HAGÅTÑA (The Guam Daily Post) — The Village of Donki, a new Guam outlet from popular Japanese retailer Don Don Donki, is on the cusp of opening and, after a limited qualifying certificate for property tax abatement was granted to Pan Pacific Retail Management Guam, a callout for job seekers has been announced.
Pan Pacific Retail Management Guam applied for the qualifying certificate in November 2022, and said it invested $20 million more than it first anticipated when projections for the Tamuning grocery and retail store were initially made, projections that were upended during the Covid-19 pandemic.
The total investment came in at $114 million, following pandemic-related setbacks, H-2B visa labor challenges and now a still-recovering consumer base, according to information presented to the Guam Economic Development Authority.
GEDA Administrator Melanie Mendiola told the agency’s board members March 23 that certain factors left the project “slower out of the gate than planned,” referencing the Japan retail giant’s original plans to open in 2021.
Mendiola explained the processes GEDA’s Business Development Department went through in determining what type of QC to recommend for the company, based on the criteria, set by law, that are considered before granting of tax abatements and rebates.
Before GEDA were the options to provide up to a 75% rebate in corporate income tax for up to 20 years, a 75% rebate in dividend income taxes for up to five years, and a 100% real property tax abatement for 10 years.
Mendiola said “it was a clear-cut yes,” that Pan Pacific would create jobs, but the answer to whether the retail giant would replace imports wasn’t as clear.
“The response to this is unclear to the team — does it reduce prices? Also unclear: Does it create a vitally needed facility or affordable housing? No. Does it create economic activity? Yes,” Mendiola said, adding later that as a new entry into an existing, mature grocery and retail market, the amount of incremental new activity was also “a little bit unclear.”
The project has seen both support and opposition. Mayor Louise Rivera of Tamuning-Tumon-Harmon backed the requested tax benefits, as did representatives of Pacific Unlimited. Sen. Tom Fisher and seven operating grocery store owners and various tenants of Guam Premier Outlets, however, wanted the proposal denied.
Over the last 20 years or so, nine QCs have been awarded. Addressing what Mendiola called “insinuations” that GEDA has handed out the tax benefits “like candy,” she defended the process, which she said includes hearings and deliberations, and requires board consensus.
“It’s an offense to the board who weighs in this important incentive for foreign investment, and the hundreds of hours that the team spends managing this program,” she said.
‘That is also inaccurate’
Some of the criticism included concerns over tax breaks that were not open for consideration, according to the GEDA administrator.
“Opposition has also said that PPRM may also receive (business privilege tax) abatement, and that is unfair in the competitive market. That is also inaccurate, as BPT has never been on the table for a general services QC – it is for a special services hotel, and clearly this isn’t a hotel,” Mendiola said.
The business development team recommended granting a limited qualifying certificate for 100% real property tax abatement for 10 years.
While concerns were raised by board members on the yet unknown impacts of the Tamuning store on 93 businesses already in the local retail and grocery market, members also were told that based on Guam Visitors Bureau yearly assessment of visitor spending, market entries and exits don’t impact how much consumers spend. Instead, the entry of The Village of Donki will bring a shift in consumer spending already in the market.
Based on information GEDA had in the QC application, Mendiola said, the investment is new money for the island.
She said, after calculating the $1.5 million estimated property tax without a required contribution for a local arts agency, GEDA is looking at an “upfront abatement of less than 1% on the total investment.”
“Even if property taxes are reported to be more, GEDA still sees a less than 4% or 5% abatement on the total investment,” said Mendiola. She believes the data shows there will be no negative impact to those who opposed the QC.
GEDA board members voted to pass the recommendation through an adopted resolution, and granted the limited qualifying certificate.
At least 200 workers
As part of the agreement, Pan Pacific Retail Management Guam must maintain 200 full-time employees for the entire term of the certificate. It will also need to adhere to employment requirements, such as employee training and a minimum percentage of employees who are U.S. citizens, said Mendiola.
A representative from the company told board members its investments already have led other foreign investors to show interest in Guam.
“There will be 15 tenants; we will operate food court and tenants … (who will bring) something new to Guam,” said a representative from Pan Pacific Retail Management Guam. “We have approached investors all over the world, so we will bring Daiso from Japan; Matsumoto Kyoshi, they are the largest drugstore chain in Japan, … they have decided to invest in Guam because we have invested such a huge amount of money. So we have already attracted new investors.”
The official further stated the $114 million Pan Pacific is investing here doesn’t include the funds the store’s 15 tenants will bring in the future. Those business partners will also be hiring their own employees, on top of the expected 300 total jobs Village of Donki will offer, the official said.
Officials said there is room for future expansion of the new store, if its opening succeeds.
Pan Pacific Retail Management Guam announced it was hiring for roughly 18 positions in a host of areas including administration, merchandising, quality assurance, delicatessen and marketing. Interested applicants are encouraged to submit résumés to hr.guam@dondondonki.com/.
The Village of Donki, which is currently under construction in Tamuning, is seen in this photo taken on March 10, 2023. A limited qualifying certificate for Pan Pacific Retail Management Guam has been approved for 100% real property tax abatement for 10 years.
