House junks CDA-CUC write-off bill

The bill that aims to write off a longstanding $45 million loan by Commonwealth Utilities Corp. with the Commonwealth Development Authority was killed by a majority vote at the House of Representatives yesterday.

With eight “no” votes, seven “yes”, and two abstentions, House Bill 14-285, authored by Vice Speaker Timothy Villagomez, was defeated during yesterday’s House session.

The “no” votes came from the seven minority bloc members and leadership member Janet Maratita, who has consistently sided with the minority on key issues lately.

Rep. Martin Ada recused himself from voting, citing a conflict of interest, while Tinian Rep. Norman S. Palacios abstained.

“I tried my best. I’m doing everything possible to try to give CUC more flexibility in its financial independence. This is one of them,” said Villagomez.

He said that he had expected that the minority bloc would go against it, but not Palacios, who chairs the House Ways and Means Committee.

“I’m just kind of sad that my own colleague Norman didn’t support it. This [bill] is something that would have helped CNMI- wide. This is not Tinian-wide issue,” said Villagomez.

In a written statement, the vice speaker said that, of all U.S. insular areas, it is only the CNMI that takes grants from the U.S. and “is forced to repay this grant to a local agency.”

Over the years, he said, that CUC has become “a puppet” and the local government the “puppeteer,” as it determines how federal grants are to be distributed among agencies.

As the U.S. gives capital improvement project funds to insular areas “and to the political entities that dictate cooperative spending agreements,” it is the local political systems that determine the methods with which the federal grants are to be distributed to agencies and departments, “and indeed, the political willpower that certainly has caused CUC problems.”

In his bill, Villagomez argued that the money loaned out to CUC by CDA was part of a $140 million federal direct grant assistance to the CNMI that required no repayment.

He said that CDA merely acted as conduit for the distribution of these funds for infrastructure development in the CNMI.

CDA, he said, distributed the funds to various government agencies besides CUC, “without requiring these agencies to pay back the funds given to them.”

Arguably, CUC too, should not have to pay back the funds given it by CDA because CUC is a public corporation and the funds were used for infrastructure development, he said.

“CUC has been a puppet in the political creation of the Commonwealth and CDA,” said Villagomez.

House minority leader Arnold I. Palacios said the amount involved is substantial and writing it off is questionable since it is part of a partnership agreement signed by the CNMI government and the Department of the Interior.

“We’re looking at writing off a very large amount of funds. There’s an agreement that this is a loan,” said Palacios.

The lawmaker also said that, while CUC officials were present at the House session to support the bill, nobody came from the CDA.

“If there’s consent here, where’s CDA? CDA and CUC should have come together,” he said.

He said there was lack of substantive information for the House to make an educated decision on the bill.

“I don’t think it’s appropriate for us to continue with this. It lacks legislative history. What happened to the loan agreement? And how’s DOI’s involvement? We also understand that there’s a [memorandum of understanding] between CDA and CUC,” said Palacios.

Villagomez, a former CUC executive director, said it is in the best interest of the CNMI to write off in full CUC loans from CDA in order to promote the stability of the utility firm, which he said, is in severe financial crisis.

He said such action is necessary now since both agencies have tried but failed to resolve their dispute a number of times.

Following a court order advising the two agencies to settle their differences without the court’s intervention, the CUC and CDA executed an amended memorandum of agreement in January 2004, setting forth the terms of their agreement.

“The CUC, however, is in a state of severe financial crisis and is unable to make payments pursuant to the agreement,” said Villagomez.