Gov’t prepares list of projects for $30M loan

The government is expected to receive within the next few weeks the initial batch of the $30 million loan it has secured from Bank of Guam to finance various infrastructure projects on the island, officials said yesterday.

Mike Sablan, special advisor for finance and budget, and Rep. Karl T. Reyes, chairman of the House Ways and Means Committee, have begun mapping out a plan on how to tap the forthcoming funds as requested by bank officials.

“We are working very closely with the Legislature on a drawdown schedule,” Sablan told reporters. This plan will include a list of priority projects as well as the amount and release schedule of money necessary to start construction.

The loan is part of an interim financing sought by the government ahead of the $60 million bond float which proceeds will be used to immediately match federal construction grants under the Capital Improvement Project/702 Covenant funding.

Once the deal is finalized with BOG, approximately $40 million worth of new projects will be bankrolled by funds from both the loan and federal grants, according to Sablan.

The rest of the money — which is equivalent to $20 million — may be used to substitute the local funding initially set aside for ongoing projects, including those that are not yet finished or about to be completed.

“We were informed by the bank that they are looking at probably a 30-day turnaround to make the funds available…They are asking for a drawdown schedule. We don’t need all the $30 million right away. We want to draw it down which would be to our advantage,” said the finance official.

The Legislature will also have to pass an appropriation bill to identify specific projects based on the CIP master plan the administration laid out early this year.

“We are going to follow (the master plan) as much as possible. To my knowledge all these projects are on the list. explained,” Sablan explained. Lawmakers “are looking at probably shifting funds between projects, but those projects are on the list.”

He added that since the CIP plan is dynamic, other projects may be included as “circumstances and priorities change.”

The Commonwealth Development Authority has guaranteed the bank loan as it awaits the $60 million bond float which will also be used partly to settle public debts.

CDA has chosen Paine Webber to handle the tax-exempt municipal bond float from a list of reputable underwriters that have submitted proposals to the authority. These actions are part of the recently-signed law that allows the agency to undertake the financing scheme.

A total of $120 million worth of projects will be undertaken by the CNMI government with the availability of $60 million in matching funds as part of the $154 million CIP package agreed upon by CNMI and Washington from 1996 to 2002.

So far, the government has already raised nearly $42 million to meet the dollar-for-dollar matching obligations and will need at least $35 million to spend the remaining balance for a total of $77 million under its CIP share.