Guam § 22425 - General Obligation Bonds for Certain Capital

§ 22425. General Obligation Bonds for Certain Capital

Projects, Including Certain Educational Facilities Projects,

and for Certain General Fund Expenses.

(a) Authorization of Issuance of General Obligation Bonds

for Capital Projects and General Fund Expenses. The Governor of

Guam is authorized to issue two (2) or more series of general

obligation bonds of the government of Guam in an aggregate

principal amount not to exceed Two Hundred Ninety-Six Million

Dollars ($296,000,000) to undertake the capital projects

enumerated in subsection (m) of this Section, to provide for the

payment of the general fund expenses listed in subsection (m) of

this section and to pay expenses incurred in connection with the

issuance of such bonds; provided, however, that the issuance of

the bonds shall not cause a violation of the debt limitation

provisions of 48 U.S.C. 1423a (§ 11 of the Organic Act of Guam).

(b) Terms and Conditions Determined by Certificate. The

terms and conditions of the bonds shall be as determined by the

Governor by the execution of a certificate authorizing the issuance

of the bonds upon or prior to the issuance of the bonds; provided,

however, that such terms and conditions shall be consistent with

this Section, and that the bonds shall mature not later than

December 1, 2023 and shall bear interest at such rates and be sold

for such price or prices as shall result in a yield to the bondholders

not exceeding eight percent 8% per annum. The certificate of the

Governor shall separately designate the amount of each maturity

of bonds issued for each of the capital projects enumerated in

subsection (m) of this Section and for general fund expenses, but

shall also permit reallocation and redesignation of such bonds,

with approval from the Legislature.

(c) Valid and Binding General Obligation. Any bonds autho-

rized by this Section shall constitute the valid and binding general

obligations of the government of Guam. The government of Guam

pledges its full faith and credit for the punctual payment of both

principal of and interest on the bonds. There shall be collected

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annually in the same manner and at the same time as government

revenue for other purposes is collected, such sum as is required to

pay the principal of and interest on the bonds. All officers charged

by law with any duty in the collection of the revenues of the

government shall do every lawful thing necessary to collect such

sum. The validity of any such bonds shall not be affected by the

validity or regularity of any proceedings for the implementation

of the capital projects funded by the bonds or for the payment of

the general fund expenses funded by the bonds.

(d) Appropriations from the General Fund. There are hereby

appropriated from the General Fund such sums as will equal in

each year the amount of money necessary to pay the principal and

interest on such bonds.

(e) Additional Parity Bonds. Nothing in this Section shall be

construed to prevent the government of Guam from issuing, after

appropriate enabling legislation, other obligations of the

government secured by the general obligation of the government

on a parity with the bonds authorized by this Section.

(f) Waiver of Immunity. Notwithstanding any substantive or

procedural provision of Chapter 6 of Title 5, Guam Code

Annotated, the government of Guam waives immunity from any

suit or action in contract on the bonds, but does not waive

sovereign immunity as to the personal liability of elected officials

and employees of the government of Guam.

(g) Form of Bonds; Covenants; Appointment of Fiduciaries.

The technical form and language of the bonds, including

provisions for execution, exchange, transfer, registration, paying

agency, lost or mutilated bonds, negotiability, cancellation and

other terms or conditions not inconsistent with this Section,

including covenants relating to the collection of revenues, shall be

as specified in the certificate executed by the Governor

authorizing the issuance of the bonds. The certificate may appoint

one (1) or more trustees, co-trustees or other fiduciaries authorized

to receive and hold in trust the proceeds of the bonds and monies

relating thereto, to protect the rights of bondholders and to

perform such other duties as may be specified in the certificate.

The Governor is also authorized to execute, on behalf of the

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government of Guam, any appropriate agreements, certificates or

other instruments relating to the bonds and the sale of the bonds.

(h) Authorization for Credit Enhancement. The Governor is

authorized to enter into such contracts or agreements with such

banks, insurance companies or other financial institutions as he

determines are necessary or desirable to improve the security and

marketability of the bonds issued under this Section. Such

contracts or agreements may contain an obligation to reimburse,

with interest, any such banks, insurance companies or other

financial institutions for advances used to pay principal of or

interest on the bonds. Any such reimbursement obligation shall be

a general obligation of the government of Guam, and any such

adva2nce, if necessary, shall be treated as creating a

reimbursement obligation issued to refund the bonds.

