Guam OPA Investigating Tiyan Campus Agreement

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Audit will compare purchase with costs of building other schools

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, Jan. 7, 2014) – Guam Public Auditor Doris Flores Brooks' office has launched an audit into tax credits granted to Core Tech International and the construction contractor's recent deal that could cost the government of Guam $160 million.

The Office of Public Accountability (OPA) had planned on auditing tax credits in general to get a picture of how much the government of Guam has approved outside the scope of the qualifying certificate program, Brooks said Friday. The public auditor's office last year released audits related to qualifying certificate program tax credits.

There hasn't been a comprehensive look at the amount of all tax credits GovGuam has granted over the years, and to what extent those tax credits have affected the local government's cash flow, she acknowledged.

And when questions were raised over GovGuam's recent purchase of Core Tech International land and buildings at Tiyan for a central high school, the Guahan Academy Charter School (GACS) and Guam Department of Education (DOE) offices, the public auditor said her office decided to split its audit into two.

"We were planning to initiate the audit and then this came up ... we are going to do the (tax credits audit) in part A and part B -- with part A being the Core Tech" tax credits, said the island's elected public auditor.

Brooks said her office has so far looked at previous lease agreements involving GovGuam and Core Tech, and has yet to begin scrutinizing the purchase agreement. Core Tech has received close to $19 million in tax credits for GovGuam's use of its Tiyan property as a public school interim campus.

Gov. Eddie Calvo and Core Tech Chief Executive Officer Conchita Bathan signed the first purchase agreement for Tiyan property.

Bathan couldn't be reached for comment yesterday through her office and cell phone.

Bathan signed the purchase agreement on Dec. 26, 2013, and the governor signed it on Dec. 30, 2013. That purchase agreement still reflected the earlier purchase plan with a bigger price tag of $254 million, which included the construction of a new central high school and Guam Department of Education offices.

Later on Dec. 30, 2013, the governor and Core Tech President Ho S. Eun signed a revised agreement that does away with the new construction projects and lowered the price tag to $56 million in cash, or $160 million in tax credit installments, governor's Communications Director Troy Torres has said.

Brooks said the audit will include comparing the Core Tech purchase with the costs to build and finance other Guam public schools in recent years.

John F. Kennedy High School cost $65 million up front. Through installment repayments, at $6.7 million every year for 30 years, the cost could add up to $201 million, Pacific Daily News files show.

Liguan Elementary, Adacao Elementary, Astumbo Middle and Okkodo High schools all were built under a single agreement that also used annual rental payments to pay back investors. Annual payments for the four schools started in 2008, and will cost about $122 million when fully paid off, Pacific Daily News files show.

Core Tech property

GovGuam first leased a 24.7-acre property from Core Tech in 2009 to temporarily house JFK High students. After the JFK High students moved, Untalan Middle School students moved in.

Gov. Eddie Calvo a week ago signed an agreement in which the government of Guam agreed to purchase Tiyan land and buildings, including renovated former military barracks and offices.

Henry Taitano, Guam Economic Development Authority Administrator, also signed the purchase agreement, certifying the availability of funds. Taitano signed below the language in the purchase agreement stating the availability of "Guam Economic Development Authority tax credits in lieu of cash payments."

The agreement states Core Tech can assign the tax credits to other entities.

Core Tech bought the Tiyan property for $11 million in 2007. GovGuam owned the property in 2000 when the military turned it over to the local government, but the local government distributed Tiyan land parcels to certain local families. A local family sold its property to Core Tech.

Airport signed off

Not all the property the governor had just agreed to purchase belongs to Core Tech. Of the $160 million price tag, $23 million would go toward acquiring an "exchange license" agreement for GovGuam to use Core Tech's leased property that belongs to the A.B. Won Pat Guam International Airport Authority, documents show.

Core Tech and the governor signed a separate agreement several days ago, after the Guam attorney general's office, in a legal review, raised concerns that Core Tech doesn't have the title showing it owns part of the property that GovGuam is acquiring.

The additional property GovGuam is acquiring is called "Tiyan 3," and is for the Guahan Academy Charter School, documents show.

Tiyan 3 "is not owned in fee simple by landlord," according to the third amended lease agreement, signed by Core Tech on Dec. 26, 2013, and the governor on Dec. 30, 2013. "The fee simple owner is the A.B. Won Pat Guam International Airport Authority," according to an amended lease agreement between the governor and Core Tech. Core Tech leased the property from the airport for 30 years, the agreement states.

The airport agency's Executive Manager Chuck Ada signed a document stating the airport agency consents to the agreements between Core Tech and GovGuam.

Brooks acknowledged it would be ironic for GovGuam to buy property it used to own.

Purchase questioned

Certain lawmakers have questioned the purchase.

Attorney General Rapadas said Friday the governor has the legal authority to make the purchase, but whether the acquisition was prudent -- is a policy call that's not up to the attorney general to decide.

Brooks said there's no question Guam needs a new central high school.

But it's unclear whether this acquisition was a good deal for the local government, she said.

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