Short Title: An act to add new §§ 12015.5 (I) and (J) of Chapter 12, Title 12, Guam Code Annotated, relative to the creation of a Affordable Housing System Development Charge (AHSDC).

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Hagåtña, Guam: On Friday, May 10, 2013, Bill 112-32 (COR), an act to create an Affordable Housing System Development Charge (AHSDC), was introduced by Senators Tom Ada and Rory Respicio. “Bill 112-32 proposes to make the System Development Charge less burdensome for those who are building low cost and affordable homes by assessing a SDC fee that is based on the total cost of construction or sale price and changing the timing of when the SDC fee has to be paid,” Sen Ada stated. He also added that “Bill 112-32 is not income based and does not eliminate the System Development Charge, as has been proposed by others”.

Currently, all new water and sewer connections to the Guam Waterworks Authority’s (GWA) system, for Residential dwellings, are assessed a one-time fee of $2,126 for water connections and $3,474 for sewer connections (if the area has sewer services). The fee is assessed by GWA to recover a portion of the costs incurred by GWA to accommodate new demands for water and sewer services that arise from the new development.

Bill 112-32 will make the AHSDC applicable to Residential units that have a total value of up to $180,000 for land and construction, or in the case of ready-to-occupy housing developments, the sales price. Additionally, it will change the current requirement that the SDC be paid at the time construction begins, to requiring payment at time of occupancy. “This deferral of the SDC payment to the back end of the construction project is beneficial because maximum capital can be invested at the early stages of construction to bring the project to completion,” stated Senator Respicio.

“Today, SDC’s are an industry norm. Developers pay a fee to mitigate the cost of expanding the system,” said Senator Tom Ada. “But they are also assured that such collected charges will only be used for system expansion projects such as developing new water wells, constructing new pumping stations, and increasing throughput at wastewater treatment facilities,” he continued.

Created by Public Laws 19-47 (in 1988) and 26-164 (in 2003), GWA’s System Development Charge was implemented as a means to protect existing ratepayers while allowing developers to fairly fund their own growth; both pieces of legislation received unanimous bi-partisan support in their passage. The System Development Charge is commonly used throughout the U.S. and other developed countries in order to insure there is enough water and sewer capacity to serve community growth and to make “growth pay for growth,” Senator Ada said.

The SDC for new GWA connections is currently set at a rate dependent upon the size of the meter serving the customer. For the typical home construction, which commonly requires a 5/8″ x 3/4″ size meter, this amounts to an SDC charge of $5,600 for both water and wastewater service. “Since its adoption and implementation, the SDC has served its purpose well,” said Senator Tom Ada, “but we now have an opportunity to further develop the SDC to incorporate a graduated charge that will encourage the development of affordable housing.”

As envisioned in Bill 112-32, single-family home construction projects costing less than $180,000 (inclusive of land purchase costs) will have the option of paying a fee equal to 3% of the cost of the project. In areas where there is no sewer services, the fee would be 1.2% of the project cost. This fee, the Affordable Housing System Development Charge (AHSDC), will serve as an alternative to the traditional flat rate of the SDC.

As an example, for a family building a $70,000 home on property costing $30,000, the AHSDC for connecting to water and wastewater service with GWA will be $3,000 ($100,000 x 3%), as opposed to the $5,600 flat rate currently required by the SDC. For a family building a $180,000 home (land included), the SDC fee would be $5,400. “As a community, I believe we can all agree to the economic and social benefits of encouraging the development of affordable housing,” said Senator Tom Ada. “I also believe that because the GWA system is a community asset, and because the cost of expansion is never free, we have a duty to invest in the system to the best of our abilities;” continued Senator Ada. “The proposed AHSDC is the best means of protecting existing ratepayers while also allowing each new customer to pay their fair share to the system to the best of their abilities.”

Bill 112-32 also proposes allowing for SDC’s levied on the construction of single-family dwellings to be collected upon issuance of an occupancy permit, as opposed to the current practice of collecting upon issuance of a building permit. This shift will allow housing developers to free up additional funds during construction, while still ensuring that GWA will receive the full SDC amount due once the home is completed and receives its occupancy permit.

And lastly, “for the homebuilder who chooses the option of taking advantage of the 15-year amortization of the SDC, Bill 112-32 will enable the new homeowner to initially pay a smaller down payment instead of the flat $1,000” Sen. Ada stated. He also added that “using the example of the homebuilder who constructs a $100,000 home (land included) and is assessed a $3,000 connection fee, he would only have to pay $600, or 20% of the assessed SDC fee.”

“We’ve listened to the concerns of the community and worked closely with the Consolidated Commission on Utilities and the management of GWA in crafting this legislation,” said Senator Tom Ada, “and I am optimistic that passage of Bill 112-32 will go a long way towards improving the availability of affordable housing on Guam.”

A copy of Bill 112-32 (COR) may be downloaded both here and from the Guam Legislature Website, at www.GuamLegislature.com. For any additional information, please contact the Office of Senator Tom Ada at 473-3301.

