The American Samoa Government wants to refinance just over $30 million in large debts and generate new revenue for infrastructure projects estimated at more than $70 million, according to the 12-page executive summary information sheet presented to the Fono yesterday by the American Samoa Economic Development Authority (ASEDA) board.

Both the Senate and House yesterday held committee hearings on an administration bill which seeks to modernize and enhance the bond issuing capability of the ASEDA. The bill states in part that the governor and the ASEDA board have determined that sound financial planning warrants the refinancing of outstanding government debt and that ASEDA needs to be given the authority to issue general obligation bonds to help with local economic infrastructure development.

At the Senate committee hearing, Sen. Laolagi F.S. Vaeao pointed out that the bill does not identify the total amount of refinancing and bonds which the ASEDA board is authorized to issue.

ASEDA board member Taimalelagi Dr. Claire Poumele, who is also Port Administration director, said debts to be refinanced total $35 million, with $75 million in infrastructure to be funded with bonds.

“That’s a total of $110 million not included in the language of the bill. The total amount must be clear in the bill to ensure that there is a ceiling amount for the ASEDA board,” Laolagi said. “Without this ceiling amount, that means the ‘sky is the limit’ for the board”.

He said, “I am not against this important piece of legislation, which I believe is necessary, but specific infrastructure projects and debts to be paid, including their amounts, must be clearly stated in the bill.”

Other senators agreed, and they also believe the amount of each debt to be refinanced, as well as the infrastructure project amounts to be funded with bonds should be included.

This was the same argument heard in the House during a debate on the bill, with Rep. Taotasi Archie Soliai pointing out that without such information “we are essentially giving the Executive [branch] a blank check” — and Taotasi reminded those present that this was the case with the $20 million approved by the Fono several years ago from the ASG Employees Retirement Fund.

At the time, he said, the Fono passed the $20 million loan bill without any protection for the government. He also says that he is not against the bill to amend provisions of ASEDA statute, but all of these issues must be made clear.

DEBT SERVICE

Among the debts to be refinanced are: the $10 million loan in 2006 from the Retirement Fund (with a current balance of $5.19 million); $20 million loan in 2007 from the Retirement Fund (with a balance of $5.25 million); the ASG tobacco loan from the Interior Department (with a balance of $10.06 million); $4.67 million balance in the Laufou fire judgement against ASG; $2 million in “AG judgements” (with no explanation given); and $8.32 million in outstanding debts to the American Samoa Power Authority, according to the executive summary sheet.

ASG Treasurer Ueligitone Tonumaipe’a told the Senate committee that refinancing these debts will lower the interest rates — especially for the two Retirement Fund loans which have high rates. He also says that the government is paying about $2.8 million annually on the two Retirement Fund loans, as one loan is paid for through a percentage from taxes and the other is paid by ASTCA.

BOND PROJECTS

The executive summary information provided for the first time to the Fono lists the seven projects the administration is looking to be targeted with the issuance of general obligation bonds.

The largest project — at $20.3 million for the amount of the bond — is for road projects (which are the first priority), to be issued under the Grant Anticipation Revenue Vehicles (GARVEE) Bond program, which is a tax-exempt debt instrument financing mechanism that is backed by annual federal appropriations for federal-aid transportation projects.

According to the executive summary, this bond is pledged with $2 million annually from Federal Highway Administration funds.

A second priority project is a new Manu’a ferry boat, with a $10 million bond. The purpose of this project is for economic development and to provide secure transportation between Tutuila and the Manu’a island group. (As previously reported by Samoa News a $1.93 million allocation in FY 2015 capital improvement projects is being used as a partial payment for the construction of the vessel, which is expected to be ready next year.)

The third priority project is a $5 million bond for the airport fuel tank farm relocation. This project’s purpose is an FAA requirement.

The other projects— 4th to 6th priority, with a $10 million bond for each project— are: a Charter Bank; Malaloa Marina Wharf; a new Fono building; and a cannery container wharf.

(The governor’s executive assistant Iulogologo Joseph Pereira told Samoa News in August this year that the Charter Bank is one of the options being considered by the administration to address the local banking situation in the event the Community Bank of American Samoa fails to secure FDIC approval.)

CONCLUSION

The executive summary emphasized that the ASEDA law proposed revisions will enable the ASEDA board to address both debt refinancing, refunding and economic development; reduce outstanding debts and obligations; and improve cash flow.