Consultant: ACG casino tax payout at $500M

Over some 24 years, Tinian investor Alter City Group projects $500 million in tax payments from casino operations within their Plumeria Golf and Casino Resort, according to one of their consultants.

Macau-based Alter City Group has applied for tax breaks for a period of 25 years. But casino tax payments will not be subject to tax incentives, according to consultant Anthony Muna.

“Casino operations will pay all required taxes,” Muna said in an email.

For the applied period of incentives—from year 2016 to year 2040—the resort project will make the following accumulated direct payments to the CNMI government and the Tinian Municipality: Hotel occupancy tax, $1.4 billion; payroll tax, $170 million; CRM permit fees, $2.7 million; casino license fees, $25 million; and public land lease, $153 million.

He said total direct payments will amount to $1.7 billion and total direct tax payments from casino operations is estimated at $2.2 billion.

Muna said the tax incentives requested amounts to $1.1 billion.

The net benefit to the CNMI—plus jobs, and other contributions—is $1.1 billion, according to Muna.

Under the CNMI’s qualifying certificate program, ACG is requesting a rebatement or abatement of BGR Tax, Bar Tax, Income Tax, Developers Tax, and Excise Tax assessed over the period of 2016 to 2040

Muna said the total estimated taxes rebated or abated projected for the period is $1.1 billion.

ACG is requesting for an award of tax incentives under the QC program to undertake “this immense $1.2-billion project that will undoubtedly transform the Tinian economy and the livelihood of Tinian residents,” Muna said.

Other benefits

ACG is planning to build a $1.2-billion project to be located at Puntan Diablo Cove in Tinian, occupying an area of 1.5 million square meters of public land.

“As a plane approaches the Tinian Airport for landing, passengers will be greeted with the sight of the resort immediately to the right of the runway,” Muna said in his email.

The resort will have 955 positions to fill when it opens in 2019 after its first phase of construction, comprising 87 managerial positions and 868 non-managerial.

Muna lists the average salaries for managers at $54,000 per annum. For mon-managerial positions the average salary is $27,000 per annum.

In 2023, the resort will have 2,004 positions to fill comprising 182 managerial positions and 1,822 non-managerial

In 2040, the resort will have 3,542 positions to fill comprising 322 managerial positions and 3,220 non-managerial.

According to Muna, resort construction and completion as planned will take about 12 years. With projected commencement date of construction in August 2016 and with an estimated completion date of July 2027.

The resort construction is divided into three phases with the first phase further sectioned into “Phase 1A, Phase 1B, and Phase 1C.” Resort construction being phased in will allow for orderly development of the property and for operations to commence as phases are completed.

Phase 1A completion will take 24 months (starting Aug 2016) with an estimated completion date of July 2018. Completed will be 150 unit villas and the casino. Operations for the completed casino and villas will commence in 2019.

Phase 1B and 1C will begin concurrently and projected to commence August 2018 and to be completed by July 2020.

Total cost for Phase 1 (A, B, C) is estimated at $445 million. A combined total of 1,789 units/apartments/rooms comprised of “villas, service apartments, and hotel rooms; a casino, an 18-hole golf course, and a club house will be put into operations. Utility infrastructure required to support the resort will be included in construction-power plant for standby power (the resort will hook up to the Commonwealth Utilities Corp. power to draw on excess capacity at the CUC power plant), a reverse osmosis water system, and a wastewater treatment plant,” according to Muna in his email.

Public contributions

Muna lists a non-profit arm group, funds for ferry and public services as direct benefits, among other indirect benefits, as follows:

-The “ACG Foundation” created as non-profit arm of ACG Inc. The foundation will oversee education and training of local residents to qualify for employment at the resort—at both managerial and non-managerial positions. It will also entertain, consider, and grant funds to assist civic minded non-profit organizations.

-A pledge of $5 million to improve airport and seaport access to Tinian.

-Engage ferry services, which will include not only the transportation of passengers but also vehicle, for “roll on and off” service.

-Beach park facilities for public access along the beach at resort site to be completed in Phase 1A construction.

-A health care clinic to be made available to the public. This will be completed in Phase 3 of construction.

-Compliant closure of Tinian Public Dump by Febraury 2017 at estimated cost of $3.8 million. ACG took over waste management of the dumpsite in 2015.

-The 5,000 construction workers required will need the lease of properties and buildings. The annual payroll of workers is estimated at $63 million.

-Resort patronage of local vendors for fresh vegetables, meat, fish, goods, and services, with average local purchases in the first five years at $6.4 million annually.

-Resort guests patronage of local vendor—at restaurants, shopping centers, or tours—is expected at 20,000 visitors per month by the end of 2020 when the resort has 1,789 units available for occupancy.