$3 million MRC settlement bill hurdles Senate

The controversial $3-million Marine Revitalization Corp. settlement agreement passed the Senate yesterday despite strong opposition from three Saipan senators: Pete P. Reyes, Thomas Villagomez, and Luis Crisostimo.

The Senate voted 4-3-1 in favor of the settlement, which calls for the immediate payment of $800,000 to MRC, which operates the Outer Cove Marina on Saipan.

Sen. Diego Songao abstained while Sen. Joseph Mendiola was absent due to medical reasons.

Supporters of the bill were Rota and Tinian senators: Senate President Joaquin G. Adriano, Henry San Nicholas, Paterno Hocog, and Paul Manglona.

“I think this is the first time that we Saipan senators agreed to vote against an issue. Unfortunately, they [Tinian and Rota] outvoted us. I hope they just respected the Saipan senators’ position,” said Crisostimo.

He said the problem—which the bill is now trying to solve—was created during the term of Gov. Froilan Tenorio.

“The failure is not with CNMI government side, so why use taxpayers’ money or why even take CIP funds to pay for others’ mistakes?” asked Crisostimo.

Reyes considers the bill a bailout plan for a losing private entity, which, he said, is something that the government should not do.

Villagomez had cited possible legal issues concerning the lease ownership. He said the ownership of a submerged land, such as in the case of Outer Cove Marina, remains on appeal by the CNMI government against the U.S. government.

Meantime, Adriano said that the bill essentially authorizes the administration to go ahead with the $800,000 initial payment. He said this deal would be far better for the government than face a possible $6 million liability arising from a litigation.

He said the Senate approved the House version, which obliges the Executive Branch to use capital improvement project funds to pay the $800,000. He noted, though, that only the leftover CIP money could be tapped for such a purpose.

“Leftover CIP funds can be reprogrammed to satisfy the $800,000. If you get that from new CIP or incoming projects, it’s next to impossible because there’s a lineup of activities already for that funding,” said Adriano.

He said the administration can also use its discretionary funds to settle the amount.

Originally, the bill identified the Managaha Island Landing and Use Fees as the source for the initial settlement requirement. The amended version, however, provides that the initial payment would not be appropriated but “allocated” through the 902 CIP funds.

House Bill 14-270, introduced by administration congressmen headed by House minority leader Rep. Arnold I. Palacios, was voted 11-3 at the House, with Reps. Oscar Babauta, Jesus Lizama, and Timothy Villagomez opposing it.

The settlement agreement, executed between the MRC and the CNMI government in early 2003, requires the immediate payment of $800,000 and an additional $2.2 million in deferred monthly installments over 20 years.

Based on the agreement, the $2.2 million can be paid through the operating revenues of Outer Cove Marina or tax credit.

The settlement approval would also allow the government immediate access to the facility.

MRC’s Anthony Pellegrino earlier sued the government over the marina deal but the case was dismissed for lack of jurisdiction. The parties began arbitration in April 2001. In January 2002, the independent arbitrator advised parties to enter into settlement negotiation.

For lack of a legislative approval reached, the arbitration resumed on Nov. 29 and 30.