The talks began approximately 10 years ago: The United States and Japan had a road map for reducing the number of American forces in Okinawa while at the same time maintaining the U.S. presence in the Pacific region.
Somewhere along the line, figures started coming out. The deal was that 8,600 Marines and their approximately 9,000 dependents would relocate to Guam from the Japanese island, by a projected date of 2014. Moving other military forces and equipment was supposed to follow later. Had everything gone according to plan, the Guam-based Department of Defense population would more than double to about 39,000 in the year 2020 from 15,000 in 2007.
Population figures like these meant that Guam, a small, unincorporated U.S. territory in the western Pacific Ocean, would see the equivalent of 20 years of growth in just a quarter of that time. Things needed to happen, and they needed to happen fast. Infrastructure upgrades were a must, and there were housing needs not only for the incoming military population, but for the tens of thousands of off-island workers who would also flock to Guam to augment the local workforce.
But things have been progressing slowly.
A worldwide recession and mounting federal deficit have dented the relocation plans. Only about 5,000 Marines are Guam-bound, and the others will scatter throughout parts of the Pacific. Fewer Marines meant lower funding for Guam, and the dramatic decline in proposed population growth has had a huge impact on the island, especially in the real estate sector: there's now a large number of vacant housing units and industrial spaces.
We are still in a period in which the ramifications are still working their way through the real estate market, and it has been negative, said Nick Captain, owner of Captain Real Estate Group.
The military buildup was an event anticipated since around 2006, and when the Record of Decision was signed about two years ago giving the go signal to start the buildup, things were looking up. It seemed the investments made during the time were going to pay off.
We had this anticipation and expectation, which has been totally shelved as far as we can see right now, Captain said. It is very difficult to plan real estate decisions when you have such dramatic unknowns.
Boom Or Bust? Depends On The Military
The facts are evident in the real estate decline.
According to Captain, in 2007, there was $686 million worth of real estate transactions on the island. Last year, there was less than $400 million.
The buildup tends to delay any real estate decision-making. People are waiting to see what the military does, Captain added. I anticipate things will get worse if the status quo continues, if it is on a hold and very little is spent.
Should the military buildup get back on track, Captain said Guam's real estate market will stabilize and grow again. He said the future of Guam's economy and the real estate market is tied to any military activity.
Real estate market follows the local economy, Captain said. Job counts have declined, construction jobs have declined, and those are the jobs that have declined dramatically. Market conditions are weak, and when you have a negative or a flat-line job count, you will see a weak economy. For now, the buildup doesn't seem like it is going to happen to the extent it was before.
Core Tech International Inc. and Younex International Corp. are currently the two major builders of housing developments constructed in preparation for the Marines. Core Tech's housing projects were built with the intention to accommodate about 8,500 temporary workers. They spread across several villages on the 212-square mile island. Younex's project, known as the Ukudu Workforce Village, was built to house up to 18,000 temporary workers.
Since completing its facilities, Core Tech has turned a majority of its structures into affordable homes. There's also a partnership between it and the Government of Guam to use one of its facility as a temporary campus for Untalan Middle School, which is currently being rehabilitated.
The Ukudu Workforce Village is unused. Younex management is exploring the best ways to use its facilities, said Sen. Tina Muna-Barnes, chairwoman of the Committee on Municipal Affairs, Tourism, Housing and Recreation.
Both companies have had to adapt to a stalled buildup process, Muna-Barnes said. Once more information is available to our people, we will be in a better position to address any future temporary housing needs.
Muna-Barnes said there's a challenge for both the public and private sectors to provide temporary workforce housing or real estate rentals, because much is dependent on decisions made outside of Guam's local government.
Our island and community will continue to focus our collaborative efforts to meet the growing demand for housing based on our anticipated organic growth, she said.
Guam's housing and real estate sector is presently anticipating a need for 6,000 additional units by the year 2020. This is based solely on the island's organic growth. By 2030, there will be a need for another 7,000 units.
However, with the absence of concrete facts and figures pertaining to the off-base housing needs, it remains a challenge for Guam to prepare accordingly.
