Atlantic City Council Weighs PILOT Tax Break for Borgata Housing Development

Atlantic City’s nine casinos pay annual property taxes based on their gross gaming revenue (GGR) rather than the assessed value of their resorts. On Wednesday night (July 22), the Atlantic City Council will consider extending a similar payment-in-lieu-of-taxes (PILOT) arrangement to a proposed housing development next to MGM Resorts’ Borgata.

Earlier this month, Atlantic City Mayor Marty Small Sr. revealed that MGM Resorts was mulling a major housing development on the land it owns located between Borgata and Harrah’s in the city’s Marina District. Small detailed that MGM is considering three blueprints, ranging in size from 1,000 to 3,500 residential units.

The Atlantic City Council’s agenda for its July 22 meeting includes the review of Resolution No. 479. If adopted, the city would be authorized to negotiate a financial agreement with MAC Corporation, a New Jersey corporation that’s fully owned by MGM Resorts, for the “redevelopment and improvement of areas in need of rehabilitation or development.”

MGM Housing Tax Break

MGM has long owned the land directly northeast of its casino hotel, outright controlling the city’s most profitable resort since buying out Boyd Gaming’s 50% in 2016 for $900 million. MGM hasn’t spoken publicly about its possible housing development, which could include a mix of apartments, condominiums, townhouses, and single-family homes.

Resolution No. 479 suggests that a favorable tax structure is needed to bring the housing plan to reality. The measure proposes allowing the development to be included in the state’s Long Term Tax Exemption Law, or New Jersey Statutes Annotated 40A:20-1.

“Due to the high cost of development within the City and the current tax rate, a Long Term Tax Exemption is needed to make the development of the Project Area financially feasible,” the resolution states. “The City and MGM wish to negotiate the terms of a financial agreement for a Long Term Tax Exemption to incentivize the development of the Redevelopment Area pursuant to the Amended Redevelopment Plan.”

City officials make no secret about their hopes that the Borgata housing project is a go. The resolution states that “the City desires to see the Project Area developed due to its positive impact on the City.”

PILOT Program

New Jersey’s Long Term Tax Exemption Law is one of the Garden State’s key urban redevelopment tools. It allows municipalities like Atlantic City to grant long-term property tax exemptions or PILOT abatements to investments in designated redevelopment areas.

The MGM land, the city resolution clarifies, is within the city’s Amended Redevelopment Plan, which, among other things, designates parcels for the Long Term Tax Exemption Law.

Atlantic City’s casinos have participated in a highly controversial PILOT program since 2016. Instead of traditional property taxes, the casinos pay taxes based on their annual GGR, excluding iGaming and online sports betting.