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CPA emergency state is extended
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Posted on Jun 12 2008
The Commonwealth Ports Authority will remain under a state of disaster emergency for another 30 days.
Gov. Benigno R. Fitial has renewed the emergency declaration, saying there is no functioning board of directors to run the ports authority.
At the governor’s request, the CPA board members resigned almost three weeks ago. The administration has not named any new appointees to replace the board members.
“[The] resignation of all members of the board of directors of the CPA has resulted in an ongoing vacuum of leadership at the CPA,” Fitial said in his latest executive order on the ports authority.
“Lack of appropriate leadership brought the CPA to the brink of technical default on the March 1, 1998 indenture. Until strong and appropriate leadership is restored to the CPA board of directors the danger of technical default on the March 1, 1998 indenture will remain a significant risk to the CPA and the CNMI as a whole,” he added.
CPA was on the verge of technical default on its airport revenue bond when the governor took control of the ports authority last month. CPA’s bond consultants had recommended measures to prevent the default, but the board of directors failed to implement them.
On May 13, 2008, the governor issued an executive order placing the financially trouble ports authority under his direct control for 120 days. He also signed a separate order declaring CPA under a state of emergency for an initial 30 days.
The Legislature has overturned the reorganization order, but emergency declaration has kept CPA under the Governor’s Office.
In the past 30 days, the governor has taken some of the steps recommended by CPA’s bond consultants. These include raising airport rates, ending the incentive program for airlines flying to the Northern Marianas, and imposing cost-cutting measures at CPA.
Fitial said additional steps have to be taken to avoid technical default.
Under the indenture agreement, if CPA committed a technical default, the bank could force the ports authority to repay the debt immediately, or take over CPA.
A CPA technical default could also have a cumulative impact on the CNMI economy, the governor said.
