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Airport land-use change agreement signed with FAA

ASG to pay subsidy to airport for next 10 years

The U.S Federal Aviation Administration has signed the appropriate document authorizing the American Samoa Government to use more than 300 acres of airport land, which the federal agency’s audit two years ago found to be used by ASG, without benefiting the Pago Pago International Airport.

Additionally, the territorial government has agreed to pay just over $2 million for improvements of the Tafuna airport.

The FAA land use audit report in 2014 found that of approximately 865 acres of land approved by the FAA in 1973 for airport use, about 325 acres had been removed from the airport and used for other ASG purposes — including the Tafuna Industrial Park, the American Samoa Power Authority compound in Tafuna and continuing all the way to the Veterans Memorial Stadium.

Faced with a loss of millions of dollars in FAA funding, ASG was required to have a corrective action plan, which was submitted in February last year to address findings in the FAA audit. The FAA sent out a letter, dated May 3, 2016, accepting the corrective action plan, which includes American Samoa providing “$2.5 million annual subsidy for a minimum of 10 years to cover airport, maintenance and capital improvements.”

However, ASG was required to revise the language of ASG’s proposal to reflect that the request is for “Land-Use Change, authorizing the use of 325 acres for non-aeronautical and revenue generations purposes” instead of transfer.

Responding to Samoa News inquiries as well as an update on this case, FAA spokesman Ian Gregor pointed out that ASG has “agreed” to pay the airport $2.5 million a year for a 10-year period in exchange for FAA approval of a “Land-Use Change” authorizing an interdepartmental change in jurisdiction for the 325 acres rather than a “release” for the disposal of airport property.

“The ‘Land-Use Change’ authorization was executed by the FAA and ASG on Jan. 20, 2017 and considered resolved,” Gregor told Samoa News via email last Friday from Los Angeles. “We will monitor the situation to ensure ongoing compliance with the corrective action plan.”

Last September, the governor requested and the Fono approved a Concurrent Resolution confirming to the FAA that ASG would agree to fund and subsidize operations of Pago Pago International Airport in the amount of $2.5 million per year for a period of 10-years, in exchange for the 325 acres of airport land.

Samoa News understands that the Fono approved resolution as well as the update on ASG’s corrective action plan was submitted to the FAA last December. ASG’s FY 2017 budget included the $2.5 million subsidy for the airport.

ASG, in the corrective action, estimates that of the 325 acres, only 150 acres are available to be leased at market rate — approximately 100 acres from the Industrial Park area; 50 acres from general ASG land area, Administrative Service area and Parks and Recreation areas. (See Samoa News edition Aug. 29 and 30, 2016 for more information on ASG corrective action plan.)

During his recent Senate confirmation hearing, Commerce Department director Keniseli Lafaele was asked about the status of the industrial park land, which involved the dispute with the FAA.

Lafaele first explained all land covered in the FAA dispute is now resolved with the agreement that ASG provides funding to the airport and to charge the fair market rate, which in accordance with FAA correspondence, is 45 cent per square foot and ASG has agreed to it.

He reminded senators that millions of dollars in FAA was held up until this issue was resolved. When asked by the committee how much is paid per square foot at the industrial park, Lafaele says ASG has started to comply with the FAA’s market rate of 45 cents, starting with all new leases as well as renewable leases.

However, if a new tenant requests some help, the government can work on starting with a lower rate for at least by two or three years, and it would eventually reach 45 cents, according to the DOC director.

Responding to other committee questions, Lafaele says that there are very old leases at the rate of 12 or 13 cents per square and other recent ones around 20 cents. But when these leases are up for renewal, it will be 45 cents, he said, and stressed that ASG will still work with new tenants, who seek a break to start off their lease.

When asked about any leases at 60 cents per square foot, Lafaele does not believe there is lease at 60 cents per square foot.

In its audit report, the FAA raised concerns that the airport is not able to be financially self-sustaining because it does not earn any income from the land that was formerly part of the airport, which today may not be receiving fair market value rental rates from tenants who presently use airport property for non-aeronautical commercial purposes.

Previously rates at the industrial park vary, depending on the business and the agreement reached with ASG. An ASG official told Samoa News last week that in recent years, the average rate is about 20 to 25 cents per square foot.

Samoa News notes that all ASG leases, which are 10 years or more, require Fono approval.

In addition, Samoa News should point out that ASG Treasurer Uelinitone Tonumaipea reminded lawmakers during his confirmation hearing this month that approval of subsidies, which are included in the annual budget, is only a “forecast” and government spending depends on collections; and if collections do not meet obligations then ASG pays priorities first, such as payroll.

Tonumaipea was answering a comment from a faipule about non-payment in full of subsidies to semi autonomous agencies, such as LBJ Medical Center and the American Samoa Community College, being a serious issue.

The governor in one of his cabinet meetings last year said the same thing — that payment of subsidies is not a priority, payroll is.