Outer Cove operator may go bankrupt

The Outer Cove Marina may eventually go bankrupt because of the failure of the CNMI government to comply with the agreement to ensure that commercial boat operators are paying their fees.

Every month, the Marine Revitalization Corp. is losing $24,000 which covers interest payment alone for its huge loans from the bank and various companies. Total investment of MRC in the marina is $4.1 million.

MRC, a non-profit corporation, entered into an agreement with the Department of Lands and Natural Resources, and the U.S. National Parks Service to build and operate the marina where it was granted a 15-year lease on some 16,394 square meters of submerged land. Under the partnership agreement, both the local and federal governments will assist in ensuring the smooth operation of MRC.

“But the local government has betrayed that trust and faith in the agreement as they broke their promise,” said MRC president Anthony Pellegrino.

Commercial boat owners have refused to relocate to the Outer Cove Marina or pay the fees saying that the marina is not safe and they could not afford the high fees amid the decline in the tourism economy.

Mr. Pellegrino has offered two options to the CNMI government to resolve the long bitter feud: takeover the operations of the marina or enforce the rules and regulations.

As early as February 1999, Mr. Pellegrino has sent a letter to Department of Lands and Natural Resources Secretary Jack Tenorio seeking his assistance regarding the problem.

In May 1999, he asked Gov. Pedro P. Tenorio to intervene in the ongoing dispute before filing the case in the federal court. Eventually, the civil case was thrown out by the federal court saying it should instead be filed with the local court.

In July 2000, Mr. Pellegrino met with the governor’s Special Advisor for Finance and Budget Mike Sablan and Special Assistant for Administration Jose I. Guerrero and presented a “takeover” plan of the marina.

Under the takeover plan, some $3.6 million of MRC’s $4.1 million liabilities will be written off by the company, leaving only some $450,000 in cash liabilities to the government.

Mr. Pellegrino proposed that the $2 million debt of the MRC with the Bank of Hawaii will be resolved in exchange for tax credits from the government. Mobil will write off $450,000 of the total $700,000 debt of the marina also in exchange for tax credit, so that the government would only have take care of $250,000.

Mr. Pellegrino has also offered to scrap the $1.3 million he had spent for the construction of the marina and use it instead as his advance payment for the docking fees of his own vessels for the next 10 years.

“I am in dire financial situation. I have hacked my house, my property and companies. The government has the police powers to enforce the laws. When they refuse to do that, they are no longer a government,” Mr. Pellegrino said.

Desperately in need of money to pay its debts, MRC did not renew the lease agreement with Tasi Tours for the operation of Island Cruise Lines when the Japanese firm refused to agree to any increase in fees.

Bus loads of Japanese tourists were stranded at the marina and told to find a place where they could board the vessel that would take them to Managaha Island.
Although the incident has sent tourism officials worried about its effect on the tourism industry no one from the government has made any move to sit down with MRC to discuss the worsening problem, Mr. Pellegrino said.