Utility Upgrades Needed
Guam needs to construct a new wastewater treatment and disposal facility in the near future. What is uncertain, however, is whether Guam will have to pay for the cost of these upgrades or if the military will assume the responsibility.
Naval Base Guam maintains its own wastewater treatment facility. If the new base is constructed and connected to the Guam Waterworks Authority's wastewater treatment facilities, chances are the federal government will subsidize a portion of the cost.
Simon Sanchez, chairman of the Consolidated Commission on Utilities, the umbrella house for GWA and its sister company the Guam Power Authority, said the utilities are presuming a smaller buildup with reduced impact. They, too, are waiting on details from the DOD about the revised buildup plan.
The much-reduced personnel transfer should result in less upgrades to serve the new buildup, Sanchez said. Until DOD gives us more details, we cannot estimate what will be needed to support their move. Right now, it's just a waiting game until DOD issues the required report on the revised buildup to Congress, supposedly summer time.
Last month, the U.S. Senate Armed Services Committee proposed eliminating $139.4 million for Guam socioeconomic projects, because there wasn't any detailed justification and they were ahead of need.
These projects were proposed by President Barack Obama and approved by the House of Representatives. They include some $106 million for water and wastewater upgrades. The Senate is awaiting three reports from the commander of the Marine Corps and the secretary of the Navy and a buildup master plan from the secretary of defense. Congress, therefore, is prevented from authorizing spending on the Marine relocation, and, consequently, the military cannot use the more than $800 million in Japanese funding available today.
The utilities are key to the buildup, said Heidi Ballendorf, public affairs director for the CCU. The challenge right now is that until money gets appropriated to the utilities we cannot be sure of the size of the build up or exactly when it will happen.
Ballendorf said even with regular growth, the upgrades still need to happen, and both Guam's northern and southern wastewater treatment plants must move up to secondary treatment. A total of seven wastewater plants and pump stations need $300 million upgrades.
Whether the military comes, this is work we still need to do, Ballendorf said. This system is definitely an ailing system and needs a lot of work.
Guam produces about 55 million gallons of water per day -- plenty to sustain the growth and its 41,000 existing customers. There is plenty of power too, as GPA produces 260 to 280 megawatts daily.
Increased Population Means Economic Increase
Despite the current uncertainties, there is no doubt that the military buildup will bring a bounty of economic opportunities for Guam.
When a recent training exercise brought 700 troops to Guam and another 200 to its neighbor island Tinian, estimates were that more than $1.3 million dollars in hotel revenue and about $750,000 in additional spending resulted from it.
Muna-Barnes believes that with the buildup, the island will see an increase in the income tax collected from nonresidents and others working on Guam.
So while the numbers of Marines have been reduced significantly, there are still many possibilities for our economy to gain financially, she said. A population increase of 4,700 nonresident military personnel will mean a substantial addition in revenue for our tourism economy
Though some lawmakers remain optimistic about such potential growth from the buildup, some hesitation remains as to whether Congress realizes that for the buildup to work, Guam must build its utility capacity, as mentioned, as well as other necessary infrastructure, such as roads.
Guam Gov. Eddie Calvo expressed that hesitation when he met with Japanese officials last month.
Now that the number of Marines coming to Guam has been reduced and the financial commitments of both countries have been adjusted, what was once certain has now become uncertain and ambiguous, Calvo said. We on Guam are left wondering whether anyone, even our own sovereign, will give Guam the practical financial offsets it needs to absorb the impact of the coming troops.
While the government of Japan is offering you assistance with your economy as you seek to reduce the U.S. presence of troops in Okinawa, we have to petition our federal government to do the same as it seeks to increase the U.S. presence of troops on Guam.
Still, Calvo said these hiccups don't stop Guam from being patriotic. One third of the island is owned and occupied by the U.S. military. Guam also has one of the highest enlistment rates in the U.S.
But for those in the real estate market, the Marine force reduction is difficult to swallow after many preparations were made.
We learned not to make real estate decisions on what the military says, Captain said. You have to wait and see what they actually do.