THIS testimony was submitted in support of the request by Hong Kong Entertainment, Inc., owners of Tinian Dynasty Hotel and Casino, to acquire a qualifying certificate for tax benefits.
In my opinion, Dynasty should be given this support for three reasons. First, Dynasty is of immense value to the economy of Tinian and the commonwealth. Second, the CNMI government has not met its obligations in support of Dynasty and the economic development of Tinian in general. Third, and most important to the commonwealth, if the Commonwealth Development Authority and the CNMI government do not support Dynasty, then we will be sending a very negative message to other potential investors at a time when investment capital is at a premium and the CNMI does not have the resources to compete with other Pacific and Asian destinations.
Life has changed dramatically for Tinian and the commonwealth since the opening of Dynasty. The owners of Dynasty risked over $150 million on the construction of the hotel and casino. This provided an immediate income to the commonwealth through port user fees, employment agency fees, health center fees, etc. When the hotel opened, new visitors began to arrive in the commonwealth, from Guam and abroad. Dynasty invested more money in promotions to bring foreign visitors to the island. This benefited the airlines, taxies and hotels on Saipan, all of whom paid taxes into the CNMI general fund.
In order to transport their guests from Saipan, both locals and foreigners, Dynasty established a ferryboat service. This again provided revenues for the general fund, without returning a profit to the company.
Dynasty has employed as many locals as are available and who want to work for a private business, rather than work for the government. All the employees, whether local or foreign, pay annual income taxes into the general fund. They also shop at local stores and occasionally eat at local restaurants, providing further revenues for the general fund.
The guests who arrive at Dynasty also provide benefits to the other businesses on Tinian. They rent cars, buy gas, shop at the stores, visit other restaurants, utilize the beach concessions, and buy locally made clothing and souvenirs. This also provides revenues for the general fund.
Equally important, the presence of Dynasty has given the people a first class hotel that can cater to conferences and give the island a source of pride. The governor’s economic summit, the Association of Pacific Island Legislators annual conference, the international Thai boxing tournament, the annual New Year’s Eve fireworks display, Mother’s Day, Father’s Day and the gambling tournaments among others were all sponsored by Dynasty at its own expense. Furthermore, it has contributed thousands of dollars to local school and public events. Its presence has been a great boon to Tinian and the commonwealth, particularly in light of the crash of the Asian marketplace and the terrible events of Sept. 11.
Dynasty has done this, despite the extra expenses involved in doing business on Tinian rather than on Saipan. They must maintain a marketing office on Saipan, which other hotels do not require. They must pay long distance expenses for phone calls to Saipan. They must pay the extra cost of shipping for goods purchased in Saipan. Each of these expenses is an additional burden on Dynasty; a burden that does not have to be born by hotels doing business on Saipan.
The commonwealth has not stood up to its end of the deal. When Dynasty made the commitment to invest in Tinian, they did so with the assumption they would have the full assistance of the government. Although they were prepared to invest in the ferry service, they anticipated the construction of a fully functional international airport. This has not happened. The renovation and extension of a B-29 runway at west field has begun, but is not yet completed. Even when it is completed and ready to receive direct flights, no financing for a proper terminal has been identified. If a plane arrives with 200 people on board, they will have to stand in line, outside the terminal, waiting to transit immigration, customs and quarantine. This will send a bad message back to their various points of origin.
Building the terminal requires other financial commitments that have not been addressed. There is no plan for a fuel dump. If the plane cannot be refueled, it cannot fly. No airline will fly without being confident of refueling. There is no plan for a computer system to monitor immigration. Since the terrible events of Sept. 11, the FAA has imposed strict regulations for monitoring arriving and departing passengers. No airline will be able to fly into Tinian without an FAA approved terminal. All this will take time. Even if everything was already on the board, it would take a minimum of two years to construct and test. Unfortunately, it isn’t even on the board yet.
The existing harbor facility is deteriorating rapidly. The day is not far off before it is no longer functional. This jeopardizes the ferry boat service, not to mention cargo transshipment. No funding has been identified for the repair of the harbor.
A hotel needs a golf course. A site has been identified and an investor has made a commitment to construction, but only in the event that the dump is moved. No funds have been identified for this purpose, and no site has been agreed upon with the federal government.
The bottom line is, Dynasty has made a significant investment. In addition to its original investment, it has pumped in an additional $50 million to maintain operations while waiting for government action on capital improvement projects. Its presence has been of great value to Tinian and the commonwealth. The CNMI government has not made an investment in the future of Dynasty, the golf course or the gaming industry in general. Considering our declining revenues from the visitor industry and the garment industry, supporting Dynasty and the gaming industry on Tinian is in the best interest of the people of the commonwealth. The Commonwealth Development Authority should grant a qualifying certificate to Dynasty and grant it whatever tax relief is within the law. If it does not, the message will go out to other potential investors that the government of the CNMI is not supportive. If, on the other hand, CDA does provide tax relief and support for auxiliary services, such as the airport terminal, repairs at the harbor and movement of the dump, then the message will go out that the government supports private developers and the CNMI is a good place to do business.
I certainly hope that the CDA board and management will choose the best of these two alternatives.
DON A. FARRELL
Marpo Heights, Tinian
