Decline in TAF expenditures not enough to offset 41% cut in tourism revenues

Tourism revenues plummeted after the number of visitors went down to near zero due to COVID-19. (PNC file photo)

The Office of Public Accountability (OPA) has released the Tourist Attraction Fund’s (TAF) financial statements, showing that the decline in TAF expenditures was not enough to offset the whopping 41% cut in the island’s tourism revenues.

According to OPA, the TAF’s combined expenditures decreased by $8.2M (or 19%), from $43.9M in FY 2019 to $35.7M in FY 2020. The decrease came from reductions of $6.9M for payments to the Guam Visitors Bureau, $1.2M of Mayor’s Council of Guam operational expenses, $613K of capital project expenses, and $267K of Department of Parks and Recreation expenses.

However, the total decline in expenditures was not enough to offset the massive decline in revenues. Collections of HOT revenue decreased by $18.3M (or 41%), from $44.7M in FY 2019 to $26.4M in FY 2020.

HOT Revenue Bonds: 2011 Series A & Series 2021A

The Debt Service Fund accounts for the principal and interest due on the HOT Revenue Bonds. In FY 2020, TAF paid $7M in principal and interest on the 2011 Series A HOT bonds.

In March 2021, the HOT Revenue Refunding Bonds, Series 2021A were issued in the amount of $71.7M to advance refund $70.5M of outstanding 2011 Series A bonds. After payment of underwriting fees, insurance, and other issuance costs, the remainder of net proceeds and available funds of the government totaling $72.8M was placed in escrow. As a result, subsequent to FY 2020, the 2011A refunded bonds are considered to be voided and the liability has been removed from the government-wide financial statements of the Government of Guam.

The issuance of the Series 2021A bonds included revised annual debt service requirements to maturity up to FY 2041. The details of the schedule include no principal paid for the first five fiscal years (FY 2021 – FY 2025) and interest of $253K in FY 2021 and $2.9M for years 2022-2025. Principal plus interest on the Series 2021A bonds totals about $100M, which is a $29.6M savings from the $129.5M remainder of the 2011 Series A bonds. This is due to the $14.2M reduction in principal and $15.4M reduction in interest.

FY 2020 Books Not Closed on a Timely Basis

In a separate issued management letter, independent auditors noted TAF’s FY 2020 books were not closed on a timely basis. According to DOA, the delay’s root cause was that the financial management system was not updated to include financial year closing as a standard feature. Further, additional man-hours incurred could have been avoided if an updated financial management system was in place. DOA’s preferred remedy is to invest in a new financial management system that incorporates all required year-end closing procedures as standard features. Procurement for the new system has begun under Executive Orders 2020-44, and 2021-07.

For more details on the use of TAF, see the Management’s Discussion and Analysis in the audit report at

(OPA Release)


Leave a Reply