Taisakan scores CUC-CDA writeoff bill

Northern Islands Mayor Valentin Taisakan has joined in the discussion on a move to waive the debt owed by the Commonwealth Utilities Corp. to the Commonwealth Development Authority.

Taisakan expressed opposition to the measure, saying the proposed writeoff would take away funds that could be made available in the future for essential infrastructure projects on Rota, Tinian, Saipan, and the Northern Islands.

The mayor issued this statement in regard to House Bill 15-64, which seeks to authorize CDA to writeoff the $45.5-million loan plus interest owed by CUC. The bill has already been passed by the House and is now pending in the Senate.

According to Taisakan, there are legitimate concerns that the Legislature should consider before taking action on the bill.

“Is it good policy and is it in the best interest of the people of the Commonwealth to ignore and look away from facts of what actually are the problems of why CUC has not been making payments of the $45 million plus interest on their loan with CDA? If mismanagement of CUC is the main reason for the nonpayment of the said loan, is it a justifiable reason to write off CUC’s loans from CDA?” he asked in a letter to Senate Fiscal Affairs Committee Felix Mendiola.

He also took issue with the bill’s argument that CUC should not have to pay back the loan, since the funds came from a $140-million federal grant that did not require repayment. It also notes that other government agencies received amounts from this grant for infrastructure development, but CDA is only pursuing repayment from CUC.

Taisakan said that CUC should not be compared with the Department of Public Works and the Public School System, as these agencies do not generate revenue.

Furthermore, he said that a writeoff may set a bad precedent in for other CDA debtors.

Rather than waiving the entire debt, he added, the Legislature could request CDA or require the agency through legislation to forgive the accrued interest and penalty on CUC’s loan.

CDA may also be asked to extend or float payment of the loan principal for a reasonable time without charging interest and penalty to allow competent members of the CUC board of directors to implement a sound financial management strategy, address CUC’s problems, and repay the $45 million loan with a new interest rate to CDA.