CPA wants free hand on investing bond proceeds

The Commonwealth Ports Authority has sounded the alarm on proposed legislation that seeks to regulate trust companies in the Northern Marianas, pointing out provisions in the draft measure that may run in contrast to government efforts at luring more investors into the CNMI.

Executive Director Carlos H. Salas said CPA was specifically concerned on the possible impacts of the proposed measure to the agency’s ability to freely choose finance companies or banking institutions, to where its bond proceeds will be invested.

Existing local laws allow CPA, an autonomous government corporation, to issue revenue bonds in order to finance various airport and seaport infrastructure projects throughout the Northern Marianas.

The ports authority invests funds generated from its bond issues or derived from port operations with banks and other investment companies, according to Mr. Salas in a letter addressed to House commerce and tourism committee chair Rep. Florencio T. Deleon Guerrero.

Mr. Salas was reacting to House Bill 12-082 now pending before the House of Representatives. The proposed measure would regulate trust companies in the Northern Marianas, with the exception of banks and other banking institutions.

He noted that since the draft measure excludes regulation of banks and banking institutions, it is less likely to affect CPA’s existing bond indenture obligation, nor will it limit the agency’s ability to issue additional bonds in the future.

The ports authority usually uses the trust services available from and provided by banks and other banking institutions.

“So long as the proposed legislation does not require the CNMI government or its political subdivisions such as CPA from investing its funds only in CNMI-licensed trust companies…we have no objection to the proposed legislation,” Mr. Salas added.

However, concerns were also raised on the apparent special treatment accorded by the proposed legislation to banks by having been excluded in the scope of the draft measure although these companies also handle trust matters.

Mr. Salas also asked about how the HB 12-082 would affect off-island trust companies that may be interested to establish a branch or office in the Northern Marianas since the proposed measure allows the practice only if the firms incorporate locally.

He said the draft legislation was not clear whether the CNMI government or any of its autonomous agencies like the ports authority can continue investing funds in United-States trust companies that are not incorporated in the Commonwealth.

At the same time, the string of fees that will be collected from trust companies under the proposed measure are considered restrictive and unfriendly that may scare away potential investors.

HB 12-082 requires that an application fee of $1,000, a notification fee of $250, as well as annual renewal fees, examinations fees and others, be collected from locally incorporated trust companies.

This is exclusive of the fees and expenses trust firms would incur to incorporate locally. “…the number of fees may scare away the investor. We believe that any legislation aimed at enticing outside investment trust firms to do business in the CNMI should be business-friendly,” said Mr. Salas.