She said there are also legal questions that must first be answered.
“I am concerned that the loan violates the constitutional prohibition on incurring public debt without the affirmative vote of two-thirds of the members in the House and Senate, and the prohibition on borrowing for government operations,” she told the Variety in an e-mail.
Last Friday, MPLT, the government’s investment arm for collected public land leases, conditionally approved the loan to Tinian, subject to certain terms and conditions such as a minimum annual revenue of at least $2.5 million for the duration of the loan repayment and maintaining a reserve of at least two months’ debt service in a trust account at all times.
The terms also include authorizing MPLT to impose receivership and shut down of public services on Tinian in case of a default on payments.
“So there is significant risk for MPLT as well. This risk is further exacerbated by the fact that there is currently a $1.6 million judgment against the Tinian municipal government pursuant to United States v. Borja — a debt that the municipality has thus far failed to pay, and that the federal government continues to seek to collect,” said Sablan.
“In addition to concerns about the constitutionality, legality, and fiduciary wisdom of allowing the Tinian municipal government to borrow for operations, and I am honestly worried for the people of Tinian. Why is the municipality pursuing such a risky loan that includes such terms as the possibility of receivership and a shutdown of municipal services in the event of a default?” she added.
The Tinian delegation approved a local bill allowing the municipal government to borrow $1 million to settle the 14 percent long overdue pay raise of about 170 public employees; funding for the local scholarship program; and debt payment to Tinian Dynasty Hotel and Casino for the 60th World War II commemoration event.
Sablan suggested a complete audit of the Tinian municipal government’s finances to find out how its appropriations were spent.
