Guam § 75122 - Commercial Leases and Licenses.

§ 75122. Commercial Leases and Licenses.

(a) Definitions.

(1) Commercial lease is a leasehold interest in real property between the CLTC and a tenant

(hereinafter referred to as “Commercial Lessee”) for the commercial use of real property under the

management of the CLTC.

(2) Commercial license is an agreement between a tenant (hereinafter referred to as the

“Commercial Licensee”) and the CLTC which permits certain activity to be conducted upon real

property in the inventory of the CLTC, but does not confer upon the licensee any title or leasehold

interest, and is terminable upon cessation of the approved activity. Pursuant to § 75107(c) of Chapter

75, Title 21 GCA, the Commission is authorized to grant licenses for terms not to exceed twenty-one

(21) years in each case, to:

(A) public utility companies, or corporations as telephone lines, electric power and light

lines, gas mains, and the like; or

(B) for lots within a village in which lands are leased under the provisions § 75107(a) of

Chapter 75, Title 21 GCA, to:

(i) churches, hospitals, public schools, post offices, and other improvements for public

purposes; or

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(ii) theaters, garages, service stations, markets, stores, and other mercantile

establishments (all of which shall be owned by the § 75107(a) lessees of the Commission or

by organizations formed and controlled by said lessees).

(3) “Commercial use” means commercial agriculture, commercial aquaculture, and any permitted

use or a conditional use expressly allowed on an “A,” “R1,” “R2,” “C,” “P,” “S-1,” or “PF” zoned

property pursuant to §§ 61304, 61305, 61306, 61307, 61308, 61312 and 61313 of Article 3, Chapter

61 of Title 21 GCA. Commercial use includes mineral extraction when specifically approved by the

CLTC and I Liheslaturan Guåhan. The appropriate regulatory clearances will be required for all

commercial uses of CLTC lands.

(4) “Tenant” means an applicant who has been approved for either a commercial lease or license,

and can also be referred to as a “Commercial Lessee or Commercial Licensee” in this Act.

(b) Designation of Available Land for Commercial Use.

(1) Notwithstanding § 75107(f) of Chapter 75 of Title 21, Guam Code Annotated, and Section

6.9 of Exhibit A of Public Law 23-038, the CLTC may declare and designate that certain lands, not to

exceed nine percent (9%) of the total remaining unassigned Chamorro Land Trust Commission land

area inventory, “are not required for § 75107 leases to native Chamorros for residential, subsistence

agriculture, or subsistence aquaculture, and are available for commercial leasing or licensing to the

general public pursuant to § 75105(d) of Chapter 75, Title 21 GCA.” Said declaration shall be in the

form of a Board Resolution approved by the Commissioners at a duly scheduled meeting of the CLTC

held after a CLTC public hearing on the specific lot and area of land to be designated. The approved

CLTC resolution shall be transmitted to I Liheslaturan Guåhan within thirty (30) days from the date

of passage of the resolution.

(2) I Liheslaturan Guåhan shall have sixty (60) days to review the Resolution declaring the list

of available lots identified in this Subsection, and may conduct public hearings on said lot list during

this sixty (60)-day period.

(3) The lots identified in this Subsection may be leased or licensed by the CLTC to the general

public pursuant to § 75105(d) of Chapter 75 of Title 21, Guam Code Annotated, for commercial use

and for a term not to exceed twenty-five (25) years; or licensed pursuant to § 75107(c) of Chapter 75,

Title 21, Guam Code Annotated, for a term not to exceed twenty-one (21) years, unless otherwise

approved by I Liheslaturan Guåhan for a longer term.

(4) The CLTC shall not initiate any solicitations for commercial leasing or licensing until at least

sixty (60) days have elapsed from the date I Liheslaturan Guåhan received the transmittal of the CLTC

Resolution and list in accordance with this Section.

(5) Notwithstanding § 75105(b) of Chapter 75 of Title 21, Guam Code Annotated, all income

arising out of any lease or license of those properties declared in this Subsection shall be credited to

and deposited in the Chamorro Land Trust Survey and Infrastructure Fund and Chamorro Home Loan

Fund in allocated amounts determined by the CLTC through the adoption of a resolution.

(6) Any solicitation for interest or proposals, prior to the enactment of this Act, for commercial

activity on CLTC land with the intent of entering into a commercial lease shall be null and void.

(c) Lease Agreement Stipulations. The execution of commercial lease agreements or licenses of the

available properties identified pursuant to this Section shall be subject, at a minimum, to the following

stipulations:

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(1) Notice of Land Designated to be Available for Commercial Use. Solicitation for the leasing

or licensing of land designated as available for commercial use shall be published at least thirty (30)

days prior to the deadline for submittal of proposals from prospective lessees or licensees. Notice shall

be posted on the websites of the CLTC and the Department of Land Management (DLM) continuously,

and through any methods of electronic publication capable of providing notice to the general public,

and at least once in a newspaper of general circulation.

