CEBU City - The City Council has authorized Mayor Tomas Osmeña to enter into an agreement with the SM Prime Holdings, Inc. for the advance payment of P50 million to be deducted from the company’s future tax liabilities with the city.

In a measure authored by Councilors Jose Daluz III and Augustus Pe Jr., the August body agreed to accept SM’s offer to advance its real property, amusement and business tax payments “to be credited for a period of one year” starting January this year.

The payment will be used by Cebu City to finance vital government and infrastructure projects, “but not to exceed the foregoing amount.”

The SM Prime Holdings Inc., the owner and operator of SM City-Cebu, asked the City Hall to relocate the informal settlers living in the five streets at the North Reclamation Area (NRAS), and to light up the streets in the area.

The amount will also be spent to fabricate and install traffic road signs in the five streets and to construct the center islands in the main roads and rehabilitate the drainage system, including the Mahiga Creek.

“Due to the budgetary constraints of the city of Cebu, various vital government and infrastructure projects are presently set aside until adequate funding is sourced either internally or through assistance form the National Government, Inc. has offered to advance its real property, amusement, and business ax payments,” they added.

As stated in the draft MOA, the SM Prime Holdings will turn over the P50 million in two installments.

The first P25 million will be paid within 30 days upon submission of the city of the approved resolution. The second half will be paid 30 days later.

The agreement is deemed terminated upon complete liquidation of the full amount by the city.

In July 2006, both parties had the same arrangement where SM Prime Holdings advanced the City Government P53.9 million in taxes, which was supposed to be used for beautification projects including the improvement of roads, and removal of garbage and vendors form the NRA. (PNA)