Freedom Air can continue using Commonwealth Ports Authority facilities for its operations despite having $1.23 million in outstanding arrears incurred the past three years.
This after the Commonwealth Ports Authority board of directors yesterday delayed the enforcement of the eviction notice supposedly due today, Sept. 19.
By a vote of 4-3, the board gave Freedom Air a 90-day extension to settle its arrears with CPA. Board vice chair Benigno Sablan and members Barrie Toves, Fermin Sakisat, and Michael San Nicolas voted in favor of the extension, while chair Jose Lifoifoi and members Thomas “Kiyu” Villagomez and Frances Mafnas opposed it.
Lifoifoi in particular was disappointed that majority of the board thumbed down his request to have them hear first the opinion of CPA legal counsel Robert Torres before conducting the voice vote.
So as it stands now, Freedom Air has until Dec. 31, 2013 to settle its unpaid obligations to CPA, especially the passenger facility charges as required by the U.S. Federal Aviation Administration. The board said failure to do would force them to “kick out” the company from its premises, with finality.
CPA board last August unanimously voted to terminate and issue an eviction notice to the airline due to its long overdue account with the ports authority. It was earlier revealed that Freedom Air, in many occasions, was issued termination notices which none were actually implemented.
Minutes before yesterday’s board meeting, Freedom Air general manager on Saipan Dennis Cruz was seen in the gallery but left as soon as the meeting started.
After adopting the day’s agenda, Sablan immediately made a motion to stay the eviction notice for Freedom Air and to delay its enforcement for 90 days—or until the end of the year—a motion immediately countered by Villagomez who described the 90-day recommended extension as “too much.”
Villagomez argued that Freedom Air had offered no single amount to pay CPA or any solid plan on how it would settle the unpaid obligation.
He added that he had a recent meeting with Freedom Air owner Joaquin Flores to see how CPA can assist the company on its current dilemma. Villagomez came out of the meeting disappointed after failing to secure a definite payment plan from the company.
“I informed Mr. Flores to negotiate with the executive director (MaryAnn Lizama) and see how much he can offer to clear the PFC (passenger facility charges). But he doesn’t want to commit any numbers!” said Villagomez, saying he is supportive of giving Freedom Air a 30-day extension of the eviction notice but not 90 days as recommended by Sablan.
“He (Mr. Flores) is not even on the verge of getting some financial assistance to pay up CPA! One thing I know from our conversation is that the airline certificate, that’s the gold mine that he is holding on to. If investors are interested in that certificate, I believe he can negotiate and if the CPA board is willing to listen to their offer, why not? I think the only way to help both the islands and the airline is to give them 30-day notice so they can clear up the PFC and maybe the other (accounts) can come later. (But) if you don’t come in and you don’t pay anything, shut it down. I don’t think it’s helping the CNMI, I don’t think it’s helping the people of Rota and Tinian,” according to Villagomez, who then offered a subsidiary motion to seek first the legal counsel’s opinion on the matter before voting is made.
Saipan Tribune reported that for failing to pay the federally required PFC in a timely manner, CPA risks not complying with the mandates of FAA, the federal organization that fully funds airport projects in the CNMI.
Because of this CPA may be exposed to an adverse ruling from the FAA in the future. Freedom Air owes $273,500 in PFC payments to Saipan, $148,392 to Rota, and $202,275 to Tinian.
Board member Frances Mafnas aired her concerns to her colleagues. “I support the concerns (from two islands). But I want to make sure also that CPA complies with the grant assurance with PFC collection (with FAA),” she told the board. According to Mafnas, a former comptroller of CPA, she was part of the management that applied the grant assurance of PFC to FAA in 2004. Like Villagomez, she wanted to seek the legal counsel’s opinion regarding the grant assurance.
However, Sablan was firm in his desire to proceed with the “voting” for his motion, despite requests from Villagomez, Mafnas, and Lifoifoi to listen first to the legal opinion of Torres.
“Can I request that before we vote (on the motion), let’s hear first our legal counsel (opinion on the matter),” asked Lifoifoi, who was immediately countered by Sablan.
“That wasn’t the consensus of the board members, Mr. chairman. So for the second time, I called for the question,” said Sablan.
Also persistent to prove his point yesterday, Villagomez asked for a short recess to confer with the other board counsel, Janet King, if he can make the subsidiary motion which is to confer with Torres before a voting is made on Sablan’s motion.
According to King, the board doesn’t necessarily need a subsidiary motion to do that as long as the members agree to confer first with the legal counsel.
Then a separate motion was presented on the floor seeking votes to allow the legal counsel to speak, which was also defeated on the floor by a 4-3 vote. Sablan’s group remained opposed to the idea to hear first the legal opinion on the matter.
After the meeting, Lifoifoi admitted to Saipan Tribune that he was disappointed on the refusal of his colleagues to hear the legal counsel’s opinion on the Freedom Air issue.
Lifoifoi confirmed that despite the absence of a formal communication from FAA regarding Freedom Air situation, the federal agency has raised some issues—through the board’s legal counsel.
The chairman described the board’s action as a “bad signal” for FAA, which fully funded airport projects and developments.
Lifoifoi confirmed that “complaints” from other airport tenants have been received by the agency and the FAA, pertaining to the collection of PFC.
Toves, for his part, told members that he is not convinced that FAA would sanction CPA for the action it took on Freedom Air.
“I understand that I have fiduciary duty for CPA, but I am not convinced that FAA is threatening to sanction or make a ruling that is detrimental to CPA with regards to PFC because I haven’t seen any communication,” said Toves, adding that he is also concerned on the economic and social impact on Rota if Freedom Air is kicked out from ports authority premises.
Although the airline had outstanding obligation of $1.23 million, Toves said Freedom Air is now faithfully paying the PFC. He said CPA, which assisted many of its tenants and customers in the past, must also extend the same gesture to Freedom Air. He urged that a business plan be asked from the airline to see if there’s recovery for the company.
To date, he said, no other airline has come in and willing to fill the gap, and shortfall that can be created by Freedom Air if it is kicked out at this time.
For San Nicolas, “If we evict Freedom Air and runs out of business, how are we going to collect the arrears?” he asked, adding that he is in full support of extending the 90-day extension to the company.