Guam § 58104 - Authorization to Enter into Long-Term Leases.

§ 58104. Authorization to Enter into Long-Term Leases.

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CONSTRUCTION INITIATIVE ACT OF 2001

(a) For the purpose of facilitating the refinancing of the design,

construction and maintenance of an existing Education Facility or

existing Education Facilities encompassed by this Act, the government of

Guam or an Education Agency, as the case may be, is authorized to lease

under existing contracts and/or existing amendments thereto, if required,

to the Contractor, subject to legislative approval, sufficient government

of Guam real property, to include, but not be limited to, Chamorro Land

Trust Commission property and Guam Ancestral Lands Commission

property, on which to construct, convert or rehabilitate an Education

Facility; provided, such property is in the inventory of the Education

Agency. The location of the property may be at the site of an existing

Education Facility under the control of an Education Agency, which may

be converted, rehabilitated or demolished and rebuilt under the

provisions of this Act.

(b) Any lease of property pursuant to this Act will be for a period

mutually agreed upon between the Education Agency and the Contractor

as may be reasonably necessary to amortize over the Lease-Back period

of the Contract, the costs associated with the financing, design,

construction and maintenance of the Education Facility, and in no event

shall such period exceed thirty (30) years from the date of

commencement of the Lease-Back period; and provided further, that with

respect to leases of property for the sole purpose of refinancing the prior

design, construction and maintenance of an existing Education Facility or

existing Education Facilities:

(1) any leases and/or amendments to such leases entered into

for such purposes shall not extend the original Lease-Back period

relating to such prior design, construction and maintenance of an

existing Education Facility or existing Education Facilities of any

original leases applied to finance such prior design, construction and

maintenance of an existing Education Facility or existing Education

Facilities;

(2) with respect to any existing leases and/or existing

amendments to leases that have the effect of refinancing the

government’s obligations with respect to the Guam Education

Financing Foundation Certificates of Participation Series 2006 and

2008 (2006 and 2008 Certificates), all obligations of the

government to pay debt service with respect to the 2006 and 2008

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CONSTRUCTION INITIATIVE ACT OF 2001

Certificates being refinanced shall be discharged concurrently with

the execution of the leases and/or amendments to leases entered into

for such refinancing purpose, and thereafter any remaining debt

service on the refunded 2006 and 2008 Certificates shall be payable

solely from and secured solely by a refunding escrow established

for such purpose;

(3) the present value in the aggregate of debt service with

respect to the government’s obligations with respect to such new

leases or amendments to leases shall be at least two percent (2%)

less than the present value in the aggregate of debt service on the

refunded 2006 and 2008 Certificates, using the yield on the

refunding bonds as the discount rate; and

(4) no increase in the amount of outstanding “public

indebtedness” as that term is used in 48 USC 1423a (§11 of the

Organic Act of Guam) shall result from the execution of any such

existing leases and/or existing amendments to leases.

(c) The Contractor shall lease back to the Education Agency the

property for the Lease-Back period. Upon the expiration of the Lease and

the Lease-Back periods and the fulfillment of the terms and conditions of

the Lease-Back by the Education Agency, the property and the existing

Education Facility or existing Education Facilities shall become the

property of the Education Agency, and the Contractor shall have no

further right, title or interest in the property or the existing Education

Facility or existing Education Facilities.