World Resort’s QC outlines multiple incentives

Following Saipan World Resort’s express commitment to increase the number of local residents in its workforce, Gov. Juan N. Babauta recently approved the hotel’s qualifying certificate that granted multiple incentives to the company, including 100 percent annual rebate payments for business gross revenue, alcoholic beverage/ bar, and corporate income taxes for a period of 10 years.

World Corp., the company operating the hotel, is currently infusing approximately $20 million for a major expansion and improvement project that would include the construction of a modern waterpark and the refurbishment of the main building’s 265-guest rooms. The company expects the project to be completed by February next year.

The QC, however, sets an abatement cap of $4,042,500. “If…the total combined rebate benefit received by World Corp. exceeds [the abatement cap]…the benefits hereunder will immediately and automatically cease and this certificate will be of no further benefit or effect,” the QC states.

It also requires World Corp. to infuse a minimum of $14,730,000 within specified construction periods—some $3.443 million for extension, $3.36 million for renovation, and $7.927 million for the waterpark.

If the hotel fails to comply with construction periods approved by the Commonwealth Development Authority, which would conclude in Feb. 2005, the QC requires that World Corp.’s expenditures for the project be at least one-third of the minimum capital requirement in three years.

Besides rebate on BGRT, alcoholic beverage and bar, and corporate income taxes, the QC also grants the hotel 100-percent rebate on any developer infrastructure tax paid to the CNMI related to approved business activities before the start of operations.

It also grants the hotel 100-percent rebate of excise taxes on construction materials and equipment used exclusively for approved business activities for the duration of construction and before business operations begin.

The incentives, however, come with several conditions, including provision of employment for local residents and preference for local vendors.

The QC requires the hotel to procure goods and services needed for the renovation project from CNMI-licensed vendors, if their costs would not exceed 105 percent of the costs of goods and services from off-island vendors. It requires the hotel to have at least 20 percent of its managerial and non-managerial workforce to be filled by local residents.

“If we are to give tax benefits, we must receive comparable tax guarantees,” Babauta said, in a letter to CDA executive director Marylou Ada.

The hotel’s general manager, Byung Kyu Park, earlier addressed the governor’s concern, assuring that World Resort would further increase its local workforce, which is currently above the required 20 percent of the company’s total workforce.

“I’ll continue to recruit more local residents to reach 25 percent by five years after our grand opening and 30 percent by 10 years after grand opening,” Park told the governor in a letter.

Park, a board member to the Marianas Visitors Authority, also said that, once the hotel is in full operation, it would have a scholarship program to entice local students to pursue careers in the tourism industry.

“We are in the process of integrating the local cultural activities into our hotel operation. A plan for a local cultural center is underway and once this plan is implemented, I will be obtaining the contractual services of local artists,” Park said.

The QC also mandates the hotel to design and implement a plan for in-house employee and management training programs to teach local workers new skills in hotel and water recreation activities.

“Within a reasonable period of time and in a manner that does not detrimentally affect the operations of the business, the employees of World Corp. who are not CNMI residents pursuant to U.S. and CNMI laws shall be replaced by CNMI residents,” the QC states.

“World Corp. shall design and implement a summer apprenticeship and scholarship programs for CNMI residents …for them to learn skills to advance in careers in the hotel and water recreation industries,” adds the QC.

The QC also requires the hotel to have lower product and service rates for local residents and senior citizens, compared to rates for regular tourists.

World Resort’s waterpark will have water slides, a lazy pool, a separate children’s pool, a poolside bar, and an outdoor barbecue area.

World Resort also plans to refurbish all of the main building’s 265 guest rooms, which will be redefined with new amenities. It also plans to construct a bigger, more spacious ballroom that can seat between 300 to 500 people. An adjoining new banquet room will also be built, along with a specialty restaurant and another buffet restaurant. A new coffee shop and sports bar will rise at the hotel’s lobby.

Earlier this year, the company demolished within its premises the old Royal Taga Hotel, considered as the first modern tourist facility in the Northern Marianas after World War II, to give way to the expansion project.

The hotel had sought from the Marianas Public Lands Authority a 25-year extension of its land lease, which is set to expire in 2015.