(i) Use of Proceeds from the Sale of the Bonds. Proceeds

from the sale of the bonds shall be used solely to implement and

equip the capital projects enumerated in subsection (m) of this

Section, to pay general fund expenses listed in subsection (m) of

this section and which are otherwise appropriated by the

Legislature, to establish necessary reserves, and to pay expenses

relating to the authorization, sale and issuance of the bonds,

including, without limitation, printing costs, costs of reproducing

documents, bonds insurance premiums, underwriting, legal and

accounting fees and charges, fees paid to banks or other financial

institutions providing credit enhancement, costs of credit ratings,

fees and charges for execution, transportation and safekeeping of

bonds and other costs, charges and fees in connection with the

issuance, sale and delivery of the bonds. The fees charged by the

Guam Economic Development Authority for this bond issuance

shall be waived.

(j) No Personal Liability. No employee or elected official of

the government of Guam shall be individually or personally liable

for the payment of any amounts due on any bonds issued under

this Section, or for any other liability arising in connection with

the bonds; provided, however, that nothing in this Section shall

relieve any employee or elected official from the performance of

any ministerial duty required by law.

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(k) University of Guam Bond Fund. There is hereby created,

separate and apart from other funds of the government of Guam,

a fund known as the “University of Guam Bond Fund” (the “UOG

Bond Fund”). The UOG Bond Fund shall not be commingled with

either the General Fund, the Current Fund of the University of

Guam, or any other fund of the government of Guam. The UOG

Bond Fund shall be held in an account or accounts at a Guam

financial institution or institutions separate and apart from all

other accounts and funds of the government of Guam. All tuition

revenues received by or on behalf of the University of Guam shall

be deposited in the UOG Bond Fund and shall be accounted for

and used periodically only for the following purposes and in the

following order:

(1) On a day when monies are remitted from the General

Fund to any trustee, co-trustee or paying agent for the bonds

to either pay the principal of and interest on the bonds issued

for the capital project described in subsection (m) item (5) or

to accumulate the amounts necessary to pay the principal of

or interest on said bonds, there shall immediately be

transferred from the University of Guam (UOG) Bond Fund

to the General Fund an amount equal to, but not in excess of,

the amount remitted from the General Fund. If the amount

so transferred is not sufficient to fully reimburse the

remittance, the amount of the deficiency shall be transferred

immediately as it becomes available in the UOG Bond Fund,

together with interest from the remittance date to the date of

transfer at a rate equal to the yield on the bonds. Such

transfers shall continue until November 15, 2018 or until a

date mutually agreed upon by the University of Guam and I

Maga’lahen Guåhan. Payments pursuant hereto made from

the UOG Bond fund shall be adjusted downwards to reflect

the interest rates of refinanced bonds if said interest rates are

lower.

(2) On the dates on which monies are transferred to the

General Fund pursuant to paragraph (1) of this subsection (k)

of this Section, if such transfer is sufficient to fully reimburse

the General Fund (with interest, if required), the balance

remaining in the UOG Bond Fund shall be transferred to the

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Current Fund of the University of Guam to be utilized only

to implement the Physical Master Plan of the University.

Such tuition revenue collections shall not be pledged to

the payment of amounts due on the bonds, and this subsection

(k) may be amended at any time by subsequent act of the

Legislature. Nothing in this Section shall be construed to

prevent the government of Guam from issuing, after

appropriate enabling legislation, for the benefit of the

University of Guam, other general obligations of the

government secured by such tuition revenues on a parity with

the bonds authorized by this Section. In addition, nothing in

this Section shall be construed to prevent the University of

Guam from issuing, after appropriate enabling legislation,

revenue bonds or general obligations of the University of

Guam secured by such tuition revenues on a parity with the

bonds authorized by this Section.

