BY WAYNE CHARGUALAF
The Guam Economic Development Authority is looking to change a local law that GEDA Chairman David J. John said has been crippling investment and land development on the island.
“We’re essentially leasing nothing,” John said. “Even the things that we came to an agreement to…we came to agreement with the business owner quite some time ago, and it’s just sitting at the legislature.”
The law GEDA aims to change is Guam Public Law 32-40, which requires special permission from the Guam Legislature for any government agency to lease a commercial property for more than five years. John said the law is so burdensome that GEDA has has written proposed legislation to change it.
“Even a capital improvement in a restaurant doesn’t make sense if you’re only talking about a five-year lease,” John said. “Sen. Taitague was looking at pushing it to 10 years, but even at 10 years, you’re not going to put any kind of a capital improvement on a piece of land. You can’t even depreciate it.”
John said that although the legislation was originally written to maintain greater control over the quality of leases entered into by government agencies, it has proven to be a hindrance to investment.
The law specifies the legislature has 60 days to make a decision as to whether to grant a lease extension, otherwise the lease will be automatically approved. However, there is no time limit on how long the legislature can wait before it brings such a proposal to the floor. As a result, some requests have waited for more than a year before being considered. There are also concerns about releasing sensitive information, such as financials and business plans, in a public forum like the legislature.
To solve the problem, GEDA has drafted proposed legislation that would eliminate the five-year requirement and allow agencies to bring their plans before the legislature early on so that the legislature and stakeholders can address concerns any party might have about the lease. The legislature would also be able to impose stricter requirements on a lease sought by an agency that has performed poorly in previous land development efforts.
“We’re not here just to be negative,” John said. “We want to create an environment where everyone can work together to successfully develop the taxpayers’ land. The land for GEDA, for example, belongs to the taxpayers. The Chamorro Land Trust belongs to the beneficiaries of the trust. And as government officials and as fiduciaries, it’s our responsibility to get the best return for those properties that we’ve identified as properties that we want to lease out.”
GEDA plans to submit its proposed legislation by the end of the year.
One major project that could benefit from a change to P.L. 32-40 is GEDA’s plan to develop the technology industry on Guam. Still in its early stages, the plan aims to develop a tech ecosystem that would allow technology-based business to take root and flourish, whether they come from off-island or are homegrown, according to Melanie Mendiola, CEO of GEDA.
“The primary objective of the Guam Economic Development Authority is to grow our economy, and one of the biggest ways to do that is through improving the lives of the people of Guam by improving their pay,” Mendiola said. “Increased pay leads to increased demand, which helps to raise gross domestic product and improve the economy, and technology tends to be a very sustainable career path.”
The goal of GEDA’s plan is to create an environment that’s attractive to tech companies. Although Guam is already attractive for various reasons — such as its position near Asia and the fact it’s a U.S. territory — GEDA aims to make the island more attractive through multiple approaches. Namely, the utilization of tax incentives, such as the U.S. Economic Development Authority’s Opportunity Zones — of which Guam has 25 — developing Guam’s work force and easing a company’s regulatory path, essentially creating a “plug and play” environment where a tech company can easily transfer capital to the island and quickly open up for business.
“We’re really spending a lot of time in the planning because we want to do it right,” she said.
Growing a new industry relies on utilizing the available resources, Mendiola said. To create a successful first step, much relies on choosing well-considered early projects. One project that looks to have promise, according to Mendiola, is a sustainable data center.
“This is a great place to set up things like data centers, primarily because of redundancy,” she said. “So, rather than going only to Singapore, for instance, you can flow through Guam as well.”
One of the biggest hurdles for data centers, according to Mendiola, is power consumption, not only from the cost of bringing in fuel, but also due to the amount of energy needed to keep the data center cool.
“Power consumption is a huge concern from the perspective of cost as well as environmental impact,” she said. “So, we thought, ‘Why don’t we try to find ways to encourage energy efficient technology?’”
Because of this, GEDA aims to study the viability of making the data center solar-powered.
A data center also provides an opportunity for workforce development in the form of telecom training. According to Mendiola, local telecom companies have told GEDA that there is a dearth of technical professionals with advanced skills and credentials.
An earlier initiative, spurred by the Chamber of Commerce and Docomo Pacific, resulted in some training opportunities at Guam Community College.
“We believe that this is sort of the low-hanging fruit because this is taking the existing workforce we have and providing them a means to become more skilled and get paid more,” she said.
GEDA projects a $500,000 price tag for planning and research into the development of a data center, for which it will seek funding by the end of the year. Research will most likely be contracted out.
Mendiola said that for all the challenges facing the prospect of developing a new industry on Guam, one of the biggest is changing people’s mindset.
“Every time I talk about stuff like this … there’s always someone who says something like, ‘Well, you know, in Guam, this is the problem and that’s the problem and that’s the problem,’” she said. “I think it’s important for the people of Guam to have an open mind when it comes to things like technology and not automatically assume that it’s something Guam will never be capable of achieving. We have a lot of innovation here, a lot of entrepreneurial spirit, and we have the human capital to move mountains. Otherwise we’re just going to continue relying on the same things — military and tourism. In order to diversify our economy, it takes people to believe that it’s going to happen and behave as if it’s going to happen.” mbj