CNMI reels from grant cancellation

The CNMI is reeling from the U.S. Small Business Administration’s sudden decision to cancel a grant that awarded the Commonwealth $1.022 million, particularly since a “substantial amount” has already been spent by the agencies involved. But officials said yesterday the CNMI can still be made eligible to receive the grant through a legislative fix.

“We have already incurred expenses; we’ve already spent a substantial amount relative to the financial challenges the CNMI is facing,” Commerce Secretary Sixto Igisomar told Saipan Tribune.

The grant in question is the State Trade and Export Promotion, or STEP, which aims to increase the number of small businesses that are exporting, and increase these small businesses’ value of exports.

Igisomar said the program authorized the CNMI to spend and get reimbursed for such expenses related to the grant.

Press secretary Angel Demapan and Igisomar separately said the Office of the Attorney General is now looking into the matter, especially because SBA cancelled the grant even before the CNMI could get reimbursements for its expenses related to the STEP grant.

Delegate Gregorio Kilili Sablan (Ind-MP) said he is “disappointed” with SBA’s reversal of its written commitment to him a year ago that the CNMI is fully eligible to apply for and receive STEP grant.

Sablan said he brought SBA officials to Capitol Hill yesterday to “explain” the agency’s “sudden decision to cancel” a STEP grant to the CNMI.

The problem stems from the absence of the CNMI in one section of the Small Business Jobs Act of 2010, and a bill he introduced last year, H.R. 1304, would have made the technical correction to the Act.

He said Dario Gomez, associate administrator of the Office of International Trade, and his deputy Luz Hopewell, who issued the April 2011 letter saying the CNMI was eligible, “acknowledged the agency’s mistake in [yesterday’s] meeting.”

“They also agreed to look at every available avenue to get the development funds to the islands,” he said.

Sablan apologized to everyone in the CNMI who had worked hard to put together the competitive grant application, which netted the Northern Marianas over $1 million, and to the businesses that would benefit from the trade promotion.

“I take responsibility. I thought this issue was successfully resolved a year ago and it was not,” Sablan said.

Legislative fix

Sablan introduced HR 1304 even before he got written assurance from SBA that their definition of “state” includes the CNMI and that the Commonwealth therefore was eligible to apply.

In the same April 2011 letter from SBA, they invited and encouraged the Northern Marianas to compete for STEP grant funds.

But the STEP Program, under the Small Business Jobs Act of 2010, defines eligible State as “Several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the U.S Virgin Islands, American Samoa, and Guam.”

Sablan said he urged SBA officials at yesterday’s meeting to find another way to use the grant funds to support tourism and other development in the CNMI.

He said SBA agreed to continue working on alternatives to get the money to the Marianas and to work with him on his legislation to ensure CNMI eligibility in future rounds of STEP grants.

Demapan said that Gov. Benigno R. Fitial has yet to see a copy of Sablan’s H.R. 1304 but he said the Fitial administration “will support any measure that seeks to give equal treatment to the CNMI as is afforded other U.S. states and territories.”

“During these challenging times, we seek to maximize grant funds to the fullest extent possible,” the press secretary said.

The Saipan Chamber of Commerce, the largest business organization in the CNMI, also expressed disappointment with SBA’s decision to cancel the grant for the CNMI.

“It’s puzzling that the International Trade Office would notify the CNMI so late in the process that the CNMI is ineligible,” said Chamber president Douglas Brennan.

Brennan said the exclusion will “hurt” the Marianas Visitors Authority “the most and many small CNMI businesses.”

“SCC was to be involved in the exit assessment of those trying to qualify for export status. This hurts in a time of need,” Brennan added.

Commerce’s Igisomar acknowledged that MVA is one of four CNMI government agencies working together on the STEP grant, along with Commerce, the Commonwealth Development Authority, and the CNMI Small Business Development Center.

He said the MVA would have been able to provide and attend “trade shows” using STEP grant funds to help promote the CNMI as a tourist destination.

Igisomar said a little over half of the $1.022 million was for MVA.

Commerce announced the “unfortunate news” from SBA on Monday night.

As a result of SBA’s notice of the STEP grant cancellation and that the Commonwealth will not be eligible to apply for future STEP awards, Commerce notified parties concerned in the CNMI that “effective immediately, all activities and/or expenditures under the CNMI STEP Grant Program are hereby cancelled.”