CEBU2WORLD Development, Inc. (C2W), Megawide Construction Corp.'s wholly-owned subsidiary undertaking the modernization of the historic Cebu Carbon district (the Project), will start to pay annual guaranteed payments (AGP) to Cebu City this year, in line with the Project’s initial construction date.
The AGP is part of the commitment of C2W to Cebu City under its joint-venture agreement. With this, Cebu City is assured of annual incomes significantly higher than past contributions from the Carbon Public Market.
"Through the AGP, the city will receive a guaranteed annual net income of P50 million from C2W, subject to 10-percent escalation every five years -- significantly more than what it has previously received from Carbon Market," said Louie Ferrer, chairman of C2W.
"Apart from the AGP, the LGU (local government unit) will also receive an estimated P20 million in business and property taxes yearly. This brings the city’s annual guaranteed income to about P70 million from the project," he added.
According to the latest available data from the LGU, as well as consolidated city market data from the Commission on Audit, Cebu City received a net income of about P21 million from the Carbon Public Market in 2019, its highest contribution in history. In the past six years, Carbon had an average gross revenue of only P27 million per year, with operating expenses yet to be deducted.
This year, 2021, the LGU will continue direct collection of market fees and on top of which will receive C2W's first AGP payment of P5 million. With this payment, Cebu City will already begin earning from C2W even though Phase 1 of the Carbon project is yet to be launched. The AGP increases yearly in proportion to the land area being released for C2W development with full amounts to be paid from year 5 onwards.
Ferrer emphasized that, through this project, the Labella administration was able to ensure earnings for Cebu City three times more than its current income from Carbon Market, with P70 million in net income as compared to the P21 million it earned in 2019.
"It was during the term of Mayor Labella that Carbon reached its highest contributions to date of P21 million in 2019. With these guaranteed annual payments, Cebu City will be earning more than three times its highest previous earnings from Carbon. This is a big win for the City and the people of Cebu," he said.
Ferrer illustrated the project's benefits to the city.
"On top of the income, the project will also provide much sought-after infrastructure improvements in the district, which will further boost the business not just of existing vendors, business owners, even the karumateros, but the city as a whole. This investment in Carbon – its people, its infrastructure, will have a multiplier effect on the city’s economy after this pandemic and beyond," Ferrer said.
The company will be investing a total of P5.5 billion for the 50-year concession.
The potential for generating more revenues for the Cebu City LGU exists, while simultaneously revolutionizing Cebu's public market system, especially if the city chooses to undertake a city-wide rehabilitation program. The additional income can then be used to fund the city's long-term socio-economic growth and development programs.
The entire Carbon development will have six blocks, developed in phases, with each block housing diverse retail, F&B, and service features. Among the project highlights are the modernized Public Market;
Wholesalers’ Hub; Lifestyle Village; Boqueria; and the Airport City Check-In. The proposed development will also feature a waterfront activity plaza, a 24/7 Puso Village, and the Sto. Nino Chapel and Park. (PR)