Ancestral Lands agency's expenditures up by nearly $1M
The Guam Ancestral Lands Commission closed fiscal 2019 with a significant increase of $4.9 million (56 percent) in net income, which increased by $1.8 million from FY 2018’s net income of $3.1 million, according to the Office of Public Accountability.
The spike in net income came with a corresponding increase in expenditures increase by $902,000, from $195,000 in FY 2018 to $1.1 million in FY 2019.
OPA attributed the increase to the increase of $752,000in management fees, incurred by GALC for the Guam Development Economic Authority’s (GEDA) services as well as $100,000 increase in salaries.
"GEDA’s increased fees pertained to AT&T’s lease payments of $4.9 million. In the 2006 Memorandum of Agreement, GEDA retains a certain percentage of the rent collected as payment for lease management services. The GALC management will reevaluate GEDA’s role relative to its property management services on GALC leased properties," OPA said.
The independent auditors also found incomplete recording and untimely reconciliation of general ledger balances against the subsidiary ledgers, resulting in misstatements of general ledger account balances, which were corrected during the audit process.
OPA specifically found untimely bank reconciliations and incomplete recording of collections; undeposited cash balance of $175,000; receivables, deferred revenues, lease revenues, and management fees not updated; and operational expenditures and government appropriations not reported in the financial statements.
The auditors recommended the implementation of adequate internal control policies and procedures to facilitate timely reconciliation and review and to ensure complete financial reporting. GALC management concurred that its internal controls are not in place and adopted some measures to address these deficiencies.
A separate letter issued to management cited a repeat recommendation to follow up with a lessee on the remaining $5,000 security deposit and verify the completeness of recording of lease security deposits.
GALC recorded four audit adjustments that increased its fund balance (net income) by $4.1 million. There were no uncorrected misstatements.
According to OPA, the commission's 2019 revenues of $6 million increased by $2.7 million (80 percent), from $3.3 million in FY 2018.
OPA attributed the spike to the $5 million increase (682 percent) in base lease rental resulting from the settlement agreement with the AT&T, which involved back rent for a leased property at Tanguisson Point in Dededo from January 2007 to Sept. 30, 2019. AT&T paid the full amount in November 2019.
GALC and AT&T settled te rent dispute before entering into a new five-year lease agreement, which expires Sept. 30, 2024, for a cable station.
The $5 million increase was, however, offset by the $2.5 million proceeds from the sale of land recognized in FY 2018. GALC derived its rental revenues from its six lease agreements with a one to a 50-year term with private and government entities.
GALC was created through Public Law 25-45 to serve as a conduit for conveying returned federal excess lands to their original landowners. In October 2011, GALC was merged with the Department of Land Management (DLM) and Chamorro Land Trust Commission (CLTC). However, per Executive Order 2019-01, issued in January 2019, it was re-established as a separate agency from DLM, with its Administrative Director.
GALC's total investment in land and other real estates at the governmentwide level was valued at $450.2 million as of FY 2019, a decrease of $8.6 million, which is associated with CLTC.
Of the $450.2 million, GALC’s land inventory is valued at $6.7 million, which remain the same for FY 2019 since there was no lease executed during the year, OPA said.
GALC assumed the role of a claims facilitator to assist ancestral landowners to exercise the rights in the properties they owned. It acts as a developer of the lands. The income it generates from lease rental income is used to compensate dispossessed landowners whose properties cannot be returned.
"GALC has been unable to perform some necessary activities due to the lack of staff and committed funding sources," OPA said.
In FY 2019, GALC was unable to finalize the Land Bank Rules and Regulations (LBRR). The Office of the Attorney General determined that the LBRR could not assess the distribution method without legislation to establish “just compensation” to those dispossessed landowners. The Commission and Executive Director will continue to dialogue with the Guam Legislature to address the concerns of the OAG relative to the LBRR.