NAVFAC Seeks “Fair Market Value” Lease for Shipyard Facility; The Property Won’t Go Back to GovGuam

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Guam – The “no-fee” lease between the Guam Economic Development Authority [GEDA] and the Navy for about 45 acres of land down on Naval Station has expired. The Navy now has to negotiate a new lease for the land,  but it will be under different terms. This time, a lease fee for occupying the land will be charged.

15 years ago following a recommendation by the Base Closure and Re-Alignment Commission [BRAC] the Navy entered into an agreement with the Guam Economic Development Authority to lease the Navy’s ship repair facility to GEDA.

The facility sits on about 45 acres of land. And the deal the Navy offered was a no-fee lease “in furtherance of conveyance” because the intent, at the time, was to eventually turn the property back over to GovGuam. As a result GEDA has not been paying any fee to the Navy for using the property.

GEDA in turn has been sub-leasing the property to Guam Shipyard, a private ship repair firm.

But in 2000, the Secretary of the Navy reversed its intention to return the land because of the strategic value of the property and security concerns over the facilities proximity to the docks where nuclear submarines berth.

NAVFAC Marinas Executive Officer Cheryl Hansen explained “The Secretary of the Navy made a decision that the land that Guam Shipyard currently resides upon was of strategic importance to the Pacific AOR. So because of that they took the land off of the BRAC list, no longer to be conveyed.  So once that decision was made, the original statutory authority for that lease is no longer valid.”

For the past 10 years GovGuam has been aware that the Navy no longer intended to return the land. And now that the original lease has expired and can not be renewed under the old terms, Hansen says a new lease must be negotiated based on fair market value.

“Again that original lease was to GEDA at a no-fee basis, so now that that statutory requirement or authority no longer exists we have to go out with a lease … we have to do something different … so we go out with a new lease and in this case the Government, again, has to get “fair value” for that property.”

The requests for expression of interest went out in October. Already several firms have expressed interest. The deadline for submissions of interest is December 23erd.

After that date, the Request For Proposal [RFP] phase will begin. All bidders must be able to fullfill the Navy’s key requirement which is to maintain a ship repair facility at that location.

“We need to be able for the provider to be able to provide us with water-bourne ship repair,” said Hanse. “So they need to have a floating dock out there that can perform services on the water.”

Guam Shipyard of course is in a prime position now to independently bid for the lease of the property they already occupy. 

There have of course been a number of controversies over the years involving alleged unauthorized shipments from Guam Shipyard, a case which is now the subject of a federal lawsuit against the Port of Guam. And questions over the validity of Guam Shipyard’s qualifying certificate which, as PNC News reported earlier this year,  is now being challenged by GEDA and the Department of  Rev and Tax which is seeking more than $4-million in back taxes.