CUC urged to borrow $5.5M for Plumeria’s infrastructure

Gov. Juan N. Babauta is pushing the cash-strapped Commonwealth Utilities Corp. to borrow $5.5 million to fund the utility and roadways infrastructure of the government’s Plumeria Estates housing project.

Over the past month, Babauta has twice written the CUC board of directors to approve the proposed loan, saying that the board’s inaction on his request may jeopardize the implementation of the housing project.

In a Nov. 23 letter, Babauta informed CUC chair Francisco Q. Guerrero that the Housing Task Force has received proposals from two companies interested in constructing 128 residential houses and infrastructure for Plumeria Estates.

Babauta said, however, that HTF could not award the contract to any of the two bidders until funding for the infrastructure improvements is secured.

The government does not want to pass on the cost of infrastructure construction to the would-be homeowners, as that would inflate the price of the houses.

Babauta said that during discussions between his office, HTF, CUC, and the Marianas Public Land Trust, it has been agreed upon that CUC would borrow $5.5 million from MPLT.

Citing CUC estimates, he said $2.2 million of the loan will go to CUC to construct the sewer lines, water lines, and power lines at Plumeria Estates.

“This infrastructure is CUC responsibility,” Babauta said, adding that the repayment of the $2.2 million will be guaranteed from the utility charges of the 128 houses.

CUC data showed that 90 percent of CUC’s residential customers consume 2,000 kwh or less electricity per month. Based on the 11-cent per kwh residential rate, a customer who uses 2,000 kwh a month pays about $220 in basic charges.

Even if each Plumeria Estates homeowner consumes 2,000 kwh a month, it would take CUC almost six years to collect the $2.2 million it needs to repay MPLT.

Babauta said the Office of the Governor will guaranty repayment of the $3.3 million balance, which will provide for the roads and drainage construction.

“It is important that the CUC board of directors approves this proposal as early as possible so that construction of 128 residential houses may start,” Babauta said.

The governor sent a follow-up letter to CUC on Dec. 10, after receiving no response from the board.

“I want to emphasize how important this project is to our community and further delay may jeopardize the implementation of this housing project because of the inaction of the CUC board to my request,” Babauta said.

He gave the board until today to act on the proposal.

The Babauta administration initially asked the Marianas Public Lands Authority to fund the infrastructure for the housing project. But the central government eventually backtracked on its request, saying it planned to look for alternative funding sources for the project.

The Plumeria Estates project involves the construction of new houses on approximately 13 hectares of land in Koblerville. Up to seven different styles of residential homes will be built based on plans and specifications provided by the Northern Marianas Housing Commission.

A total of 128 houses with two-, three-, and four-bedroom units will be available to first-time homeowners at a low price.