Calvo-Tenorio Transition 2010 ECONOMIC DEVELOPMENT & GUAM BUILDUP COMMITTEE REPORT. Mr. Philip Flores, Chair Dr. Anita Borja Enriquez, Vice Chair

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1 Calvo-Tenorio Transition 2010 ECONOMIC DEVELOPMENT & GUAM BUILDUP COMMITTEE REPORT Mr. Philip Flores, Chair Dr. Anita Borja Enriquez, Vice Chair

2 Executive Brief The curtain will rise on a new era for Guam on January 3rd, 2011 with the inauguration of Governor Eddie Calvo and Lieutenant Governor Ray Tenorio. It is our honor to participate in the transition from the administration of Governor Felix Camacho to the Direction for Guam. Over the last month we have worked with GVB, CAHA, the Department of Chamorro Affairs, GEDA, the Banking and Insurance Commission at the Department of Revenue and Tax and the Bureau of Statistics and Plans. We found some areas to be well run and with a vision, such as GVB and GEDA, and others lacking in direction, such as CAHA.

3 We immediately recognized the lack of resources which faces our government, both financially and talent wise. The lack of resources too often prevents our government employees from reaching their full potential. And while the military buildup could help with the finance side, it will exacerbate the talent issue. Gladly everywhere we looked we saw opportunities to excel.

4 So that we can do more with less, as we present today we ask you to consider improving communications and the sharing of resources within agencies and departments. We ask that the Direction include a One Guam Concept wherein the government partners relentlessly, both within itself and with outside entities. We envision embracement of clustering models to create synergies, of agencies working and sharing with one another rather than protecting their territory. C A L V O T E N O R I O Most of all we see the opportunity for hands on leadership starting from the top.

5 GUAM VISITORS BUREAU Mr. Phil Flores Dr. Anita Borja-Enriquez Mr. Joey Crisostomo Mr. Gregory D. Perez Mr. Leonard Calvo Mr. Stanley C. Wilson

6 Introduction Transition Committee Briefing Guam Visitors Bureau Statutory Composition and Mission Manage structure and FY2011 Budget Visitor Arrivals Short & Long Term Strategic Goals Purpose To ascertain effectiveness of management and staff in fulfilling statutory mandate Review activity and mission alignments in the current environment Identify significant issues of concern Identify opportunities for improvement Findings Industry situation GVB mission and direction Management and staff performance 6

7 Guam Visitors Bureau Public non-stock, not for profit membership corporation (12 Guam Code Annotated, Chapter 9) Paid up membership of 347 individuals and companies (November 20, 2010) Governing Board of Directors 4 appointed by Governor 4 elected by membership 2 appointed by Speaker plus 1 alternate 1 selected by Mayors Council 1 selected by 11 sitting members above Management & Staff General Manager hired by GVB Board Deputy General Manager hired by GM with GVB Board consent Staff covered by GovGuam Personnel Rules and Regulations Total 28 head count and one (PIO) vacancy 7

8 Guam Visitors Bureau Vision Statement A healthy, vibrant and growing visitor industry generating business opportunities and employment for all residents, protecting the island s heritage, cultural values, and natural resources, and making a positive contribution to the community s quality of life. Mission Statement Growing and diversifying visitor arrivals by creating the reasons to visit, attracting visitors from target markets, and providing a differentiated Guam destination experience. 8

9 GVB FY2011 ORGANIZATIONAL CHART Click to edit Master text styles Second level Third level Fourth level Fifth level 9

10 FY2011 Budget (PL30-196) GVB Operation $13,177,625 Admin/Payroll 16% Marketing 63% Destination Mgmt 18% Research 3% Marketing Allocation Japan 68% Korea 12% China/HK 10% All Others10% 10

11 Visitor Source Markets FY2007 1,171,4 40 FY2010 1,166,3 14 FY2011 1,217,632 Increase in USA/HI and Taiwan arrivals and less from C other A L Vmarkets O - T since ENO RIO FY

12 Guam Tourism Industry at Crossroads Shifting from historically Japan centric industry model to more diversified source markets Previous growth and industry activities aligned to Japan driven prosperity, overseas travel boom (1970 s-1980 s-1990 s), hotel investments, etc. Strategic outlook flat to negative due to older demographics, low birth rates and more competition Shifting from travel agent dependency to merit based destination appeal Move away from volume driven low yield market Attract business by promoting value and destination appeal to facilitate pricing power 12

13 Guam Tourism Industry at Crossroads Shifting from industry reactive and accommodative management to ownership model Take control of our destiny Replace short term instant gratification objectives with longer term strategic direction and allocation of resources Shifting from uncompetitive price driven positioning to more competitive value driven destination positioning Migrate away from cheap beach resort image to more elevated position Articulate other destination strengths and attractions to enhance value proposition 13

