CDA: Don’t alter $50-M CIP plan

Commonwealth Development Authority Board Chairman John S. Tenorio yesterday warned the Senate against changing the original plan on the $50.8 million capital improvement projects, saying this would only jeopardize their implementation.

He said the proposal by senators to borrow additional $10 million from Bank of Guam on top of the $30 million loan initially secured by the government will delay use of the funds as it will mean months of processing by the bank.

“There will be problems by raising the amount of the loan because this is an interim financing and we have placed everything to our underwriters and bond counsels as well as to Bank of Guam to utilize the $30 million,” Mr. Tenorio told in an interview.

The Senate, during its session Wednesday on Rota, held off action on the House bill appropriating the $50.8 million in CIP funds which will come from the loan and federal construction grants under Covenant 702 assistance.

Members from Rota and Tinian were mulling the plan to seek another $10 million under the interim financing agreement with BOG in a bid to raise additional funds for important projects in the two island municipalities.

Senate Vice President Thomas P. Villagomez said that while the two districts will still get their share of one-eighth of the total $154 million CIP funds, they want to use bigger portion of their money as soon as possible.

So far, both Rota and Tinian have received less funding in proportion to what Saipan has been provided with, whose share amounts to three-fourths of the total available funding.

By borrowing $10 million more, these additional funds will help the two islands address immediate infrastructure needs and cope with the development on Saipan.

The proposal is expected to be tackled when the Senate resumes its session on Tuesday.

Reconsider

Mr. Tenorio expressed hope that senators will reconsider their move and approve House Bill 11-496 so that the government can close the deal with the bank.

“It took us about 60 days to prepare everything to secure the $30 million loan and it’s ready to be closed except for a statute that will authorize changes on present taxation system,” he explained. “The proposal would jeopardize the plan and I just hope the Senate would reconsider and go back to the original amount.”

The CDA chief also underscored the need to tap the loan to match the federal funds in view of attempts in U.S. Congress to cut down the $11 million annual assistance to the CNMI due to failure by the island government to spend them.

“We are really concerned and we are trying to rush this loan so we can match the federal funds and start constructing some of the projects,” added Mr. Tenorio.

Part of the financing scheme earlier approved by the Legislature, the loan will be repaid through proceeds of the $60 million bonds being sought by the government.

CDA is currently conducting feasibility studies on local industries, while the government will be audited for expenditures incurred in fiscal year 1999 as part of the conditions of the bond flotation.

“We’ve been preparing and we are almost finished with the logistics,” said the chairman.

CDA has chosen Paine Webber to handle the tax-exempt $60 million municipal bond float which is anticipated to be carried out within six to eight months.

Delay

HB 11-496, sponsored by Rep. Heinz S. Hofschneider, passed the lower last week after derailing for the past three weeks due to failure to meet the quorum required under the Constitution.

Although he supported the plan to raise the amount, Mr. Villagomez expressed fear that if the Senate makes amendment, it could spell the death of the measure as it will have to go back to the House of Representatives.

The third of CIP appropriations passed this year, the legislation will set aside $20.8 million to match the federal grants, while $9.2 million will be used to refinance ongoing projects.

With $41.6 million in CIP, Saipan will receive a total of $31.2 million; Rota and Tinian will each get $5.2 million.