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‘Seaport rate hike to help CPA bond requirements’
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Posted on Dec 09 2008
The head of the Commonwealth Ports Authority yesterday said he is confident the agency can comply with requirements for its seaport revenue bond.
CPA executive director Efrain F. Camacho met with Bank of Guam officials yesterday to discuss the bond, which has been on the verge of default.
In a July report to Gov. Benigno Fitial and the Legislature, acting CPA executive director Lee Cabrera said that CPA may have to increase rates at the Port of Saipan because the seaport is not making enough revenue to meet bond requirements.
The seaport bond indenture agreement requires CPA to make timely payments and to maintain a 1.25 revenue-to-bond payment ratio at all times in the duration of the bond. This means for every $1 owed on the bond, CPA must have $1.25 of net revenue in reserve.
During yesterday’s weekly Rotary Club meeting, Camacho told members CPA was increasing the seaport fee 20 percent to $7.20 per ton to help fund the bond. The increase will help bring the bond into compliance, he said.
“Twenty percent is certainly a huge number, but when you look at dollar amount it’s not that much,” Camacho said.
A huge portion of CPA’s $33-million seaport bond was used to complete the $43 million Saipan Harbor Improvement Project.
Earlier this year Fitial declared CPA under a state of emergency for several months because the agency was on the verge of a technical default on its $20-million airport bond indenture.