14 Major Challenges in Transition Sustaining annual $1.2 billion island revenue stream while positioning the industry for stability, profitability and long term sustainability Sustaining and growing arrivals, cash flow to island Installing basic building blocks and institutional support to sustain long term industry viability Short term goals 1. Maintain island employment levels and government tax receipts 2. Each Japanese visitor creates $120 in tax receipts, generates $966 in expenditures ($113 to businesses not touching tourists), and adds $340 to Guam s Gross Island Product 3. Make invested capital in tourism plant and ancillary businesses financially viable 4. Tactical initiatives on messaging, marketing and destination improvements 5. Industry collaboration on sales, promotions and advertising 14

15 Major Challenges in Transition (cont d) Long term goals 1. Galvanize community support to create and promote compelling destination value proposition 2. Brand building initiatives and institutional support to provide unique visitor experience 3. Retrofit or backfill destination voids in visitor expectations (shortcomings) to enhance competitive position 4. Build brand image reputation 5. Strategic investments to recapitalize tourism plant and develop significant China Market 15

16 Challenges in Transition Short term strategy Sustain air service, hotels, island businesses Increase affluent mix in Japan visitor profile Increase repeat visits and maximize seasonal family market Focus on wedding, OL and Dankai markets to drive volume and yield Sustain government tax revenues, quality of life and employment Long term strategy Create and market a compelling destination value proposition Branding and Community Outreach Repositioning industry to capture, maximize future opportunities Regional and international visitors Create overarching brand strength to attract diverse visitor interests & niche markets More FIT s and viable MICE market segment Attracting cruise ship business 16

17 Short Term Strategy Messaging and brand positioning Migrate destination personality to more elevated image Overcome cheap beach resort perceptions for young Build more sophistication into destination image to attract more affluent visitors Guam product & facilities upgraded, more attractions From zories, t-shirts, shorts and beer mug, to loafers, knit shirts, wine dinners and dress casual image Promote higher value tour products Split Guam/Saipan travel brochures and differentiate two destinations Higher hotel ARR Longer stay packages, premium properties Strategic alliances (JCB and Amex tie ins, high net worth pax, selected magazines, promotions, etc.) 17

18 Short Term Results To Date Arrivals Market Share Demographics Focus on volume & yield 18

19 Focus on Volume & Yield Wedding market Fills airline seats & hotel rooms, local spending (music, flora, beauty shop, photo, reception, limo service, etc.) Guam share up from < 8% in 1980 s 1990 s to 28% 2010 (target 30% in declining market base) Each wedding ave pax 2010 estimate 180,000 or 20% of total visitors Meetings incentives convention exhibits (MICE) Target late March July and Oct mid December Strategic plan completion Dec

20 Long Term Strategy Branding and Recapitalizing Tourism Plant & Infrastructure Broaden and strengthen destination appeal in core markets of Japan and Korea Diversify source markets Highlight intrinsic destination strengths beyond inexpensive, R & R beach resort image for young Japanese tourists Shift from travel distribution dependent to merit based destination having compelling value proposition 20

21 Why Destination Branding? Paradigm Intensify Sense of Place, unified brand image Build and communicate compelling destination value proposition Shift from distribution and location driven destination to Merit Based product Need to earn the business, back to basics Need to be competitive Promote differentiated brand worth visiting, longer duration, repeat visitors Create destination value, pricing power Branding Initiative now under way 21

22 Destination Branding What is it? The instant recognition of a place or geographic location Simple, relevant, & emotional connection Why is it important? The differentiating attribute from other destinations The unique identity and personality of a place of business, leisure travel, etc. What sets place apart from other locations, and places Competitive value Who needs to be involved Public and private sector Political and business leaders Grass roots & entire community 22

23 Findings and Recommendations GVB run in very business like manner Destination management business model for $1.2 billion industry Management recognition of island strengths, weakness, opportunities and threats Allocation of resources according to strategic plan, market priorities and funding limitations Current industry challenges well recognized and addressed Short tem strategy in place with performance measures to quantify, calibrate, monitor and adjust where necessary Long term strategy anchored by new direction based on cultural heritage, history and natural assets of local people 23

24 Strengths & Opportunities Proximity to Japan, Korea and increasing affluence of East Asian consumers, China being most significant US Territory, secure environment and unspoiled resort destination with multiple attractions MICE and SMERF markets to fill low months (MICE: meeting incentive conference exhibition and SMERF: social, medical, educational, religious and fraternal) 24

25 Weaknesses & Threats First and last impressions at GIAA Guam parks/historic sites need major upgrades/upkeeps Need to develop and articulate compelling destination value proposition Inadequate infrastructure, lack of convention facilities, and price competitiveness in Asia Competition for labor in heating military buildup Lack of support from other departments and agencies to deliver good destination experience Guam being viewed as military base Lack of night time activities for families 25

26 Findings & Recommendations GVB management cognizant of weaknesses and threats, but need to rally GovGuam wide and community support Mayors Council becoming more involved Need more cultural focus and support from CAHA, DCA and other GovGuam departments involved in cultural heritage Recommend special assistant to the Governor to cut red tape, arbitrate interagency dispute, and provide coordinated and integrated response to tourism industry issues. Also serve as policy adviser to Governor on military impact on tourism

