‘QC law has too excessive requirements’

The Hotel Association of the Northern Mariana Islands called for the amendment of the qualifying tax certificate law yesterday, saying that the existing statute’s excessive requirements are “simply impossible” to comply with.

Hotel Association president Lynn Knight said hotels currently renovating their facilities could make greater investments if they had gotten their qualifying certificates.

However, most hotels have turned back offers of tax rebates or abatements due to the excessive conditions that accompany the investment incentive, Knight said.

Some of these problems are local hire and wage requirements, and earning thresholds.

“All the hotels in our association are in compliance with the local hire law [which requires that at least 20 percent of a company’s workforce be comprised by residents]. But the QCs that they have been offered would push the local hire percentage so high that they can’t possibly meet it,” Knight cited as an example.

Hyatt Regency Saipan, Dai-Ichi Hotel, and Tinian Dynasty Hotel and Casino have all failed to finalize their applications for the qualifying tax certificate program. The only remaining hotel that has a pending application is World Resort Saipan, which plans a $20-million development project that includes the construction of a water park and improvements to rooms and common areas.

“HANMI would really like to see our QC law worked on, especially now that many hotels are doing renovations. Some hotels are doing renovations under $7 million, but that could be $20 [million] to $30 million if they had gotten their QCs,” Knight said. “Although this is a long-term thing, it eventually would bring a lot of multiplier effects into the community by creating more improvements for our tourism industry.”

The Strategic Economic Development Council, which initiated the passage of the Investment Incentive Act of 2000 or the qualifying tax certificate law, expressed support for HANMI’s call.

Council co-chair Marian Aldan-Pierce said the organization will work with the Legislature and the Commonwealth Development Authority to make the law more effective in helping investors.

“There is absolutely no legislation that is perfect the first time it’s introduced. Obviously there are challenges. In this case, the QC law is not helping the existing businesses the way we hoped it would help them. SEDC will push for the necessary changes,” Aldan-Pierce said.