Commonwealth Ports Authority Board Chair Jose C. Ayuyu speaks during a special board meeting in Aircraft Rescue and Firefighting classroom on Tuesday.
THE Commonwealth Ports Authority board of directors on Tuesday adopted a resolution allowing CPA to use funds collected from the U.S. Air Force for the lease of land designated as a divert airfield on Tinian to pay for CPA’s debt and reduce its airport fees.
“Our economy is really dying,” CPA Board Chair Jose C. Ayuyu said. “We cannot continue business the way we used to do all the time. We have to become a little bit more creative.”
In 1998, CPA entered into a bond indenture agreement with the Bank of Guam, committing the ports authority’s revenue to service the bond’s principal interest. The agreement requires CPA to maintain a debt service ratio of 1.25. If CPA fails to meet its debt service ratio requirement, it would be placed under receivership.
In August 2023, to meet its debt service ratio requirement, the CPA board voted to suspend its discount program. This took effect on Oct. 1, 2023 and increased the terminal rental fee at Francisco C. Ada/Saipan International Airport by 79% and the landing fee by 90%.
On March 22, 2024, the CPA board agreed to provide airlines a 50% discount on airport fees.
Earlier this month, Assistant Attorney General Gregory Cenac advised the CPA board that if it wanted to offer discounts to the airlines it must still satisfy its obligations under the bond agreement.
Redemption
In a special meeting on Tuesday, the CPA board unanimously adopted CPA Resolution 2024-2, authorizing CPA to expend $8 million in divert airfield land lease funds deposited in an Air Stone Castle Investment Account “in order to fund the redemption of the whole of the Airport’s 1998 Senior Bonds.”
The CPA board also adopted CPA Resolution 2024-3 allowing CPA to deposit with the Bank of Guam up to $6 million into the Optional Redemption Fund account, and to provide the required 60-day notice to the Bank of Guam of CPA’s intention to exercise its redemption option for the entire outstanding principal and interest of the 1998 bond.
Present to vote on these resolutions were the board chair, Jose C. Ayuyu, vice chair Antonio B. Cabrera, members Dolores Kiyoshi, Steve Mesngon, Joseph Diaz, Thomas Villagomez and Ramon A. Tebuteb.
The CPA board, however, deferred action on a resolution to adopt an emergency regulation that will extend to terminal rental rates the exemptions currently applicable to landing fees.
It was Villagomez who asked his fellow board members not to act on the resolution yet. He also asked the CPA board chair to form a special committee that will work on the numbers for the proposed new rates.
‘These are not normal times’
Prior to voting on the resolutions, Ayuyu said, “We are in a situation where we really need to fix issues like our economy [and] especially the airlines.”
He said, he wasn’t sure if the divert airfield fund’s allocation is specific to Tinian, but “these are not normal times, and we have to do things [that are] sometimes not normal.”
He said, “Several issues are facing us.” One is compliance with the debt service ratio. “We always seem to be at the edge on that one,” Ayuyu said. Noncompliance means the bank can come in and take over the operation of the airport, he added. “This is very serious stuff. That is part of the reason why I want to pay that loan.”
Ayuyu said he understands that the divert airfield money is for Tinian, “but we are facing an emergency issue where we have to make the best decision.”
He added, “If we have a lot of money we don’t have to worry about touching the Tinian [fund]. But in an emergency, I look at the fund as a Commonwealth fund.”
Ayuyu noted that in the past, whenever Tinian and Rota needed financial assistance, the central government stepped in and helped. And some of these funds, he said, “were never paid back.”
“We are one Commonwealth — we want to make the right decision to help each other,” he said.
The airports are a main source of government revenue, he added, “so we want to try and save them. If we do not take this action, we need to look at other extreme measures to help our airports, financially. We have funds, we have an emergency and we want to take care of it.”
Disagree
Sen. Karl King-Nabors smiles during a Senate session
Asked for comment, Sen. Karl King-Nabors, who chairs the Tinian Legislative Delegation said, “I don’t agree with it.” He said it is his understanding that the divert airfield funds are supposed to be allocated for the projects at Tinian airport and seaports that are being affected by military construction on the island.
He said the people of Tinian advocated for the divert airfield funds because they will “absorb the impact” of the military buildup on their island.
He hopes the CPA board can identify other funding sources to meet its obligation under the 1998 bond agreement.
In 2019, the CPA board signed a $21.9 million land lease agreement with the U.S. Air Force for the construction and operation of a divert airfield on Tinian.