27 Findings and Recommendation (cont d) Hot Issues & Unfinished Business 6. Recapitalizing tourism plant, Micronesian Cruise Association, Safety Agenda, AB Won Pat International Airport, China Initiative Protective integrity of Tourist Attraction Fund Guam Brand affected by Red Light District and deterioration of tourism plant Abandon/Closed Hotels Enforcement of sign laws Recommendation: Implementation of Lt. Governor s Beautification Task Force Committee impressed and happy with change in direction GVB has taken and sound business plan to improve long term industry viability 7. Recommend caution on management change for the sake of change or for political reasons. GVB new direction on right track with breath of fresh air, and long term industry vision to benefit people of Guam 27

28 GUAM COUNCIL OF THE ARTS & HUMANITIES AGENCY

29 Fifth level 29

30 Council on Arts & Humanities Agency Department of Chamorro Affairs CURRENT SITUATION Coherent vision lacking in clarity in both organizations Funding an issue and priorities not well defined Execution of missions muddled and unfocused RECOMMENDATIONS Unify consolidate both organizations into one administrative unit Saves administration expenses and facilities Defined goals, responsibilities and interagency integration of cultural heritage vision 30

31 Council on Arts & Humanities Agency Department of Chamorro Affairs RECOMMENDATIONS DCA is in the best enabling position to articulate a shared vision (i.e., living the Chamorro heritage and culture in harmony with Guam s ethnic diversity Engage and unify other stakeholders Sets stage/agenda on priorities for the preservation and perpetuation of Guam s cultural heritage Avoids policy ambiguity and managerial duplication of responsibilities Engage other institutions to drive focus and execution of mission for measurable results 31

32 Council on Arts & Humanities Agency Department of Chamorro Affairs RECOMMENDATIONS Retool administrative SOPs for efficiency Convert Chamorro Village to generate revenue stream and operate more along business P&L model Stand up grantsmanship to provide funding for cultural heritage projects Develop sponsorship programs for special projects 32

33 Council on Arts & Humanities Agency Department of Chamorro Affairs RECOMMENDATIONS Creation of Governor s Special Assistant for Tourism & Cultural Affairs to cut red tape and direct GovGuam supporting cast to deliver the Guam destination visitor experience Coordinates government agencies for common projects (2016 FestPac, GMIF, GKRR) Mobilizes resources for urgent matters Policy advisor to Governor for military impact on tourism 33

34 GUAM ECONOMIC DEVELOPMENT AUTHORITY Subcommittee Members: David John, George Chiu, George Takagi/Pam Cruz, Rita Nauta

35 GEDA s Mission To develop a sound and sustainable economy through innovative programs that preserve and promote local culture, economic opportunities and quality of life.

36 GEDA Overview Sixteen Mandates Twenty-Seven Full-time Employees FY2010 Budget: Operations: $2.55M Self-Generated Revenues: $1.8M Bond Program Revenues: $0.8M

37 GEDA FY2011 ORGANIZATIONAL CHART Governor of Guam Board of Directors Legal Counsel Administrator Anthony Blaz Executive Administration Executive Assistant (Vacant) Administrative Services Officer George Bamba Buyer I Patrick Guzman Clerk I Emerald Salas Credit Review Committee Deputy Administrator (Vacant) Admin. & Ops. Division Admin & Ops. Manager Bernice Torres Accounting Accountant II Purita Quinamague Accounting Tech III Orlean Gutierrez Accountant (Vacant/unfunded) Systems Administration Computer Specialist Francisco Santos Business Development Division Business Development Mgr Lester Carlson, Jr. Bus. Dev. Asst. Mgr. R. Gregory Sablan Industry Dev. Specialist I Carl Quinata Industry Dev. Specialist I (Vacant) Admin Aide (Vacant/unfunded) Human Resources Division Human Resources Mgr Loretta Villaverde Financial Services Division Financial Services Mgr Christina Garcia Real Property Division Real Property Mgr Lawrence Toves Personnel Specialist I Elenor Lujan Personnel Assistant Daisy Mackwelung Public Finance Public Finance Officer Antoinette Leon Guerrero Management Analyst Jacob Sanchez Admin. Assistant Arleen Evangelista Loans Loan Servicing Spec Gloria Molo Admin Aide Thelma Lizama Program Coordinator II Diego Mendiola Admin Aide (Vacant/unfunded) Programs & Compliance Division P&C Manager Claire Cruz Compliance Supervisor John San Nicolas Compliance Officer Michael Willess *Admin. Aide Rosemary Garrido Marketing & Communications Division Marketing & Communications Manager Rita Nauta Marketing Officer II (Vacant) *Note: Programs & Compliance Admin. Aide will also provide assistance to Real Property Division Updated as of 9/29/10

38 Team GEDA Our subcommittee would like to congratulate the GEDA Team. We believe they have a dynamic group of hard working people that are dedicated to their job. If we can give them the tools they need, we could transform GEDA from reactive underwriter / landlord to the most dynamic agency in the government that can not only cover its expenses, but could be a major contributor to the islands economic expansion over the next decade.

