The Senate has rejected extensions of land leases for Young Energy Solutions and Formosa American Samoa Trade Corporation for lots at the Industrial Park in Tafuna.
The Senate vote came after hearings by the Senate Government Operations Committee, chaired by Senator Togiola Tulafono, at which the Director of Commerce Petti Matila and the Governor’s Legal Counsel Kristi Thaxton testified on Thursday.
Young Energy Solutions, is exercising its option to extend its original lease, which is just one day short of ten year, for 30 years to end on July 31, 2046.
The company’s lot is 0.625 acres and according to Director of Commerce Matila, it’s paying 35 cents per square ft.
Under the amended lease, the government would agree to add retail, call center and production and sale of food and beverages to how the lot can be used. The listed subtenants are Computer World LLC, Sky Bistro LLC, Young Electrical Services LLC and Data House.
According to Matila, the only active tenants of the lot are the owners, Young Energy Solutions and Data House.
The main concern that was raised by Senator Togiola is a clause in the lease agreement, whereby if the government approves, the lessee can use its leasehold as collateral for a mortgage.
Togiola questioned the Director of Commerce why this clause is in the proposed lease, when the law specifically prohibits government property and assets from being used as collateral by any company or individual.
He said if the Senate approves the lease extension with this wording, the Senate would be allowing a violation of the law.
Matila said companies that seek extensions of leases for longer periods seek reassurance as proof to give the banks that they will have space for their businesses
She said their discussion is helpful in identifying parts of the lease agreement that should be corrected.
Formosa American Samoa Trade Corporation is also seeking a 30-year extension to its lease at Industrial Park. The amended lease would add to the company’s existing business operations, financial services and a snack bar. Current uses of the company’s lot are for a wholesale and car rental services.
Committee Chairman Togiola said, in reality, the lease extension, as proposed, would not be 30 years but 55 years. He pointed to a clause in the lease which states that at the expiration of the extended term, the lessee shall have the option to renew the lease upon the same conditions and terms for an additional period of twenty-five years. His interpretation of the clause is that the company would not have to come back for Fono approval, but will automatically have its lease extended for another 25 years.
The Governor’s Chief Legal Counsel Kristi Thaxton said the lease agreement did not have to spell out that Fono approval would be needed, as it is the law for all lease extensions to be approved by the Fono.
When Senators took a vote, they rejected the lease for Young Energy Solutions and Formosa based on the concerns raised. It was noted that the companies’ current leases have not expired and the lease extensions can be submitted in the next Legislature.
The Senate approved a 25-year extension on the lease between StarKist Samoa Inc. and ASG for the 3.71 acres that the cannery is leasing at the Industrial Park. The original lease expired on September 30,2020, and the cannery is requesting a lease renewal to end September 30, 2047.
The cannery was paying $72,828 annually under the original lease. From Oct 1, 2022, it’s paying $113,274 per year.