(2) Award of Lease through Competitive Bid. The lease or license for the commercial use of

CLTC land designated as available for commercial activity shall be awarded through a competitive

bid process to entities determined to be responsible and responsive, as defined in Guam’s procurement

law, to the requirements stipulated by the CLTC. However, in the event that a designated available

land has an existing commercial activity by virtue of a previous authorization, this Act shall not be

interpreted to invalidate existing commercial leases or licenses where lessee or licensee has not

defaulted during the entire term of the lease or license, and lessee or licensee has complied with the

laws of Guam. At the expiration of a lease or license, and all options to renew that lease or license, the

CLTC shall reconsider its designation as available land and comply with all other provisions of this

Act.

(3) Unsolicited Proposals. The CLTC may also accept unsolicited proposals for the development

and commercialization of CLTC land designated as available for commercial use, but must

subsequently place such proposals to competitive solicitation.

(4) Posting of Awards. Awards of leases and licenses shall be posted, within five (5) working

days from the date of award, on the CLTC and DLM websites for the term of the lease.

(5) Minimum Annual Rent. Annual rent shall be no less than ten percent (10%) of the current

appraisal of fair market value of the land that is to be leased. Rent shall escalate at a minimum of five

(5) year intervals based at a minimum upon current appraisal of fair market value of the land being

leased, but in no event shall rent be lower than the rent charged during the previous five (5) year period.

The rent to be charged on any request to exercise an option to renew an existing lease shall also be

based on the current appraisal of the fair market value of the land at the time the option to renew is

exercised.

(6) Participation Rent.

(A) Definition. The tenant pays to the CLTC a mutually agreed upon percentage of the

revenues generated above a mutually agreed upon revenue threshold.

(B) Applicability. Participation rent shall be applicable from the fifth (5th) anniversary date

to the last day of the lease. The annual participation rent shall be made in four (4) equal quarterly

installments.

(7) Advance Rental Payment. CLTC may require accelerated or advanced rental payments as a

condition of the lease.

(8) Rent Amendments and Payment Schedules. Tenants may submit written requests for

temporary reductions in rent. Tenants shall submit audited financial statements covering the previous

three (3) year period as supporting documents. CLTC shall consider the current financial position of

the tenant and the prospect for improvements in the tenant’s financial position, market conditions, the

benefit to the Trust in temporarily reducing the rent, and such other information as may be required in

considering tenant’s request for rent reductions. Any rent reductions authorized by CLTC shall not

exceed one (1) year but may, upon written application by the tenant, be extended by the Commission

if such extension would be beneficial for the Trust. As temporary rent reductions are intended to assist

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tenants over a short period of time, tenants must agree in writing that such temporary reductions shall

in no way affect the annual amounts due or the schedule of rent escalations for future option terms

identified in the lease agreement. Requests for rent reductions shall be subject to Commission

approval. The CLTC shall not allow the exercise of options for additional terms unless all past due

rent is paid. All amendments of rent and payment schedules shall be fully documented.

(9) Payment Plans. Requests to develop a payment plan for back rent shall be submitted in writing

with the reasons for the request. In addition, tenants shall submit a copy of its audited financial

statements covering the previous three (3) year period. Payment plans must include a provision for

payment of interest on the unpaid balance. In addition, payment plans must contain the requirement

that late fees using the industry standard be paid, in the event the lessee does not make payments as

scheduled, and if the lessee is not deemed to be in breach of the lease. Financial institutions must be

provided with copies of approved payment plans if estoppel, mortgage or other such agreements

require such notification. To the extent possible, payment plans for outstanding rent must be paid off

within the fiscal year to avoid budgetary problems within CLTC.

(10) Taxes and Assessments. Tenants shall pay all taxes and assessments lawfully levied against

the leased premises and against any business conducted thereon or in connection therewith. Tenant

shall also pay all charges for utility services furnished or provided to the leased premises.

(11) Interest for Late Payment. All rent in arrears shall bear interest at a rate of four percent (4%)

per annum in excess of the prime rate, calculated daily and compounded monthly, without demand,

from the date it should have been paid to CLTC, until actual payment to CLTC.

(12) Environmental Site Assessment (ESA). Prospective tenants shall be required to prepare at

their own expense, a Phase I Environmental Site Assessment (ESA) of the leased property to serve as

a baseline of conditions at the site prior to the start of the lease. The comprehensiveness of the

assessment shall be determined by CLTC in collaboration with the Guam Environmental Protection

Agency. The Phase I ESA shall be referenced in any lease or license agreement for the property. Prior

to the issuance of any agreement, tenants or prospective tenants must conduct a Phase I ESA of the

site at tenant’s expense.

