Richard Inman Atlanta Ga.-based managing principal of Iron Bridge Capital Partners and principal of Pruvient Energy spent Nov. 4 5 6 8 and 9 in negotiation with the government of Guam.

Merchant Capital — the financier — with Iron Bridge reportedly as its contractor — was selected as the leading bidder for the finance-design-build-maintain-lease-back of government of Guam schools.

Marc A. Gagarin chief engineer at the Department of Public Works and non-voting chairman of the government’s negotiating team told the Journal on Nov. 9 “We are now at the final stage of the negotiations.”

International Bridge Corp. was the named contractor in two bids by different financiers — Municipal Capital Markets Group of Dallas and Capital Projects Finance Authority of Fort Myers Fla.

A facilities committee including representatives from the Department of Public Works the Guam Power Authority the Guam Economic Development and Commerce Authority and the Department of Education ranked the bidders.

International Bridge Corp. submitted what Gagarin called a “letter of concern.” Gagarin said the department has responded but declined to give further details. “If the protest has any merit we respond to it accordingly — we agree to their protest or deny it in proper consultation with the attorney general ” he said.

Robert Tolkes vice president said IBC had verbally been told an award had been made when it was IBC’s understanding that the government would negotiate for three days with the lead-ranked bidder and if unsuccessful would move on to the next bidder. IBC he said submitted what he termed “a protest” to the Department of Public Works on Oct. 27. Receipt was acknowledged on Nov. 2. Tolkes said “We had our attorney submit a letter. If that is an award then this is a protest.” He said the government had 14 days to respond. “We don’t know what they’re doing now. We haven’t heard from anybody.”

Joseph W. Duenas director of the Department of Public Works told the Journal “We’re going to sit here and negotiate with this group [Pruvient] and if the government feels we have the best value we’re going to move ahead.”

Following successful negotiation he said “We give an intent to award then there’s a 14-day period for a protest.” With a protest he said: “If it’s without merit I will reject it. It’s then the option of the company to take it to court.”

He said municipal leasing was the best way for the government to ensure continued maintenance at schools and government assets. “The government’s biggest problem is our inability to take care of the facilities we have. The great thing about the municipal lease plan is we are asking a private company to come in build facilities and lease them back to us over time. The government doesn’t have to borrow money; it doesn’t increase our debt ceiling.”

Municipal leasing he said was not a new concept on the U.S. mainland. “It allows Guam to move forward with capital improvement projects — such as the new hospital — with pre-privatized maintenance of these facilities. As the landlord the private company will maintain and be responsible for the presence of maintenance staff.”

The municipal leasing plan on which the RFP is based allowed for the construction of up to six new schools identified in the RFP and one — J.M. Leon Guerrero Elementary School — be refurbished as a middle school.

The U.S. Department of the Interior approved the use of $6.1 million annually in Compact Impact funding for the construction. Duenas said “That could always be refinanced somewhere else if the government wished.”

The GovGuam negotiating team was composed of Gagarin as chairman; Andreas “Andy” Jordanou insurance commissioner at the Department of Revenue and Taxation; Juan Flores director of the Department of Education; Michael A. Bamba industry development officer at the Guam Economic Development and Commerce Authority; Tina Garcia public finance officer at the authority; Liberty Perez engineering supervisor at the Department of Public Works; Duenas; and John Dela Rosa special assistant to the governor.

Inman met with the Journal on June 17 on a previous visit to discuss the RFP.

The lease-design-build program Inman said “would maintain schools more efficiently than the government of Guam.”

His facility group in Atlanta Inman said included three former school superintendents but the RFP would provide local construction opportunities. Under the RFP the successful financier hires its own contractor and subcontractors. “We have a team of subcontractors that is 100% local. They are all people who have built schools here but not necessarily the usual suspects.”

Journal sources said companies that Iron Bridge could subcontract with include AIC Orion Reliable Builders Rocky Mountain Prestress and Tumon Corp. These particular contractors are understood to have experience in school construction. International Bridge Corp. had not intended to use sub-contractors. “We sole perform ” Tolkes said.

Gerald S.A. Perez administrator of the authority said “The selected developer under the school lease program will be required to be licensed on Guam pay Guam taxes and utilize local architects and contractors.” He said the leasing program had the potential to inject millions of dollars into Guam’s economy over a two-year period.

The RFP is understood to have a proviso that if the agreement was defaulted on the builder had the right to evict the tenant the Department of Education.

Merchant Capital whose executive James Wilson accompanied Inman to Guam in June was Inman said a public and private capital investment bank.

Merchant concluded a $3 million leasing program for Winette County in Atlanta Inman said. “It was for a smaller system but AA rated. Guam is not AA rated.

“This is not debt it’s a lease. Yes the person that constructs the schools has the right to evict in a leasing program — but banks are very uncomfortable with annual appropriations risk — the determination of analysis in underwriting comes from the essentiality of the product to the lessee.”

Merchant had funded at least 30 municipal leasing programs Inman said including schools police departments and a variety of public buildings.

Inman’s assessment of the growth of other island populations was that it would continue. “That population seems to be growing and in my opinion will continue to grow. Lease financing is a creative way to get some schools built on Guam.”

Duenas said after the award due at any time as the Journal went to press he anticipated six months for architectural and engineering work before ground was broken on construction of the schools. “We hope to see them all start at the same time.”

The timing was right Inman said for Guam to improve its products because of the upturn in the economy. “It requires some creative thinking and some creative financing techniques.”

Inman is by profession an investment banker and was president of Tucker Federal Bank in Atlanta with $2 billion in assets. Tucker Federal was sold to the Royal Bank of Canada but prior to that made the loan to the builder of the power plant. Pruvient Energy is presently managing the Tanguissan Power Plant. Inman attended the Washington D.C. investment conference in September 2003 to hear of new investment opportunities in Guam.

He may be interested in other opportunities in Guam. “My first foray here was Tanguissan. I started seeing opportunities here on Guam. At first I was much more focused on real estate assets but there are some interesting opportunities here in more of a public/private arena in view of what the military is going to do here.”

Inman met with Simon A. Sanchez II general manager of Guam Dry Cleaners and chairman of the Consolidated Commission on Utilities and Frank S.N. Shimizu president of Ambros and member of the commission during his June visit. “I have had a lot of experience with public/private partnerships ” Inman said. I see a lot of opportunities with public/private partnerships to improve the infrastructure of Guam.” He described the Guam Power Authority privatization as “a challenging project.” MBJ