House authorizes $15M line of credit

The House of Representatives unanimously passed yesterday a bill that authorizes the CNMI government to negotiate a revolving line of credit with the Marianas Public Land Trust in the amount of $15 million.

All 20 House members voted “yes” during the session to pass House Bill 23-77. The legislation now goes to the Senate for action.

House Speaker Edmund S. Villagomez (Ind-Saipan) is the author of the bill and many others are co-sponsors.

The bill authorizes and pledges the funds that MPLT would distribute as interest income to the general fund pursuant to Article 11, Section 6 of the CNMI Constitution as security and for repayment of the $15-million line of credit with the government through the Department of Finance at an annual rate of 5.5%.

Under the bill, the line of credit and the legislative authorization will both expire automatically at the end of 84 months and shall not be renewed nor extended.

Before the voting, Rep. Blas Jonathan T. Attao (Ind-Saipan) said this legislation in itself will not take any money away from MPLT, but only allows the process to have MPLT, the administration, and the Department of Finance sit down and negotiate a contractual agreement.

The central government had requested this line of credit as a sort of “bridge financing” for the over $60 million U.S. Economic Development Administration grants that the CNMI will receive. This means the CNMI government has to first spend its own money for select projects, then ask the EDA for reimbursements. One of the EDA grants is funding the ongoing Paseo de Marianas rehabilitation project.

“If we spent $5 million upfront, the EDA money comes in and we will replenish back the funds to MPLT if the contractor agreement is agreed upon,” he said.

Attao pointed out that any MPLT borrowing that lawmakers had allowed in the past—whether it be for the Commonwealth Utilities Corp., Commonwealth Healthcare Corp., or any other autonomous agency—the central government has paid MPLT back and MPLT has tacked on an interest.

This legislation, Attao said, does not take out a loan with MPLT, but only allows the negotiation process to happen between MPLT and the administration.

Rep. Thomas John Dela Cruz Manglona (R-Saipan) said he understands the importance of this bill to get a lot of Capital Improvement Projects going, but he believes there’s still a lot of confusion as far as MPLT monies are concerned and how they should be spent.

He said it’s a strong legislation but he believes they possibly need to have a clear definition of how they can use MPLT to help out those of Northern Marianas descents.

“So I am going to support it but I do want to raise and pose that question: …How do we better utilize these monies to help our NMDs and how do we clearly define that, moving forward,” Manglona said.

At the end of the day, Rep. Manny Gregory T. Castro (Ind-Saipan) said, concerns are still out there among many NMD constituents.

Castro said this is a worthy legislation because if they don’t invest in any infrastructure, they won’t get the investors they need to eventually get the dividends out to NMDs.

Villagomez stated in the legislation that MPLT has reviewed the initial planned drawdown requests by Gov. Arnold I. Palacios and has determined that a $15-million line of credit is suitable for the amounts needed, in any given 45-day period, during the next few years of forecasted drawdowns offered by the governor.

Last July 17, Palacios requested a line of credit in the amount of $20 million for “bridge financing or advances” for costs related to federally funded CIP from the EDA, whereby the CNMI would be reimbursed for such advances within 30 days of advancing such costs for grant projects.

KW: Marianas Public Land Trust

Edmund S. Villagomez

Revolving line of credit

Speaker Edmund S. Villagomez