Teno welcomes interim financing for CIP

Gov. Pedro P. Tenorio welcomed yesterday a plan by the Commonwealth Development Authority to borrow up to $30 million from Bank of Guam to finance capital improvement projects in light of his administration’s efforts to spur the local economy.

He said the loan is part of the island’s commitment to tap federal construction grants under the Covenant 702 funding that have been unused for the past few years due to CNMI’s inability to meet the matching requirement.

“We are trying to find the matching funds (so that) we (can) use the 702 money,” Tenorio told reporters in an interview as he noted the federal government’s belief that the CNMI is not spending these grants made available since 1996.

“It is very important for us to improve our CIP here,” the governor explained. “We’d like to see that we use the money to improve (infrastructures in the) CNMI.”

Part of the interim financing approved by both the administration and the Legislature, the $30 million loan is expected to be released within 15 days to begin implementation of priority projects under the 702 CIP Plan of the Commonwealth, according to CDA.

The agency is also awaiting the flotation of $60 million worth of bonds, proceeds of which will be either used to pay off the debt or set aside to match other CIP grants.

CDA has chosen Paine Webber to handle the tax-exempt municipal bond float from a list of reputable underwriters that have submitted proposals to the authority. These actions are part of the recently-signed law that allows the agency to undertake the financing scheme.

According to Tenorio, CDA is working closely with the CIP administrator and the Legislature to identify “urgent projects” that will be funded under the first loan package.

“We have the seven-year plan already which is more or less approved by the Legislature and they must come up with final projects that need to be done immediately. That will be the first priority,” he said.

A total of $120 million worth of projects will be undertaken by the CNMI government with the availability of $60 million in matching funds as part of the $154 million CIP package agreed upon by CNMI and Washington from 1996 to 2002.

So far, the government has already raised nearly $42 million to meet the dollar-for-dollar matching obligations and will need at least $35 million to spend the remaining balance for a total of $77 million under its CIP share.

CNMI has been behind in utilizing the grants due to its failure to meet the matching requirement — a situation local officials have blamed to the economic difficulties confronting the island.