CPA cautious on assuming MRC’s Outer Cove Marina

Posted on Jun 25 1999

The Commonwealth Ports Authority management would have to determine first whether the Seaport Division is capable of assuming about $3 million in liability of the Marine Revitalization Corp. before making any decision on the proposal to take over the operations of the Outer Cove Marina.

According to CPA legal counsel Jose S. Dela Cruz, the ports authority’s financial capability to service the loan of MRC from the projected revenues of the marina can only be determined after a thorough analysis.

The cash-strapped MRC has asked the ports authority to assume control of the controversial project, which has been the subject of debate by boat owners who continuously oppose the transfer of their vessels on grounds that the marina is unsafe.

“If it is capable of doing so, would the revenue projection from the operation of the Outer Cove Marina be sufficient to independently pay off the several million loan that CPA would be assuming,? asked Dela Cruz.

The Seaport Division is still paying its $33 million debt it incurred in the 1998 seaport bond flotation. In making such a decision, the ports authority would have to consult its bond trustee to find out whether it is feasible to assume the Outer Cover Marina.

Another issue which the ports authority management would have to consider is one that affects the policy of the ports authority. Should CPA be involved in the operation of small boat marinas in general? Should CPA confine its activity to commercial port type of shipping operations?

The Commonwealth Ports Authority Act does not prohibit the agency from operating small boat marinas, so it is up to the CPA board to decide whether or not it will adopt such policy. Again, Dela Cruz said the board must weigh the pros and cons of the issue before making any decision.

A legal issue is something that must be considered too. The Department of Lands and Natural Resources leased to MRC the premises under the Submerged Lands Lease Agreement, which the CNMI approved under Public Law 9-46.

Section 8 of the Agreement prohibits a sublease, transfer or assignment of the lease to a third-party, without the express written approval of the Secretary of DLNR. At least three aspects would have to be considered by CPA — the opinion of the legislature, the ports authority would assume the role of the lessee for the leased premises, and DLNR Rules and Regulations would be superior to CPA port regulations.

“CPA, if it assumed control of the lease, would take the lease as it is. Jurisdictional conflicts may arise between CPA and DLNR,” said Dela Cruz.

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