Am. Samoa Senate, House Approve Bond Authority

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Fono bill to give government new revenue generating authority

By Fili Sagapolutele

PAGO PAGO, American Samoa (The Samoa News, Oct. 9, 2014) – After receiving more verbal testimony on the authority of the American Samoa Economic Authority board to issue bonds, the Senate has given the board its full faith and trust by approving in second reading the House version of an administration bill which seeks to modernize and enhance the bond issuing capability of ASEDA.

The measure is scheduled to go through final reading today without any Fono amendments — specifically regarding Fono oversight on bond issuance and refinancing ASG’s long term debts.

The Senate had initially tabled its version of the bill in committee, following a hearing on Monday where senators voiced concern with the lack of Fono oversight, especially with the large amount of government money that will be involved in the floating bond.

Acknowledging the importance of this measure — which not only refinances $35 million in current long term debt, but also generates revenue through the issuance of bonds to finance infrastructure — the Senate Economic Development Committee called back members of the ASEDA board for another round of questions.

Yesterday’s hearing included board member Iulogologo Joseph Pereira, the governor's executive assistant, who at the outset of the hearing acknowledged concerns by senators that the Fono would have no oversight on this important measure.

However, Iulogologo said the constitution is clear, in that the Executive Branch cannot use any government funds without Fono approval. He says the ASEDA bill has provisions which ensure that the board cannot use any funds without Fono approval.

Responding to committee questions, Iulogologo explained that the floating bonds being proposed in the bill are the fastest way to generate revenue to build infrastructure such as major roads throughout the territory, and this is a big issue that needed to be addressed.

He said the governor wants ASG to start working on these major infrastructure projects instead of waiting years down the road for federal assistance. He also provided a brief explanation of the proposed projects, based on an ASEDA information sheet given to the Fono on Monday. (See Samoa News edition of Oct. 7 for more details on the projects.)

Regarding the refinancing of long term debt, Iulogologo said this will allow the government to quickly pay down these debts with a lower interest rate, thereby saving ASG money that can be used for infrastructure improvements.

Senate President Gaoteote Tofau Palaie spoke at length about the Fono’s concerns, and how the explanation from Iulogologo has given senators more understanding. He pointed out that one main concern with senators is the lack of Fono oversight especially with a provision of the bill, which states in part that ASEDA "may issue bonds from time to time without further authorization from the Legislature".

Gaoteote asked Attorney General Talauega Eleasalo Ale, who attended by the hearing but is not an ASEDA board member, if there is any problem if the word "without" is changed to "with", allowing the Fono oversight.

Talauega responded that there will be problems — although not much. He suggested the use of a Fono Joint Resolution to address Fono oversight concerns. He also explained that ASEDA had addressed this same issue with its off island advisors and the one setback is that there are times when the market is very good and the interest rate drops, then the board must act quickly to get these market benefits right away, instead of having to come back to the Fono for approval.

In other words, ASEDA must act in a specific time frame to ensure the bonds get the best interest rates and other benefits, he said, adding there are provisions in the bill which ensure protection of the government and its funds.

"So when that chance comes up, we must act quick, " he explained and noted that "American Samoa needs to prove to off island investors, who invests in these bonds, that we are all committed to this venture."

It was also noted during the hearing that the Fono is represented at all times during decision making by the ASEDA board, because two of its members — Sen. Galeai Tu’ufuli and Vice Speaker Talia Fa’afetai Iaulualo — sit on the board.

Gaoteote requested the ASEDA board provide to the Fono status reports on the infrastructure projects. He says that in past years, the law would require reports by the Executive Branch, but a majority of the time there are no reports, making lawmakers suspicious of actions by the executive branch.

All of the senators who spoke during the 90-minute hearing acknowledged that this measure by the administration is important, and this was reiterated during a committee debate after the hearing.

At the end of the debate senators agreed that they will give the ASEDA board and the administration full faith and support by approving the measure.

ADVISORS

One issue that surfaced early this week during Fono committee hearings deals with consultants and advisors to the ASEDA board dealing with the issuance of bonds and other financial matters. Talia explained that a bid was put out for such a service, and all off-island "consultants" are already in place.

Board member Taimalelagi Dr. Claire Tuia Poumele said that the board is constantly in contact with the advisors to ensure that everyone is on the same page moving forward. The latest contact was made Tuesday.

According to the ASEDA information sheet given to lawmakers, the authority has secured a highly qualified finance team to assist in this endeavor. ASEDA has recruited the firm of Lewis Young Robertson and Birmingham to advise on finance; George K. Baum for bond underwriting; and the law firm of Ballard Spahr LLP for bond counsel.

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