39 Challenges Revenue Issues Office Space Lease Board Gun Shy of Making Aggressive Loans GovGuam Financial Condition Comprehensive Economic Dev. Strategy Plan Outdated QC Law/Rules & Regs

40 Revenue Issues Lease revenues constitute approximately 70% of GEDA annual operating revenues. Leases executed in the early 70 s do not include escalation clauses that allow GEDA to keep pace with increasing costs of operations. Efforts to increase revenues from existing leases and to obtain additional properties to lease have only been partially successful in generating additional revenues.

41 Revenue Issues GEDA obtained 3 industrial parks under a lease from GovGuam including the E.T. Calvo Memorial Industrial Park; the Harmon Industrial Park; and the Cabras Industrial Park. In Nov 2008, GEDA transferred the Cabras Industrial Park to the Port Authority of Guam as specified in a 1998 agreement. This transfer reduced GEDA operating revenues by $500K annually. This reduction, coupled with low escalation rates in leases negotiated in the 1970s and the potential loss of other tenants call to question GEDA s ability to operate.

42 Revenue Issues GEDA s lease of the former Navy Ship Repair Facility land and buildings and its sublease of the facility to the Guam Shipyard will expire in September 2012 resulting in the potential loss of $120,000 in lease revenue. Bond Underwriting makes up the remaining 30% of revenue. However, the fees paid for GEDAs efforts barely, if even, cover costs. Sources of dynamic revenues need to be found.

43 Office Lease Issue GEDA leases office space at the ITC building which is slated to expire February 28, The rate negotiated for 2011 is 49% greater than currently paid (although lower than market rates).

44 Board is Gun Shy Since the Max Havoc debacle, the board has virtually issued no new loans citing criticism from the public. The micro loan program is virtually non existent.

45 Government of Guam Financial Condition GEDA is tasked with maintaining relationships with the markets and telling the Guam story in order to get the best rates possible for our bonds. While the military buildup has helped with eliminating some of the future concerns regarding our ability to repay, the financial news we are reporting is bound to spook the markets and make it more difficult for GEDA to get the best possible rates on our bonds.

46 Need for Comprehensive Economic Strategic Plan A Comprehensive Economic Development Strategy (CEDS) for Guam is required by the US Department of Commerce s Economic Development Administration (EDA) in order for Guam to receive millions of dollars of yearly planning funds and in order to be eligible to apply for EDA funding. The Bureau of Statistics and Plans in conjunction with GEDA completed the application for submission in fiscal year The Government of Guam was awarded $50,000 in federal funds to complete the plan at the onset of fiscal year Yet the plan is not complete!

47 Outdated QC Law/Rules & Regulations The Qualifying Certificate law was written for a developing tourism market 40 years ago it no longer fits the needs of our tourism market. opportunities for Guam must be found to deal with new economic conditions. In addition, the benefits and requirements of the QC program are not suitable for economic sustainability and administrative expenses incurred by overseeing the program.

48 Solutions: Revenue Issues Currently 70% of GEDA s revenues come from rent and 30% from underwriting and loan programs. We would like to transpose these numbers and generate 30% from rent and 70% from underwriting and loans.

49 Solutions: Revenue Issues To accomplish this GEDA must first do a formal cost analysis of the true cost of underwriting and managing bond underwriting. Second, as a public company, GEDA should charge fees more toward market rates to the government to manage these loans.

50 Solutions: Revenue Issues If GEDA is able to get market rate fees, they could beef up their team to review all the outstanding loans in the governments portfolio. With today s historically low interest rates and the buildup story, Guam should be able to rewrite many of our loans. The proceeds could go to extend maturities, lower rates, free up cash flows or receive additional funds from the market.

51 Solution: Revenue Issues Monitor existing leases to determine those in non-compliance allowing GEDA to renegotiate leases to current market value; Purchase leased properties especially those with terms that favor the tenant in order to release properties at current market rates; Obtain additional properties for leasing under the GEDA industrial park program; and Obtain additional properties for lease under the Guam Ancestral Lands Commission.

52 Solutions: Revenue Issues GEDA has the following proposals pending with the legislature: Obtain additional properties for the GEDA industrial park program at the former Voc Rehab area. Appropriate funding to allow Guam Environmental Protection Agency and the Dept. of Public Health and Social Services to pay almost $500K in back rent. To assist in funding economic development initiatives, GEDA should aggressively pursue grant program opportunities and leverage resources by developing partnerships/cooperatives with local and federal counterparts that share common goals & objectives.

