GovGuam’s Tiyan Purchase Could Hamper Future Projects

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GovGuam’s Tiyan Purchase Could Hamper Future Projects Senator warns overpayment holds consequences for public schools

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, Jan. 9, 2014) – While the Calvo administration has made history as the buyer of the highest-priced, industrial-zoned property that sold locally in recent years, Guam senators said the price tag leaves a different legacy.

The $56 million to $160 million price for the property for school campuses -- consisting of renovated former military barracks and offices -- would hinder the local government's ability to pay for future projects for other schools that remain crowded and have waited years for repairs, said Democratic senators.

GovGuam's purchase, at $160 million payable over 25 years, exceeds all industrial-zoned property sales on Guam between 2007 and 2012, which total $113 million, according to the appraisal report submitted to the Guam Legislature. In the last three years, $43 million worth of industrial-zoned land sold for $43 million, according to an appraisal report submitted to the Legislature last year for another Tiyan property purchase.

"Overpaying for these properties has real consequences for every public school and every public school student on island," said Sen. Michael San Nicolas, chairman of the legislative committee with oversight over the airport agency. He was referring to the properties GovGuam is buying from Core Tech International for school campuses.

The A.B. Won Guam International Airport Authority holds the caretaker role for 1,417 acres of former military land that was turned over to the local government for free in 2000. Core Tech sold property that used to be part of the 1,417 acres.

San Nicolas and Sen. Ben Pangelinan, chairman of the Legislature's finance and budget committee, said they're considering legal options to stop the Calvo administration from continuing with the deal.

The governor and Core Tech signed the purchase agreement on Dec. 30, 2013.

GovGuam is paying, in part, for property under which Core Tech International holds ownership title. Another part of the purchase, worth $8 million up front or $23.8 million in installments, involves property leased by Core Tech from the airport agency, rent-free for 30 years.

The airport agency stated yesterday Core Tech had spent $4.5 million to clean up three of the airport's former military buildings. The buildings had "environmental problems" and needed cleanup and renovations, and that's part of why Core Tech holds a 30-year license to use airport property for free, according to the airport agency. The airport also obtained a reciprocal license to use 2,802 square meters of Core Tech property for a parking lot and drainage pond for an adjacent building. The adjacent building used to house the Guam Customs and Quarantine Agency.

Speaker Judith Won Pat yesterday wrote to the governor saying her office has received daily calls from constituents who question the Tiyan purchase deal.

"I was perplexed to learn that we will be leasing or purchasing a license from Core Tech for these buildings, because they belong to the airport," Won Pat said.

She said the Core Tech deal involving airport property does not provide a net economic benefit for the public.

The airport agency, in a statement, said the airport agreed to let Core Tech "sub-license" the airport portion of property being purchased by GovGuam to "allow Core Tech to recoup its capital investments."

Won Pat said she wants to see documents showing that the buildings now housing the Guahan Academy Charter School are no longer contaminated. The airport agency, in a 2012 agreement with Core Tech, acknowledged that the buildings it is allowed Core Tech to use "are decrepit and contain substantial environmental problems."

The Navy gave the airport $10 million in 2000 toward the environmental cleanup of Tiyan property. Asbestos and lead-based paint were among the environmental issues GovGuam inherited for receiving the former military buildings, Navy documents show.

The Calvo administration has stated it made the purchase to ease years-old crowding at George Washington High School and provide a home for the 500-plus student population at the Guahan Academy charter school.

The Guam Environmental Protection Agency has stated that Core Tech had removed all environmental hazards by 2009, for the buildings and land that housed John F. Kennedy High School and Untalan Middle School interim campuses.

Republican Gov. Eddie Calvo and Core Tech entered into an agreement on Dec. 30, 2013 to exercise the local government's option to buy property near the international airport in Tiyan, which had been under lease as a temporary campus. Under an earlier version of the agreement, GovGuam would purchase Tiyan properties from the corporation for at least $87 million if paid out right, or $254 million in tax credit installments for 25 years.

The higher price included new construction of a central high school and Guam Department of Education facilities. But when faced with initial questions from Democratic senators, the governor's office announced the purchase had been reduced to $56 million up front, or $160 million in installments at 7.19 percent interest each year for 25 years, the governor's office has stated.

The Guam attorney general's office had not received the revised agreement that reflected the lower price tag, but the governor's office said it had been forwarded to the AG's office days ago.

Won Pat yesterday wrote that the governor's office should formally transmit to the Legislature the final purchase agreement. The governor's office has said the only difference between an earlier version and the revised agreement is the removal of the costs for new construction projects.

Two recent appraisals for other Tiyan property not involving Core Tech show depressed values of Tiyan land parcels because of the military buildup's delay and an abundance of former military land being put up for sale by ancestral landowners.

The number of sales for industrial land peaked in 2008 with 25 industrial land sales totaling $26.9 million, according to an appraisal last year for Tiyan land that would be used for a highway connecting Route 8 and Airport Road.

Sales activities for industrial land have decreased significantly in recent years because of the military buildup's delay, according to the appraisal report.

Core Tech had planned to use the Tiyan properties initially for housing 1,800 construction workers for military buildup projects, according to the company on its website.

Core Tech asked for rezoning of Tiyan properties from agricultural to light industrial, and the Legislature and the governor approved the request last year.

Between 2007 and 2008, industrial land sales peaked in 2008 , with $27 million in total sales, according to the appraisal report.

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