Carl Icahn Seeking Property Tax Refunds for His Atlantic City Resorts
Posted on: April 26, 2017, 02:00h.
Last updated on: April 26, 2017, 09:59h.
Billionaire Carl Icahn wants to pay less tax on his