53 Solutions: Revenue Issues Additional programs to utilize at a higher rate: Governmental Purpose Bond Programs GEDA Revenue Bond Programs Industrial Development Bonds/Private Activity Bonds Securitization of other revenue streams e.g. Grant Anticipation Revenue Vehicles (GARVEEs) Special Assessment District Bonds Real Property Tax-Backed Bonds Lease-Lease Back Structures

54 Solution: Office Lease Issue GEDA owns the Tropical Color building. They have been unable to find a tenant. We would recommend that we push for payment of outstanding rent from Dept. of Public health and Social Services and EPA and use the proceeds to renovate the Tropical Color building to meet their needs. Determine how long it will take to renovate and negotiate a lease extension for that period with ITC.

55 Solution: Board is Gun Shy It is not appropriate that GEDA is being held to a success standard that we would use to judge a for profit bank. A new paradigm, with new measures of success must be developed. GEDA is a lender of last resort. If it has default rates equal to local banks, it is not issuing enough loans. A more appropriate measure of success must be developed.

56 Solution: Board is Gun Shy Further GEDA s status as a not for profit public corporation should be affirmed and guarded against political interference that could threaten the authorities new revenue sources. The additional revenue should be used to increase lending to micro loans and new industry opportunities for Guam. To further enhance lending, GEDA should team up with SBA and USDA. GEDA could guarantee loans, and the SBA and USDA would supply the funding.

57 Strategy: GovGuam Financial Condition GEDA should work with the new Administration to show the Government of Guam is serious about Fiscal Recovery. 5% of budgeted revenues to be committed to deficit reduction, holding the line on expenditures remaining diligent on revenue enhancements through improving tax collection efforts. Part of these efforts should be to restructure any and all current outstanding bonds that could perform better for the territory. Continue positive dialog with Credit Rating Agencies and bond investors in the annual review of the financial condition of the government of Guam.

58 Solution: Comprehensive Economic Strategic Plan Although at face value the development of a CEDS plan was granted only $50K in contrast to CNMI s funded request of $150K; Millions of dollars in Federal Grant money is not being awarded because the CEDS is not completed. The government has the money to complete the plan. We recommend GEDA should collaborate with UOG Pacific Center for Economic Initiatives to take the lead in facilitating the development, completion, implementation and monitoring of Guam s CEDS in conjunction with the Bureau of Statistics and Plans, Department of Labor and the Guam Chamber of Commerce.

59 Solution: Comprehensive Economic Strategic Plan Regarding the Guam Chamber of Commerce, there is very little coordination between GEDA and the Chamber. To truly engage the Guam Chamber of Commerce as a partner in economic development, we recommend that the Governor designate a seat on GEDA s Board to the Chamber to provide a more direct link with both organizations and leveraging resources to foster entrepreneurship and enhance the islands business-friendly environment.

60 Solution: Outdated QC Law/Rules & Regulations Economic development organizations in the mainland have evolved to be independent organizations outside of the government network. GEDA should embrace best in practice programs to not only redo our Qualifying Certificate but to identify new industries. In the short to intermediate term new industries could be Build- up related such as helping local companies obtain bonding. Further GEDA should leverage the Buildup to once and for all brand Guam as Where America s Day Begins for top US companies.

61 QC Program: Eligible Industries Agriculture Aquaculture Mariculture Manufacturing Commercial fishing Services Export Trading Companies as defined in 11 GCA, 26101(d), if the main office of the export trading company is in Guam Producing water or disposing of wastewater, or both, jointly with the Guam Waterworks Authority The Base Operating Service Contract (BOS) contractor for the military on Guam A small business entity operating on a military base on Guam or as a subcontractor to the BOS Contractor A global internet infrastructure services company providing internet connectivity and colocation facilities and its/their tenant-sellers in the sales of goods, services and information over the internet Tourism Guam based trusts Recycling Insurance, commercial insurers, reinsurers, or captive insurers Affordable housing and needed facilities

62 and Emerging Industries Affordable Housing Ancestral Lands Development Arbitration & Mediation Captive Insurance Film Production Light Manufacturing Regional Distribution Center Regional Recycling Center Renewable Energy Transshipment

63 Transition Report 2010: BANKING AND INSURANCE Subcommittee Brief Banking & Insurance Commission Department of Revenue & Taxation 6363

64 Department of Revenue & Taxation Organizational Chart

65 Regulatory Division Charged with the registration of business entities, issuance of general business licenses such as sales or services, alcoholic beverage licenses and other regulated business licenses including insurance, securities, banking, real estate and recordation of secured transactions under the Guam Uniform Commercial Code Composed of the General Licensing and Registration Branch, the Compliance Branch, the Weights and Measures Branch and the Insurance, Securities, Banking and Real Estate Branch. Enforces compliance on persons who transact business in Guam without business licenses. The Division also regulates and supervises holders of business licenses for the protection of the consumers in Guam from unsafe and unfair business practices.

66 Issues: Banking & Insurance Banking and Insurance needs a complete overhaul as there is no clear organizational structure in place. The Banking and Insurance Commissioner plays dual roles within DRT in addition to DOA, so this department is pretty much run by one employee of DRT. When this employee is out of work, everything stops. The Commission meets irregularly and has no real controls in place for accountability. Existing Guam Banking Act and UCC regulations are extremely dated.

