New Jersey Governor Chris Christie (R) says long-disputed tax agreements have finally been reached with Atlantic City resort casinos Bally’s, Caesars, Harrah’s, and Golden Nugget. Billionaire Carl Icahn’s three properties, the Tropicana, former Trump Taj Mahal and Trump Plaza, have also settled with the state.
Financial details of the settlements were not disclosed, but the governor said an $80 million bond ordinance that the City Council introduced last month would cover all of the agreements.
Which means that all remaining tax disputes with Atlantic City casinos have now been settled, a development that removes a heavy fiscal burden that’s been hovering over the resort town’s local government for years.
New Jersey took control of Atlantic City’s finances last November. In February, the largest of the casinos, the Borgata, settled its tax dispute for $72 million, less than half of the $165 million that the city owed the MGM property.
“The settlements reached with these casinos are the culmination of my administration’s successful efforts to address one of the most significant and vexing challenges that had been facing the city,” Christie declared. “Casino property tax appeals no longer threaten the city’s financial future.”
No More Appeals
As the recession hit and Atlantic City casinos saw revenue plummet, owners argued the valuation of their resorts were inflated, and that property taxes were therefore too high.
Courts later determined that the resorts had indeed overpaid. The Borgata sent in property checks in excess of $100 million between 2009 and 2012, and $65 million between 2013 and 2015.
Christie’s takeover of Atlantic City was largely in response to what he believed was the inability of local leaders to take steps to resolve the property disputes. He appointed Jeffrey Chiesa, a former US senator and attorney general for New Jersey, to lead the financial recovery. Coming to terms on eight appeals for under $80 million appears to be a massive victory his administration.
“We made it a priority from day one to reach settlement agreements with casinos that are favorable to the city,” Chiesa said.
Gaming operators now participate in the city’s Payment In Lieu of Taxes (PILOT) program that guarantees $120 million annually to local coffers. In exchange, resorts cannot file property tax appeals.
Cleared for Takeoff
With over $100 million in tax disputes now settled, the city can focus on looking forward instead of back. And according to all recent data, there’s plenty of reason for optimism.
Atlantic City gaming revenue posted its first annual percentage increase in 2016 (7.21 percent) since 2007, with casinos collecting a $2.6 billion win. Gaming is even stronger this year, as win is up over 11 percent for gaming operators through June.
Perhaps the most compelling sign that Atlantic City’s fortunes are changing is that investments have returned. Hard Rock is spending $500 million to transform the Taj into a rock ‘n’ roll-themed resort, and Caesars and MGM recently revealed that they too are ready to put more money on the table.