GOVERNOR Ralph DLG Torres and Lt. Gov. Arnold I. Palacios have announced that the Federal Emergency Management Agency has approved an $88.7 million low-interest community disaster loan for the CNMI.
Torres and Palacios expressed their gratitude to the CNMI’s federal partners for the approval of the loan, including the Trump administration, the Biden administration, and the U.S. Congress.
The announcement was made at a media conference that was also attended by Secretary of Finance David DLG Atalig, Special Assistant for Management and Budget Virginia Villagomez, Senate President Jude U. Hofschneider, Speaker Edmund S. Villagomez, Senate Fiscal Affairs Committee Chairman Victor B. Hocog, and Vice Speaker Blas Jonathan Attao.
FEMA recovery office director Sheryl Cochran and her team represented the agency and its top regional officials: FEMA Acting Regional Administrator Tammy Littrell and FEMA Acting Region IX Administrator Robert Fenton, Jr.
The governor said the CNMI’s request to participate in the program was submitted in February of last year, at the recommendation of the regional administrator and in consultation with the CNMI Office of the Attorney General.
The regional administrator at the time recommended to the recovery directorate to activate the program and designate appropriate Region IX representatives to work with the CNMI to begin the community disaster loan or CDL process.
This process requires that two points of contacts be named to work with the CDL program manager from FEMA HQ and the independent contractor hired to conduct a complete financial analysis of the governor’s revenues and audited financial statements, as well as to complete a questionnaire depicting events, such as the effects of the storm’s devastation and a recovery timeline.
In May of last year, the CNMI was prequalified and eligible to apply for the CDL loan of up to 25% of the projected loss of government revenues, which amounts to approximately $93.7 million.
However, at the time, FEMA was only authorized to give up to $5 million, the cap for the loan program.
The CNMI was required to complete a 10-part CDL application package and provide collateral security in the form of a joint resolution by both the CNMI House of Representatives and the Senate.
The joint resolution passed the House in June of last year, and was also passed by the Senate a month later.
Because FEMA’s authorization was limited to the loan program cap, the Torres-Palacios administration then reached out to U.S. Congressman Gregorio Kilili Camacho Sablan to discuss how to obtain approval from the U.S. Congress to exceed the $5 million cap.
The delegate then met with the regional administrator at the time to discuss the matter further, later resulting in the U.S. Congress passing a resolution that included provisions to allow FEMA to exceed the loan disbursement.
Then-President Donald J. Trump signed the legislation in December of last year, allowing the CNMI to obtain the remainder of the prequalified loan on April 9 of this year.
Governor Torres noted that as per the restrictions imposed by the program, these CDL funds cannot be used to finance capital improvements nor for the repair or replacement of damaged infrastructure nor as the non-federal share for any federal program.
Finance Secretary Atalig said that there are several vendors who have yet to be paid for services rendered for Super Typhoon Yutu recovery efforts, but will be paid through this loan.
The loan will also be used for other projects and services.
He added that the local and federal government will reassess and evaluate the CNMI’s financial standing in three years’ time, which could result in a portion or the full amount of the loan being forgiven.
FEMA recovery office director Sheryl Cochran, for her part, said, “This loan is unlike most loans where you continue to pay back. There is an expectation of payment as you go, but if you can continue to provide documentation that revenue losses have not been recovered, there is a consideration given to loan forgiveness based on continued economic status.”
If or when it comes time for the CNMI to repay the loan, Secretary Atalig noted that through both executive and legislative approval, the costs would be covered from local resources.
“We’re still rebounding from the effects of Super Typhoon Yutu,” he said.
Director Cochran added, “We’re still going to be here to help you every step of the way.”
Moreover, she said, the interest rate for the remaining $88 million of the loan is less than 1%, or seven-eighths of a percent, while the first $5 million has an interest rate of a quarter of a percent.
“It’s almost ‘free money,’ so to speak, in terms of the costs to get this loan,” said Secretary Atalig.
Special Assistant for Management and Budget Virginia Villagomez, the governor’s authorized representative for the Super Typhoon Yutu disaster response, also thanked federal and local partners for their collaboration and efficient responses to the CNMI’s inquiries into the program.
“All of this happened during the pandemic and during the time that we were preparing for the CNMI budget, but we were able to accomplish what we needed for the Commonwealth,” she said.
FEMA Acting Regional Administrator Littrell said, “Super Typhoon Yutu had devastating consequences for the people and economy of the CNMI. The amount of this additional community disaster loan required approval by Congress, and we know it will help ensure essential functions and recovery continue.”
Following a major disaster, the financial capacity of local governments may be severely undermined by a decrease in local revenues. The reduction in tax or other revenue can limit their ability to maintain public services or afford many extraordinary but necessary expenditures. Revenue loss frequently occurs when significant portions of the population are displaced for extended periods of time, or key sources of economic activity, like tourism, are heavily disrupted by a disaster.
The lack of revenues and the resulting limitation on financial capacity have been cited as among the most significant and consistent hurdles to long-term disaster recovery. The CDL program provides loan assistance to local governments to help them overcome a loss in revenues.
The core purpose of these community disasters loans is to permit the local governments to continue to provide municipal services, such as the protection of public health and safety and the operation of the public school system.
The CNMI has until Aug. 27, 2025 to draw down on the loan.
Governor Torres and Lt. Governor Palacios also thanked everyone who came to the CNMI’s aid after Super Typhoon Yutu struck the islands, including countless members of the nation’s armed forces.
They likewise thanked U.S. Congressman Gregorio Kilili Camacho Sablan, the 21st and 22nd CNMI Legislatures for their collaborative efforts in obtaining these funds for the CNMI, as well as private partners and community members for their continued support and due diligence.
“We’re in a better situation now than we were last week,” Lt. Governor Palacios said.
Governor Torres added, “The government of the CNMI and FEMA remain committed to the island’s vision to build back better, safer and more resilient to future disasters.”
Posing for a photo on Monday in the governor’s conference room: from left, Secretary of Finance David DLG Atalig, Vice Speaker Blas Jonathan Attao, Speaker Edmund Villagomez, Gov. Ralph DLG Torres, Senate President Jude Hofschneider, Lt. Gov. Arnold I. Palacios, Senate Fiscal Affairs Committee Chairman Victor Hocog, the governor’s authorized representative for the Super Typhoon Yutu disaster response Virginia Villagomez, and FEMA recovery office director Sheryl Cochran.
Photo by K-Andrea Evarose S. Limol
Gov. Ralph DLG Torres, Vice Speaker Blas Jonathan Attao, and Speaker Edmund Villagomez converse with a member of the FEMA team on Monday in the governor’s conference room.
Photo by K-Andrea Evarose S. Limol
Senate Fiscal Affairs Committee Chairman Victor Hocog exchanges pleasantries with FEMA recovery office director Sheryl Cochran on Monday in the governor’s conference room.
Photo by K-Andrea Evarose S. Limol
