Ferry needs to run to pay debt, fed says
WAILUKU » A federal Maritime Administration official says that if the Hawaii Superferry defaults on its loan, U.S. taxpayers could lose $140 million.
Jean McKeever, the office's assistant administrator for business and work force development, said the Maritime Administration issued the Superferry a loan guarantee of $140 million, and the first semiannual payment of $3 million is due in November. McKeever said the Hawaii Superferry has to operate to pay off the debt.
McKeever testified yesterday on behalf of the Superferry, whose operation was halted in late August by a judge's order following a Hawaii Supreme Court decision that the state must do an environmental assessment for Superferry-related improvements at Kahului Harbor.
Maui Circuit Judge Joseph Cardoza extended yesterday his order halting operation and planned to continue the hearing through next week.
Cardoza halted the operation under a temporary restraining order carrying a maximum period of 20 days ending tomorrow. Yesterday, Cardoza converted the order into a preliminary injunction that covers the length of the hearing, which is scheduled to last through Friday.
McKeever also said the Superferry, because of its speed and cargo capabilities, is entering into an agreement that would allow it to be used as a military sea lift in the event of a national emergency.
Attorney Isaac Hall, representing groups critical of the Superferry, argued that Cardoza should disqualify McKeever's testimony about the financial impact of a Superferry loan default because the hearing's purpose was to evaluate its environmental impact.
But Cardoza said that in the interest of time, he was allowing McKeever's testimony, and made no ruling as to Hall's objection to the financial impact of a defaulted loan.
Under cross-examination by Hall, McKeever said no vessel in the sea-lift program has been called up to be used in a national emergency in the past 10 years.
McKeever said the Superferry is supposed to maintain assets of $58 million from the closing of its loan to the delivery of its second ship. She said the Superferry also had an escrow fund of $6.5 million in the event of default on payments.
McKeever said her office's worry was that the Superferry as a startup business does not have any other assets except the Superferry to generate income to pay debts.
Rob Parsons, environmental coordinator under former Mayor Alan Arakawa's administration, testified that he felt the Superferry should have prepared an environmental impact statement.
Parsons said he had expressed his opinion, including worries about the introduction of alien species to Maui, during state Public Utilities Commission review of the Superferry.
Leslie Kuloloio, a native Hawaiian and member of the Protect Kahoolawe Ohana, said he was worried that people from other islands would take resources from Maui that people rely upon for survival and their culture.
