‘La Fiesta turnover not illegal’

Gov. Juan N. Babauta has ruled out any illegality in the purchase and the eventual transfer of ownership of the La Fiesta complex to the Governor’s Office from Northern Marianas College without legislative approval, saying the administration used federal grants, not local appropriation.

“What happened here was that the college went to the Legislature first and the Legislature was so slow so the college [came] to me. We used grant money to help the NMC. This is grant money, not money from the general revenues that the Legislature appropriates,” he said.

Earlier, Babauta partymate and Senate minority leader Pete P. Reyes said the governor’s move to assume responsiblity for La Fiesta may be illegal as it would cause the government to incur a debt without the approval of the Legislature.

Reyes said that, by assuming the financial obligations from NMC, the Executive Branch commits the government into paying the remaining debt amounting to $4 million.

NMC acquired the La Fiesta complex in Aug. 2003 for $7.5 million using a $3.5 million federal grant money from the Governor’s Office as deposit.

“The $4 million remains unpaid. In my opinion, it creates a debt for this government which is contrary to what the Constitution says. The Constitution provides that nobody has the authority to create a public debt unless it is backed up by the Legislature,” said Reyes.

Based on the acquisition contract, NMC is required to pay $200,000 a year for 20 years beginning Oct 31. 2004.

“We will meet our obligation,” said Babauta Friday.

Babauta earlier signed an agreement with NMC, taking the ownership responsibility of the complex from NMC, which faces serious accreditation problems.

Prior to this, the Governor’s Office has been providing funds for NMC to settle operational expenses of the complex.

The acquisition of La Fiesta is currently being investigated by the Office of the Public Auditor and the Legislature.

Babauta, after authorizing the release of $3.5 million to NMC last year, had also agreed to give an additional $250,000 to the college for the A&E design.

The A&E project was eventually cancelled following the college’s decision to abandon its immediate plan to use the facility.

Meantime, Babauta said that the Attorney General’s Office is also looking at the La Fiesta issue, including the takeover agreement to ensure that actions taken are all legal and aboveboard.

Reyes said the administration’s La Fiesta takeover agreement with NMC is not yet final as it would still require concurrence by the sellers, Hotel Nikko Saipan and Coco’s Lagoon Development Corp.