Atlantic City PILOT Program Flying to Court After Advocacy Group Sues State

Posted on: May 30, 2017, 01:00h. 

Last updated on: May 30, 2017, 10:42h.

The Atlantic City PILOT (Payment in Lieu of Taxes) program allows the city’s seven remaining casinos to collectively deliver $120 million annually to the local government instead of paying fluctuating property taxes on their resorts.

However, the legal basis of the structure will be challenged in Atlantic County Superior Court this summer.

Atlantic City PILOT program Seth Grossman
Attorney Seth Grossman will get his day in court to make the case that the Atlantic City PILOT program has no legal grounds to stand on in New Jersey. (Image: Dale Gerhard/Press of Atlantic City)

Liberty and Prosperity, an advocacy group based in Somers Point, a town in Atlantic County, argues that the PILOT arrangement introduced in 2014 violates the New Jersey Constitution. The nonprofit says the founding document prevents “special tax breaks for just seven casino properties at the expense of all other county taxpayers.”

Designed as a way to make sure Atlantic City had reliable income to maintain its local government, PILOT seemed like a good idea several years ago amid the fallout from the economic recession in New Jersey and across the US. As tax revenue crashed from dwindling earnings at casinos, government officials and tax appraisers increased property values on resorts.

That led to many companies challenging their property assessments. PILOT resolved the matter moving forward, though previous year appraisals continue to be disputed.

Oral arguments for Liberty and Prosperity v. the State of New Jersey commence on July 17 in Mays Landing.

PILOT Crash and Burn

There are growing calls for PILOT’s repeal or overhaul in New Jersey.

Liberty and Prosperity Executive Director Seth Grossman, who is also an attorney, told the Press of Atlantic City this week, “In the past, tax abatements were given to a handful of blighted properties to encourage redevelopment. Today, these breaks are given to the richest corporations and most luxurious properties in the city.”

Grossman certainly isn’t alone in panning PILOT. Atlantic County Executive Dennis Levinson, whose son Matthew chairs the New Jersey Casino Control Commission, wrote a scathing op-ed recently in which he said the tax scheme helps the casinos at the expense of the citizens.

“Opposition to the PILOT is not an issue of Atlantic County vs. Atlantic City. It is about property tax fairness,” Levinson opined.

And then there is Glenn Straub, the new owner of the former Revel resort, now known as TEN Atlantic City. The Florida-based developer is refusing to participate in the PILOT because he’s not currently operating a casino. The outspoken businessman says he wants to pay property taxes on what TEN currently is: a vacant, lifeless, non-gaming building.

Taxes Increased Elsewhere

The case being made by Grossman and Levinson seem to be supported by news this week that Atlantic County is raising taxes in all but two of its 21 municipalities. County Administrator Jerry DelRosso said ongoing issues with the PILOT program are to blame.  

One of the two towns that won’t see an increase is Atlantic City. In fact, residents will see a substantial decrease, an average of $418 on each homeowner’s tax bill.

The good news for Atlantic City comes as a result of Atlantic County being forced to return $12.5 million in successful property tax appeals from owners in the gambling-friendly city.