(13) Condition of Land After Use Period. At the end of the lease or license period, or upon

termination, tenant shall restore the land to baseline levels established at the start of their lease or

license, or better/higher environmental levels agreed upon in the lease or license, and shall bear all

expenses relating to such restoration and Phase I and Phase II evaluations. However, in the case where

mineral extraction or the extraction of natural resources at the site was authorized initially in the lease

or license agreement, the site shall be returned to the CLTC in the better/higher environmental end-

state that was agreed upon at the beginning of the lease or license. CLTC shall require that a

performance bond be provided to ensure that the property is returned in an acceptable end-state, but

that said bond shall not relieve the lessee of the responsibility of returning the land to the required

baseline state.

(14) Tenant Requirements. All lease and license agreements shall require tenants and subtenants

to have business liability insurance that indemnifies and holds CLTC harmless, and shall require the

tenant to respond to CLTC requests for information on a timely basis.

(15) Improvements to CLTC Property. All lease and license agreements shall require that any

improvements made to or upon the real property shall belong in title to the CLTC upon termination or

expiration of the lease or license, and that any removal required by the CLTC of improvements or

items remaining on the property shall be the responsibility of the tenant at no cost to the CLTC.

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(16) Processing Fees. Tenants shall pay for those expenses associated with the processing of

leases, amendments, assignments, estoppels, consents or other such documents, including, but not

limited to, attorneys’ fees, appraisal fees, title report fees, survey fees, credit report fees, recording

fees, and documentation fees, but not including CLTC staff time. Payment of fees shall be made prior

to document recordation or pick up.

(17) Business License. Applicants must be licensed to do business in Guam prior to the execution

of a lease or license, and all tenants must maintain a valid license to do business in Guam during the

term of their lease or license.

(18) Compliance with Environmental Laws. All activities on leased or licensed available real

property shall be in compliance and maintained in accordance with existing environmental laws.

Failure to comply with environmental laws shall be a material default by tenant.

(19) Events of Default; Termination. In any of the following events (each an “Event of Default”):

(A) if rent or any part thereof shall not be paid on any day when such payment is due, CLTC

may, at any time thereafter, give notice of such failure to the lessee, and if the failure is not

remedied by the lessee within five (5) days after the giving of such notice; or

(B) if the lessee shall fail or neglect to perform or comply with any of the terms, covenants

or conditions contained in the lease (other than the covenants to pay rent) on the part of the lessee

to be performed or observed, CLTC may, at any time thereafter, give notice of such failure or

neglect to the lessee and the lessee:

(i) if the matter complained of in such notice is capable of being remedied by the

payment of money, has not corrected the matter complained of within a period of five (5)

days after the giving of such notice; or

(ii) if the matter complained of in such notice is not capable of being remedied by the

payment of money has not corrected the matter complained of within a period of twenty (20)

days after the giving of such notice, or if a period of more than such twenty (20) days is

reasonably required to remedy, with reasonable diligence, the matters complained of in such

notice, has not forthwith commenced to remedy the same and diligently prosecute the

remedying of the same to completion;

(iii) if an event of insolvency shall have occurred with respect to the lessee, or

(iv) a breach of an obligation by the lessee which has resulted in cancellation of

insurance coverage where the lessee has not prior to or concurrent with such cancellation

replaced such coverage with comparable coverage or breach of an obligation where there

has been a notice of cancellation of insurance coverage which has not been cured and where

the lessee has not, within the period of time set out in such notice (or within ten (10) days

where no period is set out therein) replaced such coverage with comparable coverage or

which is otherwise a breach of the obligations respecting insurance; or

(v) abandonment of the project by the lessee; or then the CLTC, at its option, may

terminate the lease by notice to the lessee, in which event such termination shall be effective

immediately upon the delivery of such notice and may enter upon the property with or

without process of law and take possession thereof.

(20) Right to Cure Defaults. Without limiting any other remedies the CLTC may have arising out

of a lease or at law in respect of any default in the performance of the lessee’s obligations under a

lease, the CLTC shall have the right, in the case of any default and without any re-entry or termination

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of a lease, to enter upon the property and cure or attempt to cure such default (but this shall not obligate

the CLTC to cure or attempt to cure any such default or, after having commenced to cure or attempt

to cure such default, prevent the lessor from ceasing to do so) and the lessee shall promptly reimburse

to the CLTC any expense incurred by the CLTC in so doing and the same shall be recoverable as rent.