by Nick Delgado
Guam - Senator Tom Ada introduced legislation today that clarifies the manner by which the Guam Waterworks Authority can borrow $20 million to reimburse the General Fund, while avoiding conflicts with pre-existing bond agreements. The measure follows a public law enacted last year that mandated a new $20 million debt be issued in the same manner as GWA's $220 million Capital Improvement Plan bonds.
Bill 222 proposed a solution in which the borrowing will be structured to GWA's $30 million loan from the Bank of Guam in 2010. The loan authorization will enable GWA to enter into a loan agreement without conflicting existing bond covenants. Ada states, "Unfortunately, the borrowing provision in PL 30-145 was added as a rider, without full consultation with GWA or Bond counsel. Now that GWA is trying to carry out this mandate, they have identified constraints that need to be removed if any borrowing is going to happen."
The legislation also makes clear that no funds from the 2005 and 2010 CIP bonds be used to fund the $20 million. GWA officials have said the borrowing could require a rate increase of about 4% to 8% for the life of the loan.