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1987.

AS REQUIRED BY THE GRANT PLEDGE AGREEMENT BETWEEN THE

OFFICE OF TERRITORIAL AND INTERNATIONAL AFFAIRS (OTIA) AND THE

CNMI, CUC WILL BE FURTHER PRIVATIZED BY CONTRACTING THE

OPERATIONS AND MANAGEMENT OF THE FACILITIES TO A PRIVATE SECTOR

COMPANY.

THE CUC BOARD OF DIRECTORS HAS SELECTED A FIRM FOR THE

OPERATIONS AND MANAGEMENT OF THE POWER SYSTEM AND A FORMAL

CONTRACT WILL BE EXECUTED WITHIN THE NEXT FEW WEEKS.

FURTHERMORE, THE GRANT PLEDGE AGREEMENT REQUIRES THAT THE

UTILITY FEES BE BASED ON FULL COST RECOVERY INCLUDING LONG-TERM

DEBT SERVICE AND THAT CNMI SUBSIDY BE ELIMINATED.

THESE RATES

HAVE BEEN DEVELOPED AND WILL BE IMPLEMENTED BY CUSTOMER CLASS AS

FULL METERING IS ACCOMPLISHED AND SERVICES IMPROVED. WITH THE

IMPLEMENTATION OF THE NEW FULL COST RECOVERY RATES AS MANDATED BY THE GRANT PLEDGE AGREEMENT, IT IS ESTIMATED THAT THE ANNUAL COST FOR ELECTRICITY FOR THOSE FAMILIES ELIGIBLE UNDER THE LOW INCOME ENERGY ASSISTANCE PROGRAM (LIEAP) WILL BE APPROXIMATELY

$875,000 OR $831,000 MORE THAN THE FEDERAL ASSISTANCE CURRENTLY

PROVIDED.

IN THE EVENT NO INCREASE CAN BE OBTAINED FROM THE

APROPRIATE FEDERAL AGENCIES (HUD AND HHS), IT WILL BE NECESSARY

FOR THE CNMI GOVERNMENT TO CARRY THIS BURDEN.

IT IS REQUESTED

THAT THIS COMMITTEE ASSIST THE CNMI IN OBTAINING THE ADDITIONAL

ENERGY ASSISTANCE FUNDING FOR ELIGIBLE AND NEEDY FAMILIES.

THE SEVEN-YEAR CAPITAL DEVELOPMENT PLAN IS PROGRESSING.

WITH

THE ASSISTANCE PROVIDED BY OTIA, WE HAVE ENTERED INTO A CONTRACT

WITH ARTHUR D. LITTLE OF BOSTON, MASSACHUSETTS, A CONSULTING

FIRM, TO ASSIST US TO FINALIZE THE SEVEN YEAR PLAN IN ACCORDANCE WITH PUBLIC LAW 99-396. THE FINAL PLAN WILL BE SUBMITTED TO

OTIA FOR REVIEW IN JULY OF THIS YEAR.

PENDING COMPLETION OF THE

PLAN, IN THE INTERIM, OTIA HAS AGREED TO PROVIDE FUNDING OF CIP

PROJECTS TOTALLING $44,000,000, THE NET AMOUNT AVAILABLE FROM

THE SERIES "1" BOND PROCEEDS OF OCTOBER 1, 1987.

OF THIS NET

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SUBMISSION FOR THE CNMI IS IN FULL COMPLIANCE WITH THE BALANCED

BUDGET PROVISION REQUIRED BY THE CNMI CONSTITUTION, THE

APPROPRIATE U.S. LAWS, AND GRANT FUNDS MANAGEMENT RULES AND

REGULATIONS.

WE HAVE IDENTIFIED THE CAPITAL IMPROVEMENT

PROJECTS (CIP) THAT WILL BE FUNDED DURING FISCAL YEAR 1989

FOLLOWING PRUDENT AND TIMELY IMPLEMENTATION SCHEDULES FOR

ONGOING PROJECTS, AND ADHERING TO THE CNMI SENATORIAL DISTRICT

CERTIFICATION OF APPROVED PROJECTS.

FISCAL YEAR 1989

THE FEDERAL FINANCIAL ASSISTANCE FOR THE CNMI FOR FISCAL YEAR

1989 IS $40,150,000.

THIS BUDGET HAS BEEN SUBMITTED TO THE

COMMITTEE IN COMPLIANCE WITH THE SPECIAL REPRESENTATIVES

AGREEMENT SIGNED ON JULY 10, 1985, AND INCORPORATED BY REFERENCE

UNDER PUBLIC LAW 99-396.

THIS AGREEMENT PROVIDED FOR THE U.S.

FINANCIAL ASSISTANCE FOR A PERIOD OF SEVEN YEARS COMMENCING IN FISCAL YEAR 1986. INCLUDED IN ITS PROVISIONS THE SUMS OF $15,000,000 AND $25,150,000 FOR OPERATIONS AND CIP RESPECTIVELY

WERE TO BE ALLOCATED IN FISCAL YEAR 1989.

IN ADDITION TO THE PRESIDENT'S BUDGET RECOMMENDATIONS FOR FISCAL

YEAR 1989 WHICH WE SUPPORT, OUR UNIQUE CIRCUMSTANCES WARRANT A

SPECIAL REQUEST FOR CAPITAL DEVELOPMENT FUNDS ABOVE THE LEVEL

RECOMMENDED.

