Monday, December 15, 2008

Governor Optimistic About $20 Million Landfill Loan

Governor confident: Camacho upbeat on $20M landfill loan
By Dionesis Tamondong
Pacific Daily News
December 17, 2008

One local bank official said his bank is just not interested in lending the government $20 million for landfill construction. Another lender said it would consider the proposal if the repayment sources were more concrete.

With less than a week before the federal deadline for responses, the Camacho administration is sure some lending institutions will submit proposals to finance the Ordot dump closure and landfill construction projects.

"We remain confident that we will be able to secure the financing," said George Bamba, Gov. Felix Camacho's chief of staff. The government of Guam must deposit $20 million by Jan. 5, or some officials could face legal action from the federal government.

The Guam Economic Development and Commerce Authority has issued a request for proposals for financiers to lend GovGuam the money for the start-up projects.

BankPacific President Phil Flores said his bank won't respond to the financing request. "We're not interested. We're just not going to bid on this one."

While Flores didn't provide a specific reason for not responding to GovGuam's proposal, he said there's too much confusion over the dump situation.

"Is the Legislature wanting to build in Layon or to give the contract to (Guam Resource Recovery Partners)?" Flores asked. "So if you're lending money for a new landfill, there's always the concern that it's not going to be built."

Several lawmakers disagree with the local government's selection of Dandan, Inarajan, as the landfill site, arguing it is a potential freshwater source and is too remote for efficient use as a landfill. Senators passed a measure last month pushing for development of a privately operated landfill in the Guatali area of Piti and Santa Rita, on land being leased by GRRP, saying it is friendlier to the environment and less costly than floating bonds to develop the Inarajan site.

Pete Sgro Jr., co-counsel to Barclay's Capital, said his firm would be interested only if the repayment terms were solidified with Section 30 funds as collateral for the loan. Barclay's Capital is a division of Barclay's Bank, which has offices worldwide.

"We are seriously considering submitting a response, and if we do so, however, the response will contain terms that would include not continuing with a subordination of the Section 30 money," Sgro said. "Otherwise there is no value in the collateral."

Sgro said lawmakers made "damaging amendments" to the governor's original short-term borrowing bill.

The administration had pledged Section 30 money -- taxes paid by federal and military employees on Guam and remitted to GovGuam --to pay back the $20 million.

But lawmakers instead required tipping fees be used as the main repayment source, and a variety of funding sources -- including compact-impact money, Section 30 money and the General Fund -- as additional security, Sen. Ben Pangelinan said.

By doing so, Section 30 funds could continue to be used for other obligations, such as the overdue tax refunds and COLA payments.

"These payments are also ordered by the court and on par with the landfill issue," Pangelinan said.

Pangelinan said the amendments were made in consultation with the administration's fiscal policy team after lawmakers realized there wasn't enough support to pass the governor's original bill.

Sgro said lawmakers should go back and approve the original version of the governor's bill, which is in line with the intent of the federal receiver and the District Court of Guam.

"How can anyone ignore the consistent position taken by (Chief Judge Frances Tydingco-) Gatewood and create an amendment that will not accomplish the necessary financing because of the vagueness and lack of value of the collateral created by an amendment?" Sgro asked.

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