GovGuam’s Tiyan Purchase Could Cost Up To $160 Million

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GovGuam’s Tiyan Purchase Could Cost Up To $160 Million Initial price doesn’t include interest, insurance and maintenance

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, Jan. 1, 2014) – The price tag for the local government's purchase of Tiyan property for a future central high school, the Guahan Academy Charter School (GACS) and the Guam Department of Education (DOE) central office and a warehouse could add up to $160 million.

The smaller price tag of $56 million that the governor's office released on Monday excludes interest payments and maintenance and insurance costs every year for up to 25 years. The local government is paying property owner Core Tech International in tax credits, but the price also accrues 7.19 percent in annual interest.

With insurance and maintenance factored in, and assuming it takes the government of Guam 25 years to pay off the purchase, the amount would end up costing $160 million, details in the purchase agreement show. Attorney General Leonardo Rapadas released the documents following a Freedom of Information Act request by the Pacific Daily News.

The governor's office had previously planned for a $254 million purchase of Tiyan property that would have included the construction of a new gym, a new Guam DOE central office and other new facilities.

Gov. Eddie Calvo scrapped the new construction part of the purchase in response to criticism from certain members of the Legislature. Certain lawmakers have said there are other ways to ease crowding at the island's public schools, besides buying a retrofitted former military barracks and office complex.

The governor now leaves it up to lawmakers to decide whether they want the new construction projects to be part of the purchase, said governor's Communications Director Troy Torres. The governor signed the purchase agreement on Monday, one day before an option to purchase pieces of property from Core Tech International would have expired.

GovGuam had been leasing the properties from Core Tech since 2009, first as a temporary campus for John F. Kennedy High School. When JFK High students vacated Core Tech's Tiyan property, Untalan Middle School students moved in.

The Calvo administration announced Monday that when Untalan Middle students leave, Tiyan will be used as a central high school next school year.

Superintendent Jon Fernandez said yesterday the education department would spend the next few weeks thinking over which students in the central villages of Guam would be moved to Tiyan next school year.

Fernandez said he wasn't part of the Tiyan purchase negotiations.

Speaker Judith Won Pat yesterday sent a letter to the governor calling for a comprehensive strategy to address crowding at public schools islandwide.

"It is time for us to come up with long-lasting solutions for our students," Won Pat wrote.

Sen. Ben Pangelinan, chairman of the legislative finance and budget committee, questioned why GovGuam would purchase property that once was a military barracks and complex when a lot of the island's public schools can be repaired for $90 million. That figure came from an Army Corps of Engineer assessment released last year.

Core Tech bought Tiyan property from a local family for $11 million in 2007. Military base realignment and closures led to the turnover of vast parcels of property in Tiyan, near the international airport, to the Guam Ancestral Lands Commission in 2000. The ancestral lands commission turned over the properties to local families.

Pangelinan said he's still reviewing relevant laws in connection with his plan to possibly go to court and seek a ruling to invalidate the administration's purchase of property from Core Tech.

In December 2011, the Calvo administration agreed to delete an option to end the lease with Core Tech because the company had made significant improvements to the property, the governor has said.

In addition to buying property from Core Tech, GovGuam, in the purchase agreement, also would end up paying the company at least $8 million for property that's owned by a local government entity -- the A.B. Won Pat International Airport Authority Guam.

Airport agency property

The airport agency agreed to a 30-year lease with Core Tech in 2012. Part of the airport-owned property is what GovGuam now is paying Core Tech for, for the Guahan Academy charter school, documents show.

GovGuam's leasehold license acquisition of the Guahan Academy charter school location also will cost 7.19 percent interest each year over 25 years. The bill becomes $23.8 million if it takes GovGuam that long to pay it.

GovGuam is paying Core Tech in tax credits for the purchase of the Tiyan property, but Pangelinan said Core Tech can sell the tax credits to other businesses that owe taxes to the local government, so there would be a drain on tax collections.

GovGuam has granted Core Tech close to $19 million in tax credits for the years that the company's property has been and remains used as temporary public school campuses, lease documents show.

Core Tech purchased Tiyan with the intent to use it as a worker housing complex at the height of expectations for a military buildup boom, a federal Environmental Impact statement says.

The boom hasn't happened, prompting Core Tech to lease -- and now sell -- the property to GovGuam.

"It's the ultimate (property) flip," Pangelinan said.

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