Hagåtña, Guam: On April 9, 2013, On Tuesday, April 9, 2013, Senator Thomas C. Ada introduced Bill 86-32, an act to waive the sovereign immunity of the Port Authority of Guam, as requested by the Port’s General Manager and approved by the Board of Directors, according to a memorandum dated April 5, 2013.

In September 2012, the Guam Economic Development Authority issued a Request for Proposal for a commercial lending institution to finance service life extension repairs on the Port’s wharf, and procurement of a financial management system and top lifter, with the total amount not to exceed Ten Million Dollars ($10,000,000). As a condition of the loan terms, the Bank of Guam requested the Port to waive its sovereign immunity from any suit or action in relation to the commercial loan.

Senator Ada states, “While I am pleased that the Port has commenced the process to perform critical repairs to the Port’s wharfs, the Port must also identify a sustainable pledge of revenues by reducing operating expenses or petitioning the Public Utilities Commission (PUC) to increase the Port’s current tariff rate structure. Furthermore, the PUC must approve the terms and conditions of the ten million dollar loan ($10,000,000) prior to the Port executing the loan. I hope that the Port acts expeditiously to address these matters, considering 90% of the islands consumables traverse the Port’s wharfs, which require critical repairs to prevent any disruption of service.”

A copy of Bill 86-32 (COR) may be downloaded both here and from the Guam Legislature Website, at www.GuamLegislature.com. For any additional information, please contact the Office of Senator Tom Ada at 473-3301.

Short Title: An act to add §10238 to Article 2, Chapter 10 of Title 12 Guam Code Annotated to authorize the Jose D. Leon Guerrero Port Authority of Guam (PORT) to waive sovereign immunity to satisfy a prerequisite for approval of a $10,000,000 commercial loan.

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Hagåtña, Guam (Tuesday, March 26, 2013): I want to thank Attorney General Leonardo Rapadas and Assistant Attorney General Robert M. Weinberg for this thorough and expedient review of my request regarding this matter.

I am encouraged by this opinion upholding my belief that the terms of two members of the Port Authority board have already expired. I am pleased that the opinion acknowledges my stance that the appointments of the board members must follow the port’s enabling legislation and that they can’t just be appointed to random three-year terms.

I also felt that the section on the treatment of the previous board members is very critical as it recognizes that the Port enabling legislation incorporated staggered terms in order to avoid political interference with the board and that Governor Calvo’s termination of the previous board members was not legal.

Although the opinion falls in line with my review that two members have expired I do have a difference of opinion on when their actual terms expired. According to our review of this matter, two of the board members terms actually expired in February of 2012, which includes the extension of 90 calendar days and three legislative days.

I am overall pleased with their opinion that reflects my view of this matter and the expired terms of the two board members, but based on the differing expiration dates I plan on reaching out to the Attorney General to request a meeting to go over the differing calculations.

Based on this opinion, I am renewing my request of the Governor to appoint new board members to the Port Authority Board of Directors and forward their nominations to the Legislature.

Hagåtña, Guam: On March 18, 2013, Senator Tom Ada, Vice Speaker Cruz, and Senator Rory Respicio introduced Bill 69-32, an act to promote competition and establish a standard for commercial contracts entered into for public real property or facilities of the government of Guam.

Currently, there is no uniform standard in the law relative to the duration of lease contracts for public real property or facilities, and government agencies may enter into contracts for a term of ten (10), even sixty (60), years. Other agencies, such as the Port Authority of Guam and the Guam Memorial Hospital, are explicitly limited to five-year lease contracts, unless allowed otherwise by the Legislature.

Bill 69-32 seeks to establish a five (5) year standard for the duration of leases, inclusive of extension and renewal options. Senator Ada states, “long term contracts for a term beyond five (5) years should only be entered into to amortize costs associated with substantial capital improvements or other investments that were solicited to improve the services, capabilities and performance of the contracting agency by a quantifiable sum.”

Although Bill 69-32 will prohibit government agencies from entering into leases for terms longer than five (5) years, the Governor, or in case of an autonomous agency, the board of directors, may grant exceptions by determining there exists a need for an “exceptional term contract” and filing a “Determination of Need” prior to any solicitation for a contract term of more than five years. Senator Ada states, “There are circumstances that justify the need for a contract term greater than five (5) years. Most recently the Legislature approved a contract for a lease term up to thirty (30) years after considering the initial investment of twelve million dollars ($12,000,000) by the developer, proposed capital improvements and the creation of new jobs and economic activity.” Bill 69-32 seeks to promote competition in the procurement of long-term contracts and ensure “exception term contracts” are only entered into after being reviewed comprehensively by the government of Guam.

A copy of Bill 61-32 (COR) may be downloaded both here and from the Guam Legislature Website, at www.GuamLegislature.com. For any additional information, please contact the Office of Senator Tom Ada at 473-3301.

Short Title: An act to add a new §5351 to Chapter 5 of Title 5, GCA, Relative to the Duration of Commercial Leases for Public Real Property and Related Facilities.

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A copy of of the Public Hearing Notice, including the full Agenda, may be found here.

Hagåtña, Guam: On Monday, March 4, 2013, Senator Tom Ada introduced Bill 61-32 (COR), an act to adopt the Guam Tropical Energy Code.

