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CUC eyes debts payment for 2016 operations budget
The Commonwealth Utilities Corp. emphasizes payment of their debt, as they work on their fiscal year 2016 budget. This year’s budget is about a 6-percent increase from last year, according to executive director Alan Fletcher, largely due to debt repayment to two other government agencies.
In their budget work session yesterday, CUC legal counsel James Hirok said that CUC met with the Commonwealth Development Authority executive director Manuel Sablan and their attorneys recently.
CUC learned they would have to begin their dividend payment to CDA for debt owed, but Sirok indicated he would report the full details in executive session.
According to Sirok, by October 2016, CUC will owe CDA about $4.32 million to CDA.
From then on, CUC’s yearly obligation will be $1.082 million, payable on a quarterly basis or $260,000 every quarter, he added.
CUC board member David Sablan asked if the money set aside “would not exchange hands and just go into a fund.” Sablan suggested that the CDA board of directors just want to see that money is put aside, but were not necessarily “going to call it.”
However, Sirok responded that this was “not the message we got from their executive director.”
“The message we got is, if we put [money] into a sinking fund that would be used by CDA for capital improvement projects—but not only by CUC, by all government agencies. We would have to borrow from CDA to use that money. So it’s not an offset,” he said.
CUC executive director Alan Flecther said the CDA dividend payment is a contractual obligation that they need to meet, proposing to the board that they “do not defer this any longer.”
He said that CDA has allowed for deferment but this does not change the liability or help CUC reduce the amount owed.
The other debt service portion is for wharfage fees, another contractual obligation, owed to the Commonwealth Ports Authority, he said.
This goes back to a 2008 agreement that covered wharfage fees for the prior 10 or 15 years that were not paid by the fuel supplier in the CPA port, he said, indicating this was passed on to CUC contractually.
The board reconvenes today to further discuss and approve their FY 2016 budget.
