SPEAKER Edmund S. Villagomez on Friday introduced House Bill 23-77, which would authorize a revolving line of credit between the CNMI government and the Marianas Public Land Trust.
Because it proposes a public debt, the measure must be approved by two-thirds of the members of the 20-seat House of Representatives and the nine-seat Senate.
The loan will be used by the CNMI government as “bridge financing” for the costs related to federally funded capital improvement projects or CIPs, for which the CNMI will be reimbursed within 30 days of advancing such costs.
In July, Gov. Arnold I. Palacios requested MPLT for a $20 million line of credit to cover the reimbursable costs of the initial stage of the CIPs.
However, according to H.B. 23-77, MPLT 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 forecast drawdown offered by the governor.”
According to the bill:
1) The term of the revolving line of credit shall not exceed seven years starting from the date of execution.
2) The Office of the Governor and the Department of Finance shall repay the line of credit as to any drawdowns no later than 30 calendar days from the date of each drawdown.
3) No further drawdowns shall be made unless and until the prior drawdown is satisfied or MPLT agrees to additional drawdowns.
4) Any reimbursements received by Finance/Office of the Governor from the U.S. Economic Development Administration paid or remitted to the CNMI government for CIP advances, which are covered in the MPLT-CNMI revolving line of credit, shall be paid directly to MPLT as settlement for the line of credit.
5) The interest rate shall be 5.5% per annum.
6) The obligation for such a public debt shall not exceed 10% of the total appraised value of the properties of the Commonwealth so that the secretary of Finance shall not execute the revolving line of credit until the secretary of Finance certifies, with the concurrence of the attorney general, that this constitutional requirement is satisfied.
7) The attorney general shall review the revolving line of credit agreement for legal sufficiency.
8) The secretary of Finance and the Office of the Governor shall issue a quarterly MPLT Loan Report, which shall be a financial statement detailing the activities of the CNMI government as to the CIP advances and status. This MPLT Loan Report shall be submitted to all the members of the Legislature, the Office of the Public Auditor and the Office of the Attorney General.
9) The Legislature will authorize the Commonwealth government — through the executive branch, including the secretary of Finance and the Office of the Attorney General — to defend, hold harmless and indemnify the trustees of MPLT, individually and collectively, along with MPLT’s staff, counsel and consultants for any suits, causes of action, litigation, and claims as well as any loss, liability and expense whatsoever of any kind or nature including but not limited to attorneys’ fees, which may arise from or that are in any way related to the loan agreement which is the subject of this Act or the events arising therefrom as to MPLT’s actions in extending the line of credit.
“The Commonwealth shall pay for the cost of representation being authorized herein through the Department of Finance without cost to MPLT or provide representation by the CNMI Office of the Attorney General. In the event MPLT is compelled to engage its own counsel or representation, the Commonwealth, through the Department of Finance, shall reimburse MPLT for such costs and expenses. In the event the CNMI government fails to reimburse or pay for such costs and expenses, MPLT may withhold further distributions of income until its expenses and costs are fully reimbursed.”
All House members present on Friday agreed to place H.B. 23-77 on the bill calendar for action in the next House session.
