JFK High to cost $157M in 30 years
Thursday, October 27th 2011, 12:00 PM ChST
Guam - Construction of the new John F. Kennedy High School may be complete, but island residents have been left to foot quite a hefty bill. What does the school really cost island taxpayers?
For the next 30 years, the Government of Guam is signed to a lease financing agreement with Capital Projects Finance Authority, the investment banker who secured the funds to build the new John F. Kennedy High School campus. Guam Economic Development Authority deputy administrator Christina Garcia talked about lease financing, saying, "A private company leases a property from the Government of Guam - they build the school and they lease the school back to the government."
Had the government borrowed directly without the lease financing agreement, the debt would account toward our debt ceiling. According to Garcia, Liguan Elementary School, Adacao Elementary School, Astumbo Middle School, and Okkodo High School were also built under these terms. "This arrangement worked well for us because it enabled us to secure this public/private arrangement to build the school, to have it maintained for this 30-year period," she said.
According to GEDA's figures, acquisition and construction of the four campuses totalled $64.7 million. "As far as the cost breakdown, there were hard costs of $45.2 million of that $64.7 million, and this constituted the actual construction costs: labor, material, equipment, design and general expenses, fees, insurance, bonds and taxes. And then the balance of that, which we are referring to project costs, this included capitalized interests and reserves," Garcia stated.
But when all is said and done, in 30 years the total cost for the new Upper Tumon campus with interest will actually total $157 million. Garcia admits it may have been cheaper for GovGuam to build the new campus itself, but she says the campus is guaranteed to be well-maintained for the next 30 years because the government pays an annual $6.7 million for insurance, maintenance, and capital replacement reserves.
While it may cost more for residents, Garcia says in 2040 the campus will be returned to GovGuam in the same condition - if not better.