$27M building project to rise

The Commonwealth is gearing for another large investment: an eight-story modern residential building that will cost $27 million to build.
Tasi Homes, LLC executives H. Chieng Tan and Martin Castro made known this plan during a public hearing held at the Pedro Tenorio Multi-Purpose Center yesterday.

The company, which is applying for the government’s qualifying certificate program, aims to develop 49 three-bedroom apartment units to be located along Hagoi Road corner lot near Sugar Dock. This will be built on a 2,975 square meter property with an estimated value of $450,000.

Based on the project plan, the building’s first floor will have parking lots, elevators, a utility room, and administrative offices, among others. The apartment units will be from the second to the eighth floor. The building will also be equipped with backup generator and an underground storage tank.

The project’s estimated $27 million price tag includes construction costs, consulting fees, and related expenditures. The company expects to hire over 100 workers during the construction period.

Earlier this year, the Commonwealth Development Authority approved Tasi Homes’ Low Income Housing Tax Credit application. This time, the company is applying for tax breaks as provided under the CNMI Investor Incentive Act of 2000. Specifically, Tasi Homes is requesting a two-year waiver for both the developer’s and excise taxes. Developer tax is levied on project construction cost while excise tax is considered the import tax.

According to Castro, there remains a high demand for additional multi-family rental units on Saipan. Tasi Homes, he said, will be providing 49 of these high quality dwellings for those who could not otherwise afford decent housing.

“The Northern Marianas Housing Corp. currently has approximately 475 applicants on its multifamily housing list and less than 370 on the waiting list are for Section 8 Vouchers. There is still a high demand for additional multifamily rental units on island,” said Castro.

Bottom line

Businessman Norman Tenorio, who was one of a handful of people present in yesterday’s public hearing, expressed concern about the amount of tax breaks that would be provided to the company.

“I am just wondering how much we’re going to give away for this project? Do you know how much excise and developer tax they will be getting or not paying the government? I would like to know the bottom line,” Tenorio said.

Citing estimates, H. Chieng Tan—who is also the owner of GPPC Inc.—said the requested tax breaks may be around $500,000.

Tenorio, however, doubts this. “I don’t really believe that it’s $500,000. Why is GPPC—a big company—so concerned about $500,000?” asked Tenorio, adding that Tasi Homes could just add this a mount to its cost rather than seek a waiver.

“All of us are paying taxes and here is a developer asking a waiver of excise and developer tax. And why are we going to waive these taxes? We in the business community, we have that responsibility to support the government with the excise tax to pay for the people that run the government, build infrastructure, roads, sewer, water. I run so many businesses, but this [tax] is part of cost…part of running a business,” said Tenorio.

According to him, “If this is not a profitable business, why get into it?” He said the company could just absorb the cost as its contribution to the CNMI government.

“The project is good, there’s no doubt about it. But why is the government going to sacrifice so many millions of dollars for such a project? I have nothing against the project itself, but please…contribute to the tax fund,” Tenorio added.

Several others testified in support of the project, including David M. Sablan, Ivan Quichocho, Ed Arriola Jr., Alex Sablan, Ben Fejeran, and Oscar Babauta.

More developers

In response to Tenorio’s concerns, H. Chieng Tan said it wasn’t the original intention of Tasi Homes to seek tax relief. However, in the course of discussions with potential foreign investors, many questions came up, including tax issues.

“This is to make the project a little bit more attractive for investors. If we can get one or two investors, I think it will open up for more developers to come here. This is fairly a new ground and we should look at it that way,” said Tan.

In an interview with CDA executive director Manuel Sablan after the hearing, it was learned that exact figures cannot be known until all analysis is completed on the company’s packet application. He emphasized that CDA will review and analyze the application.