The adoption of an energy conservation code for Guam’s buildings is essential in view of the fact that, according to national studies, buildings alone consume, on average, about 70% of electricity produced. The Guam Tropical Energy Code sets a baseline standard that addresses the energy-efficiency requirements for the design, materials, and equipment used in nearly all new building constructions and renovations.

“It is encouraging to note that current industry techniques enable construction of buildings that comply with energy codes, at minimal increase in first cost. Ultimately, building owners benefit with reduced energy bills and a comfortable healthy home or business facility,” said Senator Tom Ada.

The Guam Tropical Energy Code is the product of a collaborative effort between the Guam Building Code Council, the Guam Energy Office, engineers and experts in the field, and the Office of Senator Tom Ada. The standards will apply to new construction on Guam, as well as renovations of existing structures significant enough to require building permits.

The Guam Tropical Energy Code is the product of a collaborative effort between the Guam Building Code Council, the Guam Energy Office, engineers and experts in the field, and the Office of Senator Tom Ada. The standards will apply to new construction on Guam, as well as renovations of existing structures significant enough to require building permits.

“By implementing standards that emphasize the use of sound energy conservation technology, our community will realize long-term savings through lower power costs and reduced energy waste, without significantly impacting the cost of construction,” said Senator Tom Ada. “By extension, the Guam Power Authority may be able to burn less fuel and reduce the amount of money going off-island toward the purchase of oil”, added Senator Tom Ada.

“The Guam Tropical Energy Code is the result of years of hard work by a number of local organizations and experts,” said Senator Tom Ada. When P.L. 30-199 adopted Guam’s building and fire codes in September of 2010, it stipulated that the newly created Guam Building Code Council will also develop a building energy code. The Council began by reviewing the Model Tropical Energy Code, which is a federally funded energy conservation code based on widely used industry standards, and provided for use by tropical jurisdictions – namely Hawaii, American Samoa, Saipan, Puerto Rico, and Guam – as a starting point from which to develop unique, localized energy codes.

With the aid of the Guam Energy Office, the Guam Building Code Council met regularly and collected extensive community input on the proposed energy code. In addition to regular working group meetings, the Council also held five advertised public meetings during which feedback was collected from contractors, real estate professionals, engineers, architects, and the general public. Articles were also written about the proposed energy code in local media. During this period of extensive outreach, submitted feedback was continuously evaluated and incorporated into the proposed energy code, and then disseminated to the community for further feedback.

Through this process of community input and revision, impractical requirements were removed (commercial door air curtains), and unnecessary requirements reduced (high R-value roof insulation in certain circumstances). A few new options and requirements were added to help systems perform better in Guam’s unique environment (refrigerant piping wrapping, duct insulation). After months of extensive discussion, the revised Model Tropical Energy Code was finalized and renamed the Guam Tropical Energy Code.

The Guam Tropical Energy Code (GTEC) was approved by the Guam Building Code Council on January 8, 2013, and, in accordance with P.L. 30-199, subsequently forwarded to the Guam Legislature for adoption in law. Bill 61-32 is the vehicle used to introduce the energy conservation code for adoption by the Legislature.

The crafting of the Guam Tropical Energy Code (GTEC) would not have been possible without the contribution of time and expertise from a number of local experts and members of the public who provided input. Contributors included the Guam Energy Office, Guam Energy Task Force, Guam Chamber of Commerce, members of the Guam Building Code Council and the organizations the Council members represent – DPW, GFD, Guam Contractors Association, Guam Society of Professional Engineers, Guam and Micronesia Chapters of the American Institute of Architects, and the Guam Association of Realtors. “From the outset, the Guam Building Code Council recognized the importance of gaining widespread support for this legislation,” Senator Tom Ada said.

If adopted by the Legislature, the effective date of the new building energy code will be a six-month period after enactment. The transition time is needed for local engineering and construction firms to familiarize and begin incorporating the new standards.

Once the six-month grace period passes and the new energy conservation code goes into effect; construction on Guam will begin incorporating the cost-effective energy saving standards. According to U.S. Energy Information Administration, “energy codes increase energy efficiency in buildings, resulting in significant cost savings in both the private and public sectors of the U.S. economy. Efficient buildings reduce power demand and have less of an environmental impact.” Additionally, it is estimated that 75% of buildings nationwide will be new or renovated within the next 25 years; “as a building’s operation and environmental impact is largely determined by upfront decisions, energy codes present a unique opportunity to assure savings through efficient building design, technologies, and construction practices,” according to the U.S. Department of Energy.

“I look forward to a successful adoption of the Guam Tropical Energy Code,” said Senator Tom Ada. “These new standards will help developers and contractors build structures that save money on power in the long run while protecting our environment,” added Senator Tom Ada.

A copy of Bill 61-32 (COR) may be downloaded both here and from the Guam Legislature Website, at www.GuamLegislature.com. For any additional information, please contact the Office of Senator Tom Ada at 473-3301.

Short Title: An act to add a new § 67101.7 of Chapter 67, Title 21, Guam Code Annotated, relative to adopting the Guam Tropical Energy Code (GTEC).

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