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Saturday, April 19, 2014

Finance pays nearly $1M for judicial building loan

After the NMI Retirement Fund alerted the Department of Finance last week to the agency’s intention to foreclose the judicial building due to unmet obligations, the government was able to scrape enough money to pay a portion of the outstanding arrears.

Acting Fund administrator Lillian M. Pangelinan disclosed this to the Legislature on Friday following the submission of documents related to the judicial building loan.

Pangelinan, in a letter to Sen. Ray Y. Yumul (IR-Saipan) and Rep. Mario Taitano (Ind-Saipan), disclosed that the Fund received last week a payment of about $970,000 from Finance. Despite this payment, the loan remains delinquent by more than $1.6 million, she added.

Under the terms of the loan and mortgage, the CNMI government—through Finance—is required to remit to the Fund money collected by the Judiciary and make up any difference between the Judiciary’s collection and the monthly payment.

Fund documents indicate that Finance failed to remit any payments for the judicial building loan from June 2012 to January 2013.

“Last week, after the Fund alerted both the Judiciary and the administration of its intent to seek foreclosure on the mortgage, the Department of Finance sent a payment of approximately $970,000. Although this recent payment decreases the amount of arrears, the loan remains delinquent by more than $1.6 million,” said Pangelinan in her letter to Yumul and Taitano dated Feb. 1.

The Judiciary earlier stated that it has transmitted all court collections to Finance and any additional obligations for the loan has to be paid out of the general fund. The Judiciary statement added that it is not a party to the loan agreement because parties involved are Finance and the Retirement Fund.

The Judicial Building Financing Act of 1994 allowed the CNMI government to secure a $13.8 million loan from the NMI Retirement Fund in order to build the Guma Hustisia in Susupe. The primary source of repayment would come from revenues generated by the Judiciary. The loan has a maturity date of Aug. 14, 2015.

The judicial building loan is one of the Fund’s four local investments and has been cited as one of the investments that are at risk for some years. Besides the delinquent monthly payment, the Fund earlier revealed that the reserve account for the loan has already been exhausted.

Saipan Tribune learned that the loan agreement required the maintenance of a three-month reserve account under the custody of the Finance secretary.

The CNMI government is required to pay $118,000 monthly for the loan.

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