‘CPA consultant recommended seaport fee hike, not BST’

The newly approved rate hike on seaport fees and charges was based on the recommendation of a financial consultant commissioned by CPA and not by the BST Associates, which earlier completed the seaport rate study for the agency.

This was clarified by a CPA board resolution, which states that, although CPA acknowledges the work of BST in its Rate Revenue Covenant Update, the ports authority had to seek the expertise of a financial consultant, who later recommended the 90 percent rate increase on all seaport fees and charges.

Saipan Tribune learned that CPA has hired and retained Bruce McMillan of International Management Ltd. as its financial consultant in the absence of a permanent comptroller for the agency.

BST’s study had proposed a 20-percent increase in seaport tariff rates for wharfage, dockage, entry fees, homeport fees, and franchise fees over the current rates for fiscal year 2009.

The same rate study recommended a 12-percent hike by fiscal years 2010, 2011, and 2012.

For FY 2013, BST suggested a 7-percent increase on top of the already proposed 5-percent increase.

These recommendations were never adopted by the agency.

CPA is currently charging a wharfage fee of $6 per revenue ton.

The amount will reach $10.20 per revenue ton once the board-approved 90 percent is implemented.

CPA, however, promised to evaluate and assess the impact of the new rates after three months.

Stakeholders have asked the board to defer the enforcement of the new seaport rates three weeks after its approval on Jan. 14.

CPA described BST’s study as “generally based on historical data.”

“It deems its contents to be optimistic because it did not provide the best analysis of the most recent data to achieve the requirements and provisions of the Seaport Revenue Bond Indenture Agreement,” stated the CPA resolution.

It said McMillan, who was retained in December, reviewed the most recent seaport data and recommended that the fees be increased by 90 percent in order to meet the requirements of the bond indenture.

CPA has reported that seaport revenues dropped by over 60 percent in FY 2008 primarily due to the shutting down of the garment industry on island.

Both CPA management and its board believe the proposed tariff rate and fee increases will contribute to and aid in arresting the continued deterioration of CPA.