GUAM – A room full of engineers heard the reassuring news directly from NAVFAC Pacific’s Vice Commander, Captain Paul Fuligini last December. Towards the end of his PowerPoint presentation as he updated the engineers on the progress of Guam military construction, he clarified the status of Government of Japan (GoJ) money.

 

Fuligini shared that not only had Japan FY09 and FY10 money indeed been received, but a number of projects are approved by the U.S. Congress and the Japan Diet for contracting. Military construction contracts awarded or pending in 2010 included one GoJ project for utilities and site improvements worth $320.9 million.

According to the latest information published by NAVFAC, in 2011 GoJ-funded projects will include the awarding of a new Apra Harbor medical clinic, a waterfront headquarters building, and a fire station at Finegayan. Moreover, two of these jobs are the “seed” projects written into the GoJ-funded $3 billion Mamizu MACC that was announced last year and that will close its bidding deadline this February.

The fact that GoJ has already appropriated over $900 million (as of JFY09 and JFY10) for the Guam base buildup is a strong counterpoint to some who worry Japan might be dragging its feet over Futenma.

The mainstream media’s heavy coverage of Okinawan protests on the Futenma issue often overshadows GoJ’s significant and deliberate gestures of financial support for the Guam buildup. The truth is, GoJ money keeps coming. In fact, as recently as last December, the Diet allocated another 37 billion yen ($420 million) for the buildup in its 2011 national budget.

That would bring total Japan appropriations to over $1.3 billion so far. And that leads to the next question: what will project financing look like?

This January, GoJ officials were on Guam meeting with the island’s Consolidated Commission on Utilities and the Navy’s Joint Guam Program Office. They were discussing financing options for utility upgrade projects. Simply put, the commencement of such meetings signals this: Now that GoJ money is available and projects have been identified, the focus has shifted to the question of how to structure the financing. While local utilities are being consulted, that decision is strictly the prerogative of the national governments and will require an agreement between the U.S. and Japan.

For years now the U.S. Navy and GoJ have said that such a financing structure will likely take the form of special purpose entities (SPEs) — one for housing, and one for utilities. Guam’s utility agencies will have a role in the utilities SPE, but the specifics have yet to be sanctioned. What GuamBuildupNews.com (GBN) does know is that, at this time, there is no such thing as a “direct” flow of money between GoJ and the Government of Guam.

GBN’s research has found that SPEs are a novel method in utilities development for the Department of Defense. Millions of dollars are being spent on researching a successful approach, and notional models have been on the table for some time.
Stay tuned. GBN will explore this further in the coming days.