ACG to discuss QC application with CDA, Torres

The Alter City Group said it will still have to discuss its qualifying certificate agreement with the Commonwealth Development Authority after Gov. Ralph DLG Torres signed a resolution and approved having ACG under the program.

According to ACG chief executive officer Edvon Sze, they will be meeting with CDA as well as the governor to talk about the QC regarding certain conditions that they need to fulfill.

“Hopefully we can reach an agreement,” Sze said, “We need to have this agreement presented to the CDA board and the whole board of directors they will vote, and then they will do the recommendation to the governor again and the governor will sign then it will become official.”

“Now is time to sit down with CDA to discuss,” managing director Ken Lin said.

Sze said some of the conditions in the QC are “not really favorable to us” citing as an example the condition of having locals to fill 30 percent of their employee needs.

ACG projects needing “at least 1,000 staff for phase one of the development” which would mean hiring about 300 locals on Tinian.

“I would like to point out that that is very difficult for us because the number of people living in Tinian is not that much. It will be like close to 4,000 people, and of that 4,000, how many are potential employee that we’ll be able to hire?” Sze said.

“If I can’t achieve that 30 percent, I cannot have the entitlement from the QC,” he added.

He also cited a ratio requirement for managerial positions to be locals.

Sze said the conditions are “putting us in a difficult situation to obtain this allowance” even though their hiring preference are Tinian residents first followed by CNMI residents, residents from U.S territories in the Micronesian region, U.S. citizens, and then green card holders, before considering Commonwealth-only worker visa holders.

“We prefer to hire locals, as a matter of fact. But again, it’s going to be difficult for us and we don’t think we will be able to do it even though we’re willing to hire locals. And if we cannot achieve it, if we cannot comply with the conditions in the QC, there is no way we can get the benefit back at the end of the year. Those kinds of things put is in a very bad situation,” Sze said

Sze also mentioned the requirement of buying local products which is no problem for them, but worrisome if there are no supplies of local products available.

“We would like to see more things that makes sense and flexible and not something that will put us in a bad situation and is not achievable,” Sze said.

“It defeats the purpose of allowing us to have this QC,” he added.

Tax incentives

In its application last February, ACG requested to have, during their 12-year construction phase, tax abatement for the 2 percent developer’s tax and 100 percent off on the business gross revenue, bar, and excise taxes. They also have asked for a rebate of the 100 percent of income taxes during construction and operational phases of its resort for a period up to 25 years.

Last April 29, Torres signed CDA’s resolution and memorandum recommending the issuance of Qualifying Certificate No. QC 2016-01 to ACG “with tax benefits limited to those taxes directly related to the construction and operation of a golf and casino resort in Puntan Diablo Cove, Tinian.”

The project includes the construction of 324 villas, 1,205 hotel rooms, 3,098 service apartments, a casino, two 9-hole golf courses, an 18-hole golf course, a golf club, a golf villa club house, a cultural center and 1,057 staff dormitories and community retail units as well as infrastructure developments including power plants, wastewater treatment plants, standby power generation systems, and reverse osmosis water systems.

In its resolution, CDA recommended 100 percent abatement of Excise Taxes for construction materials directly related to the approved project until completion of Phase 3 or July 2027, which ever occurs first.

The excise tax abatement shall be capped at $17.6 million.

On BGRT and Alcoholic Beverage Tax abatement, CDA recommended for Years 1 to 15 a 20-percent rebate, plus an additional 30 percent rebate on the BGRT multiplied by the ratio of total resident employees to total employees; an additional 30 percent rebate on the BGRT multiplied by the ratio of total resident managerial employees to total managerial employees; and an additional 20 percent rebate on the BGRT multiplied by the ratio of local purchases of goods and services used in the operations of the business to total purchases of the same goods and services.

The BGRT and Alcoholic Beverage Tax rebates shall be capped at $496 million.