DUE TO CHANGES IN CIP PLAN Gov’t may lose $30-M bank loan

The chair of the House Ways and Means Committee yesterday expressed fear the government may lose the $30 million loan secured from Bank of Guam for capital improvement projects if the Senate pushes ahead with changing the initial plan.

Rep. Karl T. Reyes asked senators to approve the CIP bill pending with them in order to fast-track implementation of critical infrastructure projects, such as the new prison and extension of the present Commonwealth Health Center.

Failure to do so would jeopardize the measure and further delay use of the federal construction grants provided under the Covenant 702/CIP program, according to the representative.

“I hope the Senate backs down and realizes that the amount given to each senatorial district is more than proper,” Mr. Reyes told in an interview as he noted the prison and CHC projects will benefit not just Saipan but the rest of the Commonwealth.

He also warned that BOG may not agree with increasing the loan amount to $40 million should the upper house move ahead with its amendment to the legislation in view of the bigger commitment that the government has to meet.

“My assumption is that Bank of Guam may pull out from this thing and nothing will go through,” Mr. Reyes explained.

“There are certain deadlines that need to be met, certain commitments that the government has to make and certain time to draw down the money. If you don’t meet the timing, they will not be able to pull it down. Then it becomes expensive for us.”

The lawmaker was reacting on the decision by the Senate to defer action on House Bill 11-496 while mulling the plan to borrow additional $10 million from the bank under the financing scheme approved earlier by the Legislature in a bid to fund other projects on Rota and Tinian.

Senators are expected to decide on the issue at a session scheduled tomorrow.

John S. Tenorio, chairman of the board of the Commonwealth Development Authority that has sanctioned the loan and the forthcoming bond flotation, last week warned the Senate against such a plan as it would mean further delay in appropriating CIP funds sourced from the loan and matching federal construction grants.

The third of CIP appropriations passed this year, HB 11-496 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.

The loan extended by BOG will be repaid through the proceeds of the bonds worth more than $60 million that will floated by CDA in the next few months.