PUBLIC LAW 99-396 PLACES EMPHASIS ON CAPITAL

DEVELOPMENT FUNDING.

THE PLANNED OUTLAYS FOR FISCAL YEAR 1989,

COMBINED WITH THE AUTHORIZED FUNDING THROUGH FISCAL YEAR 1992,

WILL NOT MEET THE IMMEDIATE NEEDS IN THE AREAS OF WATER AND

HARBOR .ND WILL ONLY KEEP THE OTHER INFRASTRUCTURE DEVELOPMENTS

AHEAD OF THE ADDED DEMAND RESULTING FROM AN EXPANDING AND

GROWING PRIVATE SECTOR ECONOMY.

U.S. PUBLIC LAW 98-254 AUTHORIZED $15 MILLION FOR WATER SYSTEMS

IMPROVEMENTS IN SAIPAN.

THIS WAS REAUTHORIZED UNDER PUBLIC LAW

99-662 FOR WATER SYSTEMS IMPROVEMENTS IN THE NORTHERN MARIANA

ISLANDS.

OF THIS AUTHORIZATION, $4.671 MILLION WAS APPROPRIATED AND EXPENDED IN CRITICAL WATER SYSTEM IMPROVEMENT NEEDS.

THE

BALANCE OF $10.329 MILLION IS NEEDED FOR DESIGN, ENGINEERING AND

CONSTRUCTION OF THE CRITICAL WATER SOURCE DEVELOPMENT,

TRANSMISSION AND DISTRIBUTION SYSTEM THROUGHOUT THE CNMI.

WE

REQUEST THAT THIS COMMITTEE CONSIDER, AND SUPPORT OUR REQUEST

FOR THE APPROPRIATIONS OF $10.329 MILLION AS AUTHORIZED BY U.S.

PUBLIC LAW 98-254 AND FURTHER REAUTHORIZED UNDER U.S. PUBLIC LAW

99-662.

ALTHOUGH WE CONTINUE TO DEVELOP ADDITIONAL GROUNDWATER

SOURCES, WATER CONSUMPTION HAS INCREASED AT A GREATER RATE THAN ANTICIPATED DUE TO THE RAPID CONSTRUCTION OF ADDITIONAL

RESIDENTIAL, HOTELS AND OTHER COMMERCIAL ESTABLISHMENTS.

OUR

WATER PRODUCTION HAS INCREASED BUT IS INSUFFICIENT TO MEET THE

DEMAND DUE NOT ONLY TO ACCELERATED ECONOMIC GROWTH, BUT ALSO DUE

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CONSIDER, AND SUPPORT, OUR REQUEST FOR THE APPROPRIATION OF

$10.329 MILLION AS AUTHORIZED BY U.S. PUBLIC LAW 98-254 FURTHER

REAUTHORIZED UNDER U.S. PUBLIC LAW 99-662.

THE PROPOSED PROJECTS TO BE FUNDED ARE DETAILED IN ATTACHMENT I

OF OUR BUDGET SUBMISSION.

AS IN THE PAST, IT IS RECOMMENDED

THAT THESE FUNDS, WHEN APPROPRIATED, BE ADMINISTERED BY THE

DEPARTMENT OF THE INTERIOR.

APPROVAL OF THIS REQUEST AND THE

APPROPRIATION OF THE FUNDS WILL MOVE US CLOSER TO MEETING THE

U.S. PUBLIC HEALTH DRINKING WATER STANDARDS.

THE SAIPAN SEAPORT CONTINUES TO BE A MAJOR THREAT TO CONTINUED

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FURTHER DAMAGED BY STORM OR HEAVY USE, IT COULD FORCE THE CNMI

TO AIRLIFT OR LIGHTER SEVERAL HUNDRED THOUSAND TONS OF

MATERIALS, GOODS, SUPPLIES INCLUDING FOOD, WHICH WOULD BE AN

IMPOSSIBLE TASK.

THE SAIPAN COMPREHENSIVE PORT DEVELOPMENT PLAN

PREPARED BY THE U.S. ARMY CORPS OF ENGINEERS ESTIMATES A COST OF

$28,000,000 FOR ONSHORE AND $14,000,000 FOR OFFSHORE

IMPROVEMENTS AND REPAIRS FOR A TOTAL PROJECT DEVELOPMENT COST OF

$42,000,000.

IT IS ESTIMATED THAT IF THE OFFSHORE AND ONSHORE

PROJECTS ARE CONSTRUCTED ON OR ABOUT THE SAME TIME CONSIDERABLE

SAVINGS OF APPROXIMATELY $5 MILLION WOULD BE REALIZED.

THIS

WILL BE ACHIEVED BY UTILIZING THE OFFSHORE DREDGING SPOILS FOR

THE ONSHORE LANDFILL. IN THIS CONNECTION, THE CNMI HAS EARMARKED

$12.5 MILLION OF ITS COVENANT CIP FUNDS FOR THE PROJECTS.

WE

RESPECTFULLY REQUEST THE COMMITTEE TO INCLUDE IN THE FISCAL YEAR

1989 APPROPRIATION, THE $14 MILLION AUTHORIZED UNDER V.S PUBLIC

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