67 Solutions: Banking and Insurance Separate Banking & Insurance into two separate commissions with respective commissioners selected by the commission. Structure: Governor appoint board for terms of five years. Members would have staggered terms to create continuity. Members would not be asked to resign when administration changes. Board would elect chairman and select committees as well as define mission & organizational structure. Appeals mechanism would be put in place.

68 Solutions: Banking and Insurance Administratively, the divisions need to be separated at DRT. Case in point, DRT has yet to develop rules and regulations for the implementation of the S.A.F.E. Act mandated into local Guam law this past summer and federal law last year in response to mortgage fraud in the Mainland during their most recent real estate boom. Investment restrictions on insurance companies must be aligned with National regulations and not Guam-specific which makes insurance companies non-competitive.

69 Solutions: Banking and Insurance The regulatory arm of the financial services industry really has to step up to deliver credibility through transparency of rules & regs (mitigating selective interpretation/enforcement situations); and the "business-friendly environment" that are both crucial to growing the industry. Growing the financial services industry, through aggressive marketing efforts for certain niche markets like captives and the "headquartering" of US companies to serve the Asia/Pacific region, can only be effective if the government and the regulatory arm of the domicile delivers on those two key factors.

70 Solutions: Banking and Insurance With the tax revenues collected from the respective industries, a portion of these funds should be allocated to the Regulatory Division for resources to improve customer servicing & manage timely processing of applications/requests. To provide accountability, a 45-day automatic conditional approval should be enacted to ensure reasonable processing time frames. To increase transparency, the Commission must ensure to release timely notices of new regulations and/or changes to all licensed/registered companies

71 Bureau of Statistics and Plans (BSP) Subcommittee Members: Dr. M. Claret Ruane Dr. Anita Borja Enriquez C A LPeter V OLeon - TGuerrero ENORIO

72 BSP Administration Director: Alberto (Tony) Lamorena V Chief Planner: Machelle Leon Guerrero Chief Economist: Albert Perez Coastal Program Administrator: Evangeline Lujan Governor Ricardo J. Bordallo Governor s Complex PO Box 2950 C A L VHagatna, O - TGUE N ORIO Telephone:

73 BSP Mandate Enabling Legislations: Public Law and Public Law Created to oversee the preparation of a comprehensive development. Mission and Mandate: Provide technical assistance, support and planning information to the Comprehensive Development Council and assist in integrating and coordinating all levels of development planning throughout the government of Guam. P.L gives BSP flexibility to appraise, coordinate, prepare and assist in the development of a wide range of plans, policies and studies, including the preparation of planning elements not the duty and function of staff and line agencies.

74 BSP Mission Statement To ensure Guam s resources are effectively used for the benefit of present and future generations by ensuring consistency among various plans, policies and programs.

75 Brief Description of key positions and functions BSP received $1.2M in local appropriation for FY2011 used for business and economic statistics, planning information, socio-economic planning and general administration. The Bureau will also receive and administer eight 100% Federal-funded grant programs amounting to almost $2.6M ranging in scope from coastal management, land use planning, coral reef management, fisheries management, law enforcement assistance, drug control programs, and administrative support to an advocacy program for individuals with developmental disabilities. The Director of the Bureau oversees a staff of 35; key positions include a Chief Planner, Chief Economist and Coastal Program Administrator. Two locally funded planners were detailed to the Census Bureau to assist during the enumeration and census data compilation. Another two planning staff were assigned to the Civilian-Military Task Force to assist in planning activities

76 Significant Issues for Governor Elect s Immediate Attention The mandates of BSP s enabling legislation have not been effectively utilized by past administrations as a mechanism for planning and guiding future economic, social and land use of the Island s natural resources. The role of the Bureau to coordinate base mapping of the Island is frustrated by agencies unwilling or unable to share information. Sharing and access are critical for comprehensive C A L V O T ENORIO planning.

77 Significant Issues for Governor Elect s Immediate Attention Social and economic planning for Guam s future growth unchecked and will result in continued duplication of efforts and conflicts in competing priorities. A sound growth policy is urgently needed. Public Law repealed the Guam Planning Council created in P.L and transferred all the powers, duties, responsibilities and jurisdiction to BSP, but no funding source was identified. Guam is member in various national, regional and international organizations including the NGA, PBDC, SPC, ESCAP and SPREP. BSP has been the lead agency entrusted with providing administrative and technical support in providing coordination and maintaining Guam s standing in these organizations. Past administrations have treated Guam s membership in some of these organizations with varying degree of commitment.

