Last Monday I wrote about Expropriations in local PPPs. I posited that local government units can expropriate private property and contribute the use of that property in a public-private partnership. In the PPP contract, the LGU can recover from the private sector proponent (PSP) what it will pay as just compensation to the private landowner.
This power of LGUs is anchored on the 1991 Local Government Code (1991 LGC) and affirmed in Memorandum Circular 120, s. of 2016 (MC 120) issued by the Department of the Interior and Local Government. A reading of the template PPP ordinance attached to MC 120 reveals that an LGU can do more for a PPP project.
Available options for LGUs. Aside from cash contributions, an LGU, under the model ordinance, “may extend goodwill, free carry, grant a franchise, concession, usufruct, right-of-way, equity, subsidy or guarantee, provide cost-sharing and credit enhancement mechanisms, exercise police power, give tax incentives or tax holidays, perform devolved powers, expropriate and reclassify and enact or integrate zoning ordinances.” Today’s column is on “police power.”
What is the police power of LGUs? The general welfare clause is the delegation in statutory form of the police power of the State to LGUs. The exercise of police power by LGUs is defined under Section 16 of the 1991 LGC.
The law states: “Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants.”
What are the ways? Police power by LGUs in a PPP can be exercised during the whole life of the project. The partner-host LGU may, in the PPP contract, bind itself to grant the business permit and/or waive the payment of business permits and other regulatory fees. The appropriate zoning ordinance may be enacted or amended to reflect the real property usages of the PPP project.
For projects within the exclusive purview of the LGU, it may create a regulatory authority that will determine the tariffs and fees that end-users will pay for using the project—expressway, bridge, monorail or sewerage. The LGU can grant an exclusive concession to a PSP, however, it cannot compel the citizenry to use the facility.
The LGU may also provide security and police assistance to its PPP project. It may also abate or cause the abatement of a nuisance obstructing its project with the PSP.
So, LGUs can do it. Through police power, LGUs have more skin in the game.