(3) Notwithstanding Paragraphs (1) through (3) of this

Subsection (k), if the Board of Regent of the University of

Guam (University) elects to issue revenue bonds of the

University pursuant to Chapter 17 of Title 17 of the Guam

Code Annotated, tuition revenues received by or on behalf of

the University may be pledged as a first priority to secure the

payment of the obligations of the University with respect to

the revenue bonds, and may be used to pay such obligations

to create or replenish required reserves relating such revenue

bonds, and to pay expenses directly related to the issuance

and payment of such revenue bonds. In such event tuition

revenues shall be deposited, used and applied as provided in

the bond indenture, trust agreement or loan agreement

relating to such revenue bonds.

(l) Guam Educational Facilities Fund. There is continued in

existence, separate and apart from other funds of the government

of Guam, a fund known as the “Guam Educational Facilities

Fund” (the GEF Fund). The GEF Fund shall not be commingled

with the General Fund or any other fund of the government of

Guam. The GEF Fund shall be held in an account or accounts at

a Guam financial institution or institutions separate and apart from

all other accounts and funds of the government of Guam. All real

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property tax revenues received by or on behalf of the government

of Guam pursuant to § 24103, Title 11, Guam Code Annotated,

shall be deposited in the GEF Fund and shall be accounted for and

used periodically only for the following purposes and in the

following order:

(1) On the dates on which monies are remitted from the

General Fund to any trustee, co-trustee or paying agent for

bonds issued pursuant to this Section or pursuant to § 22435,

Chapter 22 of Title 5 Guam Code Annotated, for the purpose

of either (A) paying the principal of and interest on the bonds

designated as having been issued for the capital projects

enumerated in items (1), (2), (3), (4), (6), (7) and (8) of

subsection (m) of this Section, or paying the principal of and

interest on the bonds issued pursuant to § 22435, Chapter 22

of Title 5 Guam Code Annotated, or (B) accumulating the

amounts necessary to pay the principal of or interest on such

bonds, there shall be transferred from the GEF Fund to the

General Fund amounts equal to, but not in excess of, the

amounts remitted from the General Fund for such purposes,

and in the event that the amount so transferred on any such

date is insufficient to fully reimburse the amount so remitted,

the amount of the insufficiency shall be transferred as soon

thereafter as it becomes available in the GEF Fund, together

with interest from such remittance date to such date of

transfer at a rate equal to the yield on the bonds.

(2) On the dates on which monies are transferred to the

General Fund pursuant to paragraph (1) of this subsection (1)

of this Section, if such transfer is sufficient to fully reimburse

the General Fund, (with interest, if required), the balance

remaining in the GEF Fund shall remain in the GEF Fund and

shall only be appropriated by I Liheslatura for the purpose of

constructing, refurbishing, replacing and funding educational

facilities and to fund the operations of the Guam Community

College.

Such tax collections shall not be pledged to the payment of

amounts due on such bonds and this subsection (l) may be

amended at any time by subsequent act of I Liheslatura. Nothing

in this Section or § 22435 of Chapter 22 of Title 5 Guam Code

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Annotated shall be construed to prevent the government of Guam

from issuing, after appropriate enabling legislation, for the benefit

of the government of Guam, other general obligations or revenue

obligations of the government secured by said real property tax

revenues.

The repayment obligation of the University of Guam

described Title 5 GCA § 22425 (k) shall continue.

(m) The capital projects to be implemented and equipped

with the proceeds of the bonds authorized by this Section are as

follows:

Allocated

Capital Projects:

Amounts:

(1) High school located in Santa

Rita, Guam $76,000,000;

(2) Including a sewage treatment

plant, infrastructure and off-site

development, related to the

high school in Santa Rita, Guam $21,000,000;

(3) Elementary school located in

Tamuning, Guam $15,000,000;

(4) Elementary school located in

Astumbo, Dededo, Guam $15,000,000;

(5) Buildings at the University of

Guam as follows:

College of Arts and Sciences

Building; renovation and

addition to the Health Science

Building; Plant Maintenance

Building; Building II for the

College of Agriculture and Life

Sciences; College of Business

and Public Administration; Fine

Arts Building; and the Student

Center, $28,000,000;

(6) For the purchase of equipment

and furniture and the relocation $ 3,000,000;

