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Friday, April 25, 2014

CDA: Only 4 qualifying certificates are active for now

The government’s qualifying certificate program has only four active recipients for now, out of the 14 certificates issued since the program’s inception years ago.

Documents obtained by Saipan Tribune from the Commonwealth Development Authority yesterday showed that businesses that currently enjoy the benefits of the QC program are SandCastle Saipan, Saipan World Resort, Bridge Capital LLC, and Saipan Laulau Development Inc.

Records further show that a total of 10 qualifying certificates have been marked “inactive,” mostly because these businesses simply didn’t agree with the conditions offered and refused to accept the certificates. Other QCs were either revoked or had expired.

SandCastle Saipan is the first business that benefited from the government’s QC program when it invested $1.5 million in 2001. It was given both rebate and abatement on excise tax, BGR, income, and developer infrastructure, among other taxes. The company still benefits from the certificate to date.

World Corp., which does business as Saipan World Resort, also has an active QC for its $25.5 million investment made in 2005.

Saipan Laulau Development’s QC, which the company acquired in 2008, remains in effect for its $54.1 million investment.

Bridge Capital LLC was granted QC benefits in 2006 for its $12.2 million investment.

Of the 14 QC’s the government issued since 2001, 10 are classified as inactive due to varied reasons.

Saipan Tribune learned that Tinian Dynasty Hotel & Casino, which acquired its QC in 2002, had its certificate revoked in September 2011. When it first obtained the QC, the company’s investment was at $135.3 million.

Hard Rock Café Saipan, which got a qualifying certificate in July 2002, also has an inactive certificate after its benefits expired in September 2012. The company invested $4.7 million when it applied for the QC.

The government revoked the certificate of the Spring Water Inc. on Rota when the company did not proceed with its promised $1.6 million investment on the island in 2002.

In the case of Hyatt Regency Saipan, the company had lobbied with the then-governor not to sign the QC as it did not agree with some of the conditions being required of it. The company invested $20.5 million in 2002.

The Rota Resort & Country Club, on the other hand, surrendered its QC in January 2005. The amount of its investment was at $93 million.

Tony Roma’s & Caprissiosa’s QC benefits expired in May 2003, resulting in its certificate becoming inactive. The firm had invested $1 million.

The former Dai-ichi Hotel Saipan, meantime, did not accept the QC in March 2004 despite investing some $32.5 million.

We Manage Calls Inc. surrendered its qualifying certificates in 2005. The same case was noted for PTI Services Inc. when it surrendered its certificate in November 2011.

In the case of Sandy Beach Homes, LLC, the company let its benefits expire in December 2011. The firm invested $28.3 million under its QC.

Meantime, Saipan Surfrider, LLC declined to accept the offered QC in May 2013.

According to Carline B. Sablan, CDA economic development analyst, beneficiaries with expired QCs may apply for additional tax relief on expansion/renovation projects that meet the minimum capital investment threshold set by the Investment Incentive Act of 2000. 

She said the application process would be the same: the applicant submits a complete application package to CDA; the filing fee is paid; a notice of application is published; notices of the public hearing are published; a public hearing is conducted; the CDA board meets, in consultation with the Division of Revenue and Taxation, to make a recommendation on the QC application.

A QC, if any, and CDA’s recommendation is forwarded to the CNMI governor, who is the ultimate decision maker for the program.

Saipan Tribune learned that CDA has 90 days from receiving a complete application package, including payment of the applicable filing fee, to process or make a recommendation on a particular application to the governor.

The governor, in turn, has 45 days to act on CDA’s recommendation.

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