78 Significant Issues for Governor Elect s Immediate Attention The Bureau s various program offices are scattered; some are in the Adelup Complex but physically separated, while two others are located at the GCIC Building. Funded infrastructure and technical assistance grants through the U.S. Department of Commerce Economic Development Agency are based on priority projects identified by the Office of the Governor through the Guam Comprehensive Economic Development Strategy (CEDS) Plan. In January 2009, BSP received a grant through Office of the Governor to update the Guam CEDS, but as of today, no progress has been made. BSP was involved in the review of the 2030 Port Authority Master Plan and the Guam Land Use Plan for Northern and Central Guam. The focus of the latter planning document was on the impact of the anticipated military build-up on transportation, utilities and public services.

79 Significant Issues for Governor Elect s Immediate Attention According to BSP director Tony Lamorena, the organizational chart submitted to BBMR is not the correct organization chart. The certified organizational chart needs to reflect a correct structure. BSP s current organizational structure is confusing; most related to planning, with little emphasis on statistics. The Business and Economic Statistics Program does not fit well in the overall structure. Shortage in data related personnel has resulted in delays toward updating the BSP websitehttp:// and ensuring adequate link to key government/planning agencies. Bureau of Economic Analysis, U.S. Department of Commerce, which generated the recent GDP estimates for Guam, recently expressed to OIA s Wali Osman the need for Government of Guam to address data deficiencies as well as the need to automate government processes. In order for BEA to estimate Guam s GDP in a manner similar to its national GDP estimates, the territories would need to be included in the U.S. Census Bureau s annual, quarterly, and monthly surveys. These surveys include: annual and monthly surveys of retail and wholesale trade, annual capital expenditures survey, monthly surveys of the value of construction put in place, quarterly services survey and service annual survey, annual survey of manufactures, monthly manufacturers' shipments, inventories, and orders,

80 Listing of Department/Agency Goals Goals Stated in the Bureau s FY2011 Budget Submission: andasobjectives, existing Performance Metrics or Annual Reports Goal 1 Have an up-to-date information system and data bank for the continual collection, storage and dissemination of public information needed or utilized in the development plan and policy formulation process. Goal 2 Promote and foster the use and preservation of Guam s land and ocean resources and ensure consistency with the plans, policies, laws and programs to ensure that Guam s resources are used effectively. Goal 3 Conduct, or cause to be conducted, investigations, studies, surveys, research and analysis relating to the physical, human, social and economic development

81 Listing of Department/Agency Goals and Objectives, existing Performance Metrics or Annual Reports Planning Information Program to conduct or cause to be conducted investigations, studies, surveys and analyses relating to the human, social and economic development of Guam and to publish the results thereof; to conduct or cause to be conducted data analysis and report writing courses to maximize the Government of Guam s efforts to effectively analyze and disseminate demographic, social and economic information on Guam; to ensure the delivery of economic, social and physical data and information to planners, policy makers and individuals with public information requirements; 1. to support the evaluation, development and implementation of fisheries management plans for Guam and the Western Pacific region; and,

82 Listing of Department/Agency Goals and Objectives, existing Performance Metrics or Annual Reports Socio-Economic Planning Program to coordinate and provide direct planning support to Guam s criminal justice system by preparing a strategic plan, the monitoring of the strategy s implementation, and assessing the effectiveness of the strategy to meet goals; to coordinate and provide direct planning support and technical assistance for economic development planning; to coordinate federal programs to ensure Guam s priorities and policies are met while ensuring they are consistent with federal directives; to ensure a coordinated approach to Guam s participation in national, regional, international organizations, such as the National Governors Association, Pacific Basin Development Council, Secretariat of the Pacific Community and the Western Pacific Fisheries Management Council; and,

83 Listing of Department/Agency Goals and Objectives, existing Performance Metrics or Annual Reports Guam Coastal Management Program to implement activities related to local land use planning. These activities ensure Guam's natural resources are properly managed including the review and coordinate the Master Plans for various Government of Guam agencies and departments. to represent the BSP at the Application Review Committee. Permit applications are reviewed and coordinated with participating agencies for critical issues such as benefits to the community, consistency with local zoning laws, protection of environmentally sensitive areas and economic growth.

84 Listing of Department/Agency Goals and Objectives, existing Performance Metrics or Annual Reports to lead the Government of Guam agencies in addressing the issues related to natural resources and the military buildup and the demand for expansion of development associated with the arrival of additional military presence. to continue overseeing federal consistency determination on Guam to ensure federallyfunded projects are consistent with local laws. to continue the efforts of the Coral Reef Initiative Coordinating Committee, which focuses on promoting the awareness of coral reef issues. Includes coordinating information exchange and intergovernmental efforts, fishery management and research, outreach and education activities, reduction of land based sources of pollution, and reducing impacts from recreational activities, and coral reef long term monitoring program. to continue to support the work at the GIS/LUPP. The GIS/LIS will concentrate on creating GIS applications to manage the increase in military and private development.