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expenses for students during

construction of projects set out in

items (1), (3) and (4) of this

subsection (m), including

temporary classrooms,

(7) To the extent of any bond

proceeds not required for the

projects listed in Items (1)

through (6) of this Subsection

(m), any remaining balance other

than the portions designated to be

used for the Northern High

School, or to pay General Fund

expenses, may be applied to the

cost of:

(A) repairing or reconstructing

the Inarajan Elementary School;

(B) repairing or reconstructing

the earthquake-damaged Ordot-

Chalan Pago Elementary School;

(C) reconstructing the

earthquake-damaged gymnasium

and classrooms at Inarajan High

School;

(D) repairing and

reconstructing Upi Elementary

School;

(E) repairing or reconstructing

earthquake damage at any other

school;

(F) design and construction of

additional elementary schools in

Guam, subject to Subsection (n)

of this Section;

(G) needed infrastructure

improvements for schools;

(H) the completion of design

plans for the Northern High

School;

(I) the design, construction

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and renovation of facilities, and

capital improvement projects on

the existing campus of the

Guam Community College not

to exceed One Million One

Hundred Thousand Dollars

($1,100,000);

(J) The Department of

Education’s ten percent (10%)

local share, over and above the

approved FEMA funding, for the

architectural, engineering design,

construction and repair of the

Jose Rios Middle School

(formerly Piti Middle School)

from damage resulting from

Super Typhoon Paka and to add

an additional classroom for

Special Education needs;

(K) Perform feasibility

studies, pro forma cost

projections and other documents

necessary to justify and/or obtain

financing/leasing of additional

schools or education facilities;

(L) Replace two (2)

classrooms destroyed by fire at

L.P. Untalan Middle School;

(M) Repair, replace, and/or

modify air conditioners and air

conditioning electrical systems

for schools and repair of water

infrastructure at the school. The

Department of Education shall

evaluate the following options on

a school-by-school basis: (1) the

cost to repair the units and

electrical systems, (2) the cost to

replace the air conditioning

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systems with new systems, (3)

the cost to install single units in

each classroom, office or other

enclosed facility, (4) the cost to

add expansion units to existing

systems, (5) any combination of

the four (4) options herein and (6)

the recurring cost to operate and

maintain each of the four (4)

options herein. The Department

of Education shall conduct a

public hearing at each affected

school prior to engaging any firm

to supply systems, parts, or

perform repairs. Any system

purchased herein shall comply

with the comfort and air quality

standards set forth for Heating,

Ventilation and Air Conditioning

(HVAC) equipment as provided

for by Chapter 5 of the Federal

GSA’s Facilities Standards For

Public Buildings Service

(Revised November 2000 B PBS-

P100); and

(N) The Superintendent of the

Department of Education

(“DOE”), in consultation with the

Guam Education Policy Board

(“Board”) shall have the

authority and flexibility to

review, and if necessary,

reprogram such funds

appropriated herein to DOE, to

meet the needs of DOE, for

repair, renovation and upgrade of

public school facilities.

(8) To the extent of any bond

proceeds not required for the

projects listed in Items (A)

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through (F) of this Subsection

(m), any remaining balance, other

than the portions designated to be

used for the Northern High

School or to pay general fund

expenses, may be applied to the

costs of:

(A) repairing or reconstructing

the Inarajan Elementary School,

(B) repairing or reconstructing

the earthquake damaged Ordot-

Chalan Pago Elementary School,

(C) reconstructing the

earthquake damaged gymnasium

and classrooms at Inarajan High

School,

(D) repairing or reconstructing

Upi Elementary School,

(E) repairing or reconstructing

earthquake damage at any other

school,

(F) construction of additional

elementary schools in northern

Guam, subject to subsection (n) of

this Section,

(G) needed infrastructure

improvements for schools,

(H) the completion of design

plans for the Northern High

School, or

(I) other projects approved by

subsequent legislation.

