Effects of economic growth questioned

Eyeing an agenda of gradual economic growth, Gov. Ralph DLG Torres said yesterday the administration is looking at gathering statistics for the peak number of hotels to accommodate future development and halt other development whose impact may be questionable, as the Commonwealth also looks to grapple with the ill-effects of the continuing contract worker shortage due to permit delays amidst new economic development in play.

Torres told reporters he would be heading to Washington, D.C.—for meetings with the Office of Intergovernmental Affairs—bringing with the data on the “ripple effect” and dollar figures of the recent delay of about 2,800 contract worker permit renewals.

“We just experienced the disaster of Soudelor…and now we are hit with an additional labor issues,” said Torres. “We are getting hit in both ways—closure” of businesses and “preventing us from growth.

“How important our contract workers are,” and “how important that they are to infrastructure, housholds, and farmers” are some of points of his message he will stress with federal counterparts.

Torres also met with Honest Profit Group—a hotel investor—yesterday. Torres said they requested an additional 15-year lease on top of the 25 years on their current lease they already have but that the administration was still reviewing with the Attorney General’s Office on this request.

“The good thing is—if we have an additional 15 years—it gives the company the tool to get additional funding or stronger business partners knowing that their lease is 40 years,” Torres said. “The downfall of it is if the company doesn’t go through…and that’s where it’s important to foresee the things that we have experienced in the past [with other stalled investors] moving forward.”

Torres noted a current government moratorium on ATV vehicles operator applications, as impact of the current over 10 operators on island has raised questions about the ability of island’s roads to handle the activity.

“If we have 20 ATV companies, do you think it’s good for the CNMI?” Torres said. “Instead of approving everything, we got to look at the” economic, social and environmental impact. “We want the right investment and the timing of those investments—those are things right now that are critical for us to look into,” he said.

Saipan Chamber of Commerce president Alex Sablan said controlled and planned development is what they’ve been asking from the government. He described this as the idea of looking at development in terms of backtracking and fitting out where the CNMI is in terms of its worker pool and determining how many rooms the CNMI can open up with that worker pool; getting contractors to move into the project-oriented H-visas, and getting professional level CWs into other visas to see what the real CW needs are, for example.

“We are asking for a focused group in government to take a look at what the impact of growing up to 4,000 rooms with one developer—Best Sunshine Ltd.—and the advent of adding another couple thousand with other proposals on Saipan,” he said. “We are going to probably need somewhere close to 10, to 12, to 15 thousand workers. “ Realistically, these numbers would not come from the U.S mainland or Micronesia, but typically, Asian countries where workers are readily available and “willing to come because of better wages.”

“We need to have the government focus in on planned development and structured and controlled development because this is going to get out of hand,” he said. “…Investors here going to basically up and leave because they aren’t able to get workers.

Sablan urged that federal and local government agencies form a working group to address the issue, and urged contractors to move to the H-visa program versus the contract worker program as there are no caps to these worker levels.

Since H-visas are set for specific projects, specific timelines, Sablan said, “once that’s done, they are out, and we move on to the next project. And that’s just going to be the fact of life of the situation here.”

Sablan estimates the impact of the shortage of CW workers “in the millions” of dollars in productivity.

“This is a huge impact to our economy and this should have never happened. It’s unfortunate. We saw this coming and we called people’s offices and we talked to them about this and didn’t see to the light of day,” he said. “It could have been headed off earlier but it wasn’t and it’s unfortunate.”

Bait and switch

Concerned citizen Glen Hunter told Saipan Tribune that it seemed odd that the same officials that “rammed a $7-billion casino development down our throats just months ago” would now subscribe to a limited slow and steady growth plan. “There was nothing slow or gradual about that whole process,” he said. “It seems that immediate, fast and improperly planned development was behind the push to get an exclusive casino license handed to a specific bidder.”

He said that now that they have secured that license an alteration to what was promised to what was presented, which appears to be a “clear case of bait and switch.

“The voice of the people was overturned with a promise of a casino being included in a $7-billion integrated resort. That promise was the bait that pushed out anything competitive bidders and granted them a sole license. The switch has been altering that to a casino in a mall and now a casino in a mid-sized hotel. The switch had also been the amendment to allow for the ability to place casino tables and machines in any of the casino license holder’s facilities, apartments, stores, motels, hotels, etc. Potentially leading to a casino gambling sprawl across all of Saipan,” Hunter said in an email.

“The only thing slow about this whole process has been transparency,” he added.

Hunter believes that the administration allowed for a new industry, which will undoubtedly have negative impacts to our environment, culture, infrastructure, and all way of life “but failed to properly tax it to offset those new costs.”

“There is nothing slow about the rise we are witnessing in the housing market and basic commodities,” he said. “As for the workforce there is nothing slow about a request for thousands of new CW permits. It is no doubt that USCIS had stalled renewals. For the past few years a trend toward reducing CWs had been demanded by law. Yet just this year the new industry has placed new applications and is lobbying for expanding the cap that should be reduced.”

Hunter said if the administration wants to control development and mitigate impacts “they need only to properly tax the new industry.” “The casino is the only one operating free of gross gaming revenue taxes, casino table play taxes, all machine taxes, and casino winning taxes. It is also the only casino that does not adequately reveal revenue figures and breakdowns. It also runs entirely on a cash basis and in-house credit system. These all sets up a perfect environment for improperly regulated transactions.

“If this administration wants steady, gradual economic growth, they need only to properly tax the new casino industry and properly regulate it. If not the burden will inevitably fall on us tax payers. We are already feeling the impacts at the stores and in rental properties. Talks of floating a pension obligation bond would also further strain us taxpayers,” he said.

Given a chance to clarify the need for casino taxes, Commonwealth Casino Commission executive director Edward C. Deleon Guerrero said, “the misguided belief by Hunter that this industry does not pay business tax is a fallacy and simply incorrect.”

Guerroro said the casino licensee is required to pay Business Gross Revenue Tax (BGRT) on their Gross Gaming Revenue (GGR: win minus payout). “Currently, they are paying 5 percent of their GGRs that are quite substantial. In addition to the BGRT, they are required to pay $15 million every year for a total of 40 years for their exclusive license fee. Further, they are also required, per the Casino License Agreement, that they pay $20 million a year into a special Community Chest Fund, 60 days after ground breaking of Phase I, for all remaining years of their license. “

“The Casino Licensee’s contribution into the CNMI economy from the payment of BGRT, Exclusive License Fee, EGM’s Jack Pot Tax, employment of close to 700 employees (mostly U.S. citizens), purchase of goods and services from the local vendors, and other community contributions and donations are huge and quite substantial,” he added.

Guerrero said they also are required to pay for the Infrastructure Impact Fee (Developer’s Tax) and other environmental and regulatory fees. This includes the $3 million Commonwealth Casino Regulatory Fee (CCRF) fund.

“The CNMI taxpayers are not burdened with the costs of regulating the industry. This cost is transferred to the industry,” he said.