Yap legislature dithering over iBoom's land lease contract
The legislature’s Government Health and Welfare (GH&W) committee is laboring in approving the proposed land lease of the island’s newly licensed telecommunications company, iBoom! Inc.
It was the first major land lease to be presented to the committee since the law pertaining to public lands was amended over a year ago.
The amended law authorizes the governor to approve only transactions of less than five years. The legislature awarded itself the responsibility for land leases between five and 50 years, the legal limit in Yap.
Now the Yap State Legislature is struggling over the legalese in the lease document.
Headed by technology entrepreneur and Yap native son Lubuw Falanruw, iBoom wants to lease four parcels of public land in the center of Colonia, the island’s only town and seat of state government, for its operations.
Two of the parcels contain lease-holding businesses and one houses the public library and two government offices.
iBoom is seeking to use the land for the “operation of a digital data center; accommodation for niche market visitors; tech and other strategic subletting; on-shore training and job placement; operation of a digital data center; virtual technology upskilling and upgrading and technology research and development applications (including telecom operations); high end tour and activities; and development and exploitation of digital economies.”
Falanruw noted that iBoom is looking at the latest technology and how to best service the state with the least cost to its residents. They will primarily be a subleasing entity at the beginning for a variety of cloud-based digital services like telemedicine and 3-D printing.
“We already have multinational companies ready to outsource to us,” Falanruw said. “All of these activities will be handled by our local workforce, and we’ll bring in the experts to train them.”
Gov. Henry Falan told the legislature that iBoom’s projects are consistent with his goal of enhancing economic development initiatives that would provide well-paid job opportunities and bring home citizens who had moved away for better education and jobs.
Falanruw’s Yapese team began installing fiber optic cable all over the island beginning in May in preparation for the business’s launch.
Yap Catholic High School, the beta site for the project, benefited during the summer session from the newly installed broadband internet connection across the entire campus, according to principal Michael Wiencek.
“iBoom has made it possible for us to expand the programs offered to our students, and our staff and faculty are already using the faster internet connection for more reliable cloud-based storage and collaboration,” he said.
At the July 6 public hearing, legislators discussed how to proceed with what was deemed a more complex document than the legislature had ever dealt with.
Several legislators said no one is against the company or its plans, but they want to “fully understand the lease agreement and ensure that it meets all legal requirements.”
It was determined that a word-for-word, article-by-article examination of the 10-page agreement was required.
Ted Rutun, chair of the 10-member GH&W committee, said he does not fully understand the lease terms. Others admitted the same lack of expertise but pressed on with their examination of the wording and content.
Rutun asked why there are two names in the document – iBoom! Inc. and iBoom! Waab Inc. The legislature’s legal counsel, Leelkan Dabchuren, suggested that two leases might be needed if they were separate entities.
Attorney General Eliesa Tuiloma explained that it is common for a company to have subsidiaries that are included in a lease. In this case, he said, “we’re dealing with iBoom! Inc., the parent company.”
Another source of confusion was a five-year agreement that had been entered into by Falan and Falanruw in November 2019. However, Falanruw wants a longer commitment from the state.
“His business is not going to end in five years,” Falan said. “He sees it as perpetual and continual as long as he lives. I told him, why don’t we do this and give him time to get his feet on the ground and prove himself. We can terminate it when we approach the legislature with a long-term lease.”
That agreement was still in effect at the time of the hearing.
To craft the 50-year lease, the five-member land lease committee worked with Falanruw and his attorney before sending it to Tuiloma for his approval.
Falan sent the final document to Speaker Vincent Figir on May 28 “for review and urgent approval as the landowner to allow iBoom to start all of the required leg work in mobilizing its asset to Yap.”
Falan said the attorney general had approved the final lease agreement.
In the interim, Falanruw met separately “in good faith” with an existing tenant to discuss subletting his parcel to iBoom.
The leaseholder agreed, but Dabchuren said it was questionable if the state, as the owner of the parcel, needs to be involved, setting up more questions from the legislators.
Falan ordered the demolition of condemned structures on two of the parcels that began in December 2020 in preparation for iBoom.
By the end of the hearing’s first day, only the five one-sentence recitals and two of the 26 articles in the proposed lease had been reviewed.
Other questions included the renewal of the lease at the end of 50 years; whether liability insurance was in the lease (it was, the AG said); what was to be done with the library and government offices; and how the lease price is accounted for to ensure payments are correctly calculated.
At one point, in an attempt to assure the legislators of the validity of the contract and the work that went into drafting it, the AG told the assembled that the 10-page lease was a simple, common format.
In the future, he said, if other companies want to establish businesses on the island, their leases may run to 200 pages or more.
Arlynne Chugen, chair of the lease committee and director of the Department of Resource & Development, supported the AG’s assertion.
She said the document before the GH&W committee was agreed to by her committee, Falanruw and his attorney, and the AG.
To inform the group about certain points being questioned and the manner in which contracts of this type are worded, Tuiloma offered procedural insights that he felt would be helpful in moving the session along.
Legislator John Mafel erupted, yelling at him to “not preach” to the legislature.
As frustrations and tensions were running high, Tuiloma responded that it was not his intention to “preach” but only to provide what might be useful examples similar to the one before the legislature.
During nearly three hours of discussion in a follow-on session the next week, the focus remained on how best to review the document.
Should they go article by article? Should they ask the land lease committee, the AG or Falanruw’s team to come back with legal questions?
No additional articles were reviewed.
Chugen and Tuiloma said it was up to Rutun’s committee to identify anything they questioned.
Falanruw’s team quickly prepared responses to the more concrete questions from the hearing and sent them to the attorneys and lease committee for their review. They were awaiting a response as of this writing.
Under the original five-year agreement, the iBoom team is “plowing on” and continuing their work on the island. They have temporarily set up a shipping container on one of the parcels to be retrofitted as a central meeting and testing site.
The team is also researching the land’s infrastructure to determine where underground pipes and other hidden hazards may lie. The Environmental Protection Agency board was presented with the company’s construction plans within the last month and approvals are pending.
The iBoom team is also sending questionnaires to inquiries sent via www.iboom.io to determine how best to serve the community.
But they are still in the test stage, Falanruw said. “We want to manage expectations. We won’t bulldoze our way in or evict anyone. We’re working methodically to ensure that the island’s culture is not compromised and have met with the traditional councils as well as the government leadership.
“Nonetheless, it’s still a logistical challenge to get through the political requirements, applications and paperwork,” he said. “We will deliver as best we can but it might take longer than we planned or want.