(9) The aggregate principal amount of

bonds authorized to be issued to

provide for the payment of general

fund expenses is One Hundred

Fifteen Million Dollars

($115,000,000), the proceeds of

which to be used exclusively for

the purposes outlined below. The

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general fund expenses authorized

to be paid with the proceeds of

such bonds are income tax refund

payments, supplemental

retirement payments, transfer

payments to governmental

agencies, and vendor payments,

but in each case only to the extent

such expenses have been incurred

or previously obligated by the

government for goods, services,

and obligations rendered,

received, or incurred prior to May

15, 1995.

(n) Uniform Design of Projects. In utilizing the bond

proceeds authorized by projects set out in items (3) and (4) of

subsection (m) of this Section, in order to optimize funds and not

replicate services, a standard and uniform design for all elementary

schools, shall be employed in their construction, unless the

topography and size of the land for such a school prevents the use

of such a standard and uniform design. Such standard and uniform

designs shall be as energy efficient as is practical, and shall

conform to island styles.

(o) Head Start Classrooms. The elementary schools described

in items (3) and (4) of subsection (m) of this Section and whose

construction is to be funded by this Act shall include a minimum

of five (5) “Head Start” classrooms at each school.

(p) Selection of Participants. In view of the urgency for the

issuance of the bonds for the purpose of financing general fund

expenses and for the infrastructure related to the high school

located in Santa Rita, the Governor is hereby authorized to utilize

such method as he deems appropriate for the selection of all

participants in connection with the issuance and sale of those

bonds, including trustees, depositories, paying agents,

underwriters, counsel, any credit enhancement provider and any

other participants; provided, however, that such selection shall be

subject to any provision of law which requires bidding, other

competitive process, or any other procedure with respect to such

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selection, except that the Governor may limit the requests for

proposals for services associated with the issuance of the bonds to

those firms that have previously participated in bond issues for

Guam.

(q) Notwithstanding any other provision of law, any

additional real property tax revenues received as a result of the

most recent valuation of real property due to commence during

the calendar years 2013 and 2014 is hereby continuously reserved,

subject to annual appropriation, in an amount not to exceed Eight

Million Five Hundred Thousand Dollars ($8,500,000), from the

Guam Educational Facilities Fund in the amounts and for the

purposes set forth in this Subsection:

(1) The sum of One Million One Hundred Fifty-Eight

Thousand Two Hundred Eighty-Three Dollars ($1,158,283),

beginning in FY 2015, for the construction of the Student

Services Center and the Engineering Annex facility at the

University of Guam, as a source of payment to the University

of Guam Capital Improvements Fund for the purpose of

paying rental payments due under the lease-leaseback

agreements with the University of Guam Endowment

Foundation for a term of forty (40) years; including any

lease-leaseback agreements entered into in connection with

the interim financing;

(2) The sum of Two Hundred Seventy-eight Thousand

Nine Hundred Twenty-one Dollars and Fifty-two Cents

($278,921.52), beginning in FY 2014 for forty (40) years, for

the construction or renovation of Building 100 and the DNA

Laboratory at the Guam Community College;

(3) The sum of One Hundred Thirty-two Thousand

Fifteen Dollars ($132,015) to the Guam Public Library

System to hire a Guam Librarian at Ninety-three Thousand

Three Hundred Seventy-seven Dollars ($93,377), and a

Computer Analyst II at Thirty-eight Thousand Six Hundred

Thirty-eight Dollars ($38,638);

(4) The sum of One Million Seven Hundred Seven

Thousand Six Hundred Fifty-two Dollars ($1,707,652) to the

Guam Department of Education for the renovation or

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construction of a new Simon Sanchez High School.

(5) The sum of One Million Two Hundred Thousand

Dollars ($1,200,000) for rental payments under the lease and

the lease-back as described in Chapter 58D of Title 5, Guam

Code Annotated.

(6) other than the portions designated to be used for in

Items (1), (2), (3), (4) and (5) of this Subsection, eighty

percent (80%) of the remaining balance for rental payments

due under the lease-leaseback agreement with GDOE secured

for the renovation or construction of a new Simon Sanchez

High School, to include its athletic facilities, and other Guam

Department of Education public school facilities requiring

new construction, rehabilitation or maintenance;

(7) Early Childhood Program Fund. There is hereby

created, separate and apart from all other funds of the

government of Guam, a fund known as the “Early Childhood

Program Fund.” All monies received by or on behalf of the

government of Guam pursuant to § 22425(q)(8) of Title 5

GCA, shall be deposited in the Fund and used for early

childhood programs at the University of Guam, the Guam

Community College, or the Guam Department of Education.

