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Bill seeks MIHA debt writeoff
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Posted on Dec 08 1998
The House of Representatives has set in motion a proposal to write off some $6.6 million in debts owed to the Commonwealth Development Authority over a failed low-cost housing project on Saipan more than 10 years ago.
In a bill filed by Rep. Heinz Hofschneider, the debt forgiveness seeks to absolve the Northern Marianas Housing Corporation from any liability resulting from the loan extended in 1987 to the former Marianas Island Housing Authority, or MIHA.
The loan, amounting to $10 million, was earmarked for the construction of 150 housing units at Sugar King Part II in Garapan, but only 52 units were built at a cost of $3.36 million.
MIHA, however, was dissolved in 1994 under an executive order issued by former Gov. Froilan C. Tenorio, effectively transferring all its assets, liabilities and functions to CDA and its instrumentality, NMHC.
Although the public housing corporation has tried to pay off the MIHA debt, the legislature noted its inability to meet the financial obligations entailed from interests and principal balance of the loan.
“This is especially true as NMHC is charged with providing housing to the commonwealth’s citizens of low to moderate income, therefore its ability to generate revenues is severely restricted,” the bill said.
The proposal also seeks to maintain the financial integrity of NMHC and to provide CDA with sound financial management, according to House Bill 11-325 which has been passed by representatives and is awaiting Senate action.
In exchange for the debt forgiveness, NMHC shall pay CDA with $3.36 million through the sale of the existing 52 units, but will not be obligated to pay the remaining balance of $6.64 million and other interests.
CDA, however, will not be restricted from taking actions against other parties responsible for the loan granted to MIHA in January 30, 1987, the bill pointed out.