85 Proposed or Pending Rules and Regulations and Ongoing and Upcoming Initiatives Guam Comprehensive Economic Development Strategy (CEDS) was a 5-year economic plan that expired in A new/updated CEDS plan must be filed with the U.S. Department of Commerce Economic Development Authority (EDA) before Guam can pursue new infrastructure and/or technical assistance grants. The North and Central Guam Land Use Plan and the Guam Compensatory Mitigation Policy were completed in Both plans underwent the public review and comment process as mandated under the Master Plan adoption process pursuant to PL The Plans have been submitted to Governor Camacho with the recommendation that they be forwarded to the Guam Legislature for formal inclusion as an element in Guam s Comprehensive Development Plan

86 Challenges that the SubCommittee foresees If it is the intent to rely on BSP, according to its intended mandates by Public Law, key classified key personnel who oversee strategic mandates of BSP may need to be assessed to determine their ability to carry out key planning guidance, etc., on behalf of the Office of the Governor. For at least the next four years, the future of the Island rests with the incoming administration of Governor-elect Calvo and Lt. Gov-elect Tenorio. Over the past 16 years, there has been a lack of a coherent and coordinated planning strategy, and if this trend continues, the people of Guam will suffer from unguided development and missed opportunities. A more effective model for comprehensive planning driven by the Office of the Governor needs to be established, which factors in a careful review of outstanding relevant priorities across all master and/or strategic plans recently developed by Government agencies, as well as new ones in light of the current and long-range Guam situation.

87 Opportunities for Change or a leadership to carry out mandates of BSP in order to provide foresight, Direction direction and guidance present current and future stages of development needed by Guam to sustain the desired standards and quality of living for its people; that to fully enjoy the benefits that can and would be derived from Guam's limited human and natural resources Chapter II, P.L However, need to address the gaps and fill them accordingly with the right model and assets (leadership, personnel, funding). Leverage expertise from Bureau of Economic Analysis and funding from the DOI Office of Insular Affairs to improve data collection and reporting (e.g., updated GDP/GIP), as well as automation processes across Government of Guam to effectuate better comprehensive planning. Capitalize on regional partnerships. The Bureau is also mandated to provide technical and administrative support to the Office of the Governor in areas pertaining to Guam s participation in international and regional organizations. Regular engagement with these entities will strengthen the Governor s partner position.

88 Opportunities for Change or a Direction This new administration has an opportunity to engage in more effective and relevant comprehensive planning for a new direction for Guam. This includes an overall view of Guam s current situation and future challenges and opportunities, and the development of realistic actionable strategies that factor in leveraged assets and funding resources. Need to complete a new 5-year Comprehensive Economic Development Strategy (CEDS) (or Strategic) Plan driven by the Office of the Governor. This will enable key government agencies to gain access to new infrastructure and/or technical assistance funding from the U.S. Department of Commerce Economic Development Administration. GEDA is prepared to initiate collaboration with the UOG Pacific Center for Economic Initiatives (PCEI) and BSP. BSP has offered to sub grant the project to UOG PCEI, working in collaboration with BSP, GEDA, and required stakeholder groups to complete within a four-months span.

89 Budget Program Function FY 2010 FY 2011 Executive Direction 371, ,377 General Funds Business & Economic Statistics 366, ,259 General Funds Planning Information Program 260, ,920 General Funds Socio-economic Planning 135, ,725 US DOI Coral Reef Initiative (CRI) 564,000 US DOI CRI Monitoring Grant US DOC Coastal Management 564, , , % Federal Grant 100% Federal Grant 988,200 US DOC Inter-jurisdictional Fisheries Act US DOC Western Pacific Fisheries General Funds 100% Federal Grant -0-12, , % Federal Grant 100% Federal Grant US DHHS Developmental Disabilities US DOJ Edward Byrne Memorial Grant US DOJ Paul Coverdell Science Grant 240, , % Federal Grant , , % Federal Grant 99, % Federal Grant

90 Executive Summary of Recommendations Review BSP s overall mandates, and develop a better organizational model with stronger leadership and personnel capabilities to effectuate outcomes. Mandate the submission of all government agency strategic/master plans including relevant technical reports--to BSP (in hardcopy and electronic formats), to ensure the left hand knows what the right hand is doing across agencies. Mandate the sharing of base maps of the island, including updated maps, by government agencies to BSP. Revisit the current location of BSP offices and determine if the current structure makes strategic and operational sense in support of BSP s mission and goals. Develop effective communications system to improve collaboration across units within BSP, as well as across government agencies. administration needs to mandate all government agency directors/leaders open lines of communication using technology.

91 Executive Summary of Recommendations Align efforts of GEDA, BLS, and BSP to strengthen the Bureau of Statistics and Plans as a onestop information resource center for Guam, where reports/data can be accessed electronically for planning or policy development purpose. Address proposed data surveys recommended by BEA to develop updated Gross Island/Domestic Product (GIP or GDP). Consider BEA s recommendation for all Government of Guam offices to automate data collection processes. Mandate that Department of Revenue and Taxation require businesses to report principal business activity using the North American Industry Classification System (NAICS) codes on all business income tax forms. Establish a visible sustainable Economic Research Center possibly at GEDA.