The Fund shall not be commingled with the General Fund or

any other funds of the government of Guam, and it shall be

maintained in a separate bank account. All monies in the

Fund shall require legislative appropriation, and shall not be

subject to any transfer authority of I Maga’lahen Guåhan.

(8) other than the portions designated to be used for in

Items (1), (2), (3), (4) and (5) of this Subsection, 3.5% of the

remaining balance for the Early Childhood Program Fund, as

described in § 53101 of Title 17, Guam Code Annotated;

(9) other than the portions designated to be used for in

Items (1), (2), (3), (4) and (5) of this Subsection, 3.5 % of the

remaining balance for I Famagu’on-ta, Child Adolescent

Services Division of the Guam Behavioral Health and

Wellness Center, and Project Karinu. These funds shall not

be subject to I Maga’lahen Guåhan’s transfer authority.

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(10) other than the portions designated to be used for in

Items (1), (2), (3) (4) and (5) of this Subsection, five percent

(5%) of the remaining balance to the Department of Revenue

and Taxation for the following:

(A) for maintenance support and sustainability of

real property data and system;

(B) for the five (5) year (quinquennial) property

tax revaluation as mandated by law;

(C) for enhancements, and technological

advancements related to software/hardware, and support

staff necessary to improve electronic services; and

(D) for other costs directly associated with

improving the efficiency of the real property tax system.

The Director of the Department of Revenue and

Taxation shall submit a report to I Maga’lahen Guåhan and

I Liheslaturan Guåhan on a monthly basis as to the

expenditures of the funds following the enactment of this

Act, detailing all transactions;

(11) other than the portions designated to be used for in

Items (1), (2), (3), (4) and (5) of this Subsection, five percent

(5%) of the remaining balance shall be lock boxed for the

procurement of a unified financial management information

system, as recommended by consensus from the Department

of Revenue and Taxation, the Department of Administration,

the General Services Agency, the Office of Public

Accountability, the Office of Technology, the University of

Guam, the Guam Community College, the Guam Department

of Education, and Guam Memorial Hospital Authority. This

amount shall be subject to legislative appropriation.

(12) Other than the portions designated to be used for in

Items (1), (2) (3) (4) and (5) of this Subsection, three percent

(3%) of the remaining balance shall be a source of funding

for island-wide school bus shelters. The Director of the

Department of Public Works shall submit a report to I

Maga’lahen Guåhan and I Liheslaturan Guåhan on a

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monthly basis as to the expenditures of the funds following

enactment of this Act, detailing all transactions.

(r) It is the policy of the Guam Legislature to ensure that the

projects enumerated in Subsection (m) of this Section are

completed. In this respect, the Guam Legislature gives its consent

and authorization to allow the transfer of funds between projects

contained in Subsection (m), Items 1, 2, 3, 4, 6, 7 and 9. The Guam

Legislature shall be notified in writing prior to any transfer. This

Subsection shall take effect immediately.

(s) Interest earned on the bonds authorized by this Section

shall be used exclusively for the projects enumerated in

Subsection (m) of this Section.

(t) Authorization of Issuance of General Obligation Loans for

the Dededo Precinct and Crime Lab of the Guam Police

Department. I Maga’lahen Guåhan is authorized to borrow one

(1) or more general obligation loans of the government of Guam

in the aggregate principal amount not to exceed Seven Million

Dollars ($7,000,000) to undertake the cost of the design, plans and

construction of the Dededo Police Precinct at a cost not to exceed

One Million Dollars ($1,000,000.00), and the cost of the design,

plans and construction of the Crime Lab at a cost not to exceed

Six Million Dollars ($6,000,000), and paying expenses incurred

in connection with the issuance and closing of such loans;

provided, however, that the incurring of the loans shall not cause

a violation of the debt limitations provision of Title 48 U.S.C.