Guam Airport To Issue Bonds To Refinance 2003 Bonds

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Special legislative session to pass bill ‘premature’: senator

By Louella Losinio

HAGÅTÑA, Guam (Marianas Variety Guam, August 1, 2013) – During a marathon special session yesterday, Bill 1(2-s) garnered enough votes to pass despite several Guam senators decrying the lack of public input in the process.

Gov. Eddie Baza Calvo himself invoked his authority by virtue of the Organic Act to convene the special session for the bill which authorizes the Guam International Airport Authority (GIAA) to issue revenue bonds to refinance the airport’s 2003 revenue bonds to support new capital improvement projects.

Calvo stressed that if GIAA does not refund its 2003 bonds and does not issue a call notice to current bond-holders by Aug. 30, the airport authority will not be able to avoid the annual bond insurance payment worth $820,000.

The amount for the refunding of the 2003 bonds has been pegged at $135 million. But the bill also calls for $125 million for the financing and refinancing of capital improvement projects.

Vice Speaker Benjamin J.F. Cruz, who is the vice chairman of the appropriations committee, said holding a special session on the bill is premature and with the government going out for more than $200 million worth of bonds, the bill should have undergone a public hearing to get the consensus and views of the entire community.

Cruz said the appropriations committee already announced last Tuesday that a public hearing would in fact be conducted for the bill on Aug. 6.

"We would have been able to receive public testimony on the 6th. Even if we left the record open for 10 days for people to send in their comments, we would have been done by the 16th and I am sure that since we will be in session during that week anyway. We could address the bill and have it out by the 30th of August," Cruz said.

Two different things

Meanwhile, Sen. Michael F.Q. San Nicolas said "we are talking about two different things here – one does have a degree of urgency the other does not," pertaining to the time sensitivity of the Aug. 30 deadline for the 2003 bond refinancing.

But on the $125 million in additional borrowing, San Nicolas asked the panel to justify the lack of a public hearing.

Guam Economic Development Authority (GEDA) representative Lester Carlson said the passage of the bill would provide certainty and enable GovGuam to proceed and take advantage of current interest rates.

Carlson also said the bond refinancing would result in a reduction in debt service payments. With the airport currently paying $18 million dollars annually in debt service, he said a reduction of around $1.6 million per year may be realized.

GEDA has estimated that the 2003 bond refinancing – under current market conditions – will result in $12.3 million in gross debt service savings for GIAA.

Sens. Tom Ada, Frank Aguon Jr., Michael San Nicolas, Vice Speaker Benjamin J.F. Cruz, and Speaker Judith T. Won Pat voted against the bill while Sens. Rory Respicio, Dennis Rodriguez, Tony Ada, Chris Duenas, Aline Yamashita, Brant McCreadie, and Michael Limtiaco voted in support of the bill. Sens. Tina Muña-Barnes and Ben Pangelinan were absent during the special session.

Transparency

Bill 1(2-s) includes provisions similar to Bill 129 Рthe legislation introduced by Sens. Tina Mu̱a-Barnes and Chris Duenas last May which also authorizes GIAA to issue revenue bonds to refund the 2003 bonds series at the same maturity date.

Pangelinan confirmed he had scheduled a public hearing for Bill 129, for Aug. 6.

In his column for the Variety today, the senator said there appears to be new language that was added to Bill 1(2-s) relative to the ongoing procurement issues regarding the GIAA concessionaire contract.

The new language, he said, "specifically and explicitly would allow GIAA to exclusively contract with the master concessionaire for ten years instead of the current five years it is authorized to do and exempts the GIAA from the Guam procurement rules and instead simply requires a competitive process."

Furthermore, he said the new language "would remove required compliance with the competitive bid process already established by Guam’s procurement law and instead allow the GIAA or the master concessionaire to determine a suitable competitive process for local businesses to provide concession goods and services at the GIAA."

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