Senators want answers on Port's leases

by Ken Quintanilla

Guam - The Legislative Committee on Transportation held an oversight hearing on Thursday night hoping to address issues and concerns regarding two property parcels within the Port Authority of Guam, Parcel 31 leased by Cementon Micronesia and Parcel 3 (referred to as "Hotel Wharf"). Both parcels have run into some rough waters in terms of development and generating much needed revenue for the agency.

According to committee chairman Senator Tom Ada, the two property parcels have excellent revenue generating potential, however, it seems that the port has had difficulty in realizing that. For the Cementon-leased parcel, the Port estimated about $1 million annually from potential revenues.

In 2009 the company issued a press release announcing plans for a bulk cement terminal that would provide support to the local construction industry and the construction boom anticipated with the military buildup. Although Cementon Micronesia had constructed a cement facility costing approximately $20 million, it has been unable to commence operations - because Mobil Guam would be impacted because of its master operational lease agreement with the Port on parts of the property. Evidently, there are issues regarding protecting Mobil's assets along with liability as well.

Vice Speaker B.J. Cruz asked, "Did any members of the previous board or employees contact Mobil before we made this lease agreement with Cementon and had them commit $20 million on-site where they were going to have a problem with the last...100 feet?" PAG chairman Dan Tydingco replied by saying, "I know the Legislature was involved with this particular endeavor, having approved something that's beyond a five-year lease, which I the limitation imposed up on the Port Authority of Guam with regards to any particular leases."

Tydingco referred to Bill 442 passed by majority vote by senators in the 30th Guam Legislature. He along with Port general manager Mary Torres assured the committee that they are working with Mobil to address the issues, adding they are not getting any pushback from the company and that Mobil conceptually agrees with the development.

As for Hotel Wharf, Port officials testified the rent that can be generated from this parcel of property was $237,000. Lawmakers were surprised as they're estimations pegged it generating about $1 million in rent. But both Torres and Tydingco reminded lawmakers that the Legislature in 2007 passed the Port's Master Plan, which limited the use of this particular property for fishing facilities and for dinner cruises.

But of particular concern to lawmakers was why the Port Authority of Guam did not place Hotel Wharf property on its notices issued in June and August of this year of areas available for lease, license or permit. It was in May 2008 a lease agreement with YTK was terminated, and based on the advice of the Port's legal counsel, Attorney Mike Philips, it appeared the agreement is legally questionable because it was without legislative approval.

Senator Ben Pangelinan, however, remained concerned that there may be an ulterior motive in taking hotel wharf off the inventory of properties for the lease.

According to Torres, the reason Hotel Wharf was taken off the list of available properties for lease was so that a thorough assessment could be conducted on its structural integrity. "It was a management decision to do our due diligence so that we understood what product we were putting out there. And what its condition was because it had been in a state of disrepair," she said.