Previous Story
CPA counsel gives OK to port fees hike
|
Posted on Jan 19 1999
The legal counsel of the Commonwealth Ports Authority has advised management to go ahead with its plan to increase its airport rate so that it can acquire an investment grade rating.
CPA counsel Jose S. Dela Cruz reminded executive director Carlos H. Salas that the rating agency will only give an investment grade rating for the airport bonds if the fees are raised as recommended by Ricondo & Associates, the airport feasibility study consultant.
The ports authority has not increased its airport fees for the past 10 years and the proposed rate hike will still make Saipan more competitive than Guam.
Dela Cruz said failure to get an investment grade rating would mean an increase in airport bond interest rate from 6.25 percent to 6.70 percent on March 15, 1999. However, if CPA receives a rating, there is a possibility that the interest rate will only be pegged at 6.45 percent.
Among the effects of not having any bond rating include the difficulty of issuing subordinate bonds, negative effect on the government’s ability to issue general revenue bonds.
The Aviation Task Force and the Marianas Visitors Authority have recommended a 50 percent reduction in airport landing fees and departure facility service charge in a bid to entice more airlines to provide service to the CNMI.
In fact, many hotels on the island have already lowered their rates but visitor arrivals remained down as the Japanese economy slid in recession, the longest in record since World War II.
Dela Cruz said CNMI officials should look for other alternatives to attract tourist to come to the Northern Marianas instead of reducing the airport fees because the ports authority has to meet its bond obligation.
Two years from now, CPA can commission another feasibility study that will lower airport fees and charges. By that time, the Free Trade Zone would have begun operating on the airport premises, generating the much-needed revenue for the ports authority.
CPA board members will meet with the Legislature on Thursday to seek their support on the planned rate increase. Management will also discuss with management of Northwest and Continental Micronesia Airlines this week to inform them of the plan.
