Senate hears history, payments and proposals tied to CUC–CEDA 2009 preferred-stock dividend
February 26, 2025 | Senate, Northern Mariana Legislative Sessions, Northern Mariana Islands
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The Senate Public Utilities, Transportation and Communications Committee held an informational hearing Feb. 20 on the 02/2009 preferred‑stock agreement between the Commonwealth Utilities Corporation (CUC) and the Commonwealth Economic Development Authority (CEDA), reviewing the agreement’s history, current payments and previous legislative proposals to alter how dividends are used.
The discussion matters because the preferred‑stock arrangement and its dividends affect CUC’s operating costs, CEDA’s infrastructure funding and past legislative attempts to redirect the funds. Committee members sought detail on how much has been paid and how those funds have been used or pledged for other obligations.
Frank Rebaliman, chair of CEDA, told the committee past legislatures had attempted to remove the dividend obligation and that the topic prompted comments from CEDA’s board. “House Bill 23‑52 attempted to write off the whole obligation,” Rebaliman said, describing why CEDA submitted written comments to the committee.
Betty Terlahi, chief financial officer for CUC, summarized the preferred‑stock terms used in conversation at the hearing: “The preferred stock was issued at 45,000,000 shares with a 2% flat payout,” she said, and explained how that converts into annual and quarterly payments. Terlahi said the payout formula equates to about $1,080,000 per year paid in advance in quarterly installments of $270,000.
CUC staff and CEDA representatives reviewed the loan history cited in the committee materials: an initial infrastructure loan in 1988 of roughly $50 million for power generation, a subsequent roughly $16 million for sewer and wastewater, and a later $5 million, which staff said collectively exceeded $70 million and was later converted in part to the 2009 preferred‑stock instrument.
Terlahi told senators CUC has paid into the preferred‑stock arrangement since issuance and gave a cumulative payment figure for the committee record; she stated a total paid to date of roughly $9.19 million and that the most recent quarterly payment was made Jan. 8 for the second quarter of fiscal 2025. A fiscal analyst on the Senate staff pointed to a CEDA letter that listed a different year‑to‑date figure ($13.5 million) and asked the presenters to reconcile the numbers.
Committee members also discussed a previously proposed bill that would have returned dividends to CUC for infrastructure or converted the preferred stock back to CUC ownership. Watson and CEDA witnesses said a proposal that would have moved funds or forgiven obligations did not become law and that a sum previously identified for return—about $7.75 million—was used by the government last year to pay a 25% retiree pension obligation under a separate action, per presenters’ statements.
CUC and CEDA staff said the dividend proceeds are restricted by the original agreements to infrastructure uses while held by CEDA; CUC said it does not control where CEDA places those funds. CEDA chair Rebaliman and CUC staff urged that any legislative change returning funds to CUC include restrictions requiring the funds be used for infrastructure, so the money would continue to match the agreement’s original intent.
Senators requested that CUC and CEDA provide the committee full documentation of the 02/2009 preferred‑stock agreement, prior write‑offs and any legislative proposals or letters referenced during the hearing so the legislature can review the facts before any future bill is filed.
The committee took no binding action on the matter; the session was informational and the senators said further materials and possible follow‑up hearings could be scheduled.
Ending: Committee staff said they will compile the documents requested and that the hearing record will inform any future legislative steps. Senators said the topic will be reported to the full Senate.
The discussion matters because the preferred‑stock arrangement and its dividends affect CUC’s operating costs, CEDA’s infrastructure funding and past legislative attempts to redirect the funds. Committee members sought detail on how much has been paid and how those funds have been used or pledged for other obligations.
Frank Rebaliman, chair of CEDA, told the committee past legislatures had attempted to remove the dividend obligation and that the topic prompted comments from CEDA’s board. “House Bill 23‑52 attempted to write off the whole obligation,” Rebaliman said, describing why CEDA submitted written comments to the committee.
Betty Terlahi, chief financial officer for CUC, summarized the preferred‑stock terms used in conversation at the hearing: “The preferred stock was issued at 45,000,000 shares with a 2% flat payout,” she said, and explained how that converts into annual and quarterly payments. Terlahi said the payout formula equates to about $1,080,000 per year paid in advance in quarterly installments of $270,000.
CUC staff and CEDA representatives reviewed the loan history cited in the committee materials: an initial infrastructure loan in 1988 of roughly $50 million for power generation, a subsequent roughly $16 million for sewer and wastewater, and a later $5 million, which staff said collectively exceeded $70 million and was later converted in part to the 2009 preferred‑stock instrument.
Terlahi told senators CUC has paid into the preferred‑stock arrangement since issuance and gave a cumulative payment figure for the committee record; she stated a total paid to date of roughly $9.19 million and that the most recent quarterly payment was made Jan. 8 for the second quarter of fiscal 2025. A fiscal analyst on the Senate staff pointed to a CEDA letter that listed a different year‑to‑date figure ($13.5 million) and asked the presenters to reconcile the numbers.
Committee members also discussed a previously proposed bill that would have returned dividends to CUC for infrastructure or converted the preferred stock back to CUC ownership. Watson and CEDA witnesses said a proposal that would have moved funds or forgiven obligations did not become law and that a sum previously identified for return—about $7.75 million—was used by the government last year to pay a 25% retiree pension obligation under a separate action, per presenters’ statements.
CUC and CEDA staff said the dividend proceeds are restricted by the original agreements to infrastructure uses while held by CEDA; CUC said it does not control where CEDA places those funds. CEDA chair Rebaliman and CUC staff urged that any legislative change returning funds to CUC include restrictions requiring the funds be used for infrastructure, so the money would continue to match the agreement’s original intent.
Senators requested that CUC and CEDA provide the committee full documentation of the 02/2009 preferred‑stock agreement, prior write‑offs and any legislative proposals or letters referenced during the hearing so the legislature can review the facts before any future bill is filed.
The committee took no binding action on the matter; the session was informational and the senators said further materials and possible follow‑up hearings could be scheduled.
Ending: Committee staff said they will compile the documents requested and that the hearing record will inform any future legislative steps. Senators said the topic will be reported to the full Senate.
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