CNMI eyes bond float for CIP projects • Move aimed at raising $60 million to hasten construction plan

In a bid to immediately tap millions of dollars in federal funds, the Commonwealth is looking at borrowing between $30 million to $60 million from investment firms to match US grants under the Capital Improvement Projects.

Finance officials, led by Mike S. Sablan, House Ways and Means Committee chair Rep. Karl T. Reyes and Commonwealth Development Authority Chairman Juan S. Tenorio met yesterday to lay the groundwork for the plan.

The government will seek to float bonds worth up to $60 million whose proceeds will be used to meet the matching requirement on the Section 702 Covenant funds.

If this goes through, the Northern Marianas expects to release within the next five years between $60 million to $120 million in CIP money for its massive infrastructure development plan intended to boost the local economy.

This will also take care of a huge portion of the $154 million in both federal and CNMI funds under the seven-year grants which have been kept idle since 1996 due to failure by the island government to meet the matching requirement.

“We want to come up with at least $30 million from our money to match the CIP, ” Reyes told in an interview after the meeting at CDA. “We have to float bonds and that’s what we are looking into right now.”

CDA, the chief government lending institution, is “receptive” to the plan, he said. The agency must approve the bond flotation with full faith and credit backing by the CNMI government.

The move followed successful sale, backed by CDA, of the $15.6 million worth of bonds for the Public School System for its various school projects.

“This should be rolling now that PSS has successfully floated its own bonds,” Reyes said.

He added the government hopes to get the highest rating to assure less risk for its bond buyers, saying “we have to identify source of funds in order for us to be rated triple A.”

Officials are currently looking at the revenues from the business gross receipt tax — a “good source,” Reyes said, to repay the bonds since the government expects to collect this money from businesses on the island.

Once these steps are completed, the administration and the Legislature will buckle down to work to identify projects under the CIP master plan that will benefit from the proceeds of the proposed bond flotation.

Over $120M wait appropriation: More than $33 million — out of the $154 million — have already been appropriated by the Legislature since February for various projects, including the new correctional facility on Saipan, completion of the Marianas High School Gymnasium as well as expansion of the Rota airport runway and the Tinian airport.

Construction has not been scheduled yet for these projects, but the island government is under pressure to raise $77 million within the next three years to match an equal amount to be drawn from the federal grants.

Washington has committed to allot $11 million each year beginning in 1996 until 2002 to the CNMI provided the island government sets aside a dollar-for-dollar matching from its own coffers.

Some 50 priority projects on Rota, Tinian, Saipan and the Northern Islands have been included in the master plan drawn up last year by the CIP task force chaired by Sablan, but legislators have inserted other pet projects at the last minute.

Local efforts to allocate the CIP funds have come on the heels of a legislative proposal in the US Congress to slash half of the assistance to increase aid to Guam., blamed on CNMI’s inability to use the money.

The Northern Marianas is reeling from its worst crisis in 50 years that has pulled revenues in the past two years, making it difficult for the government to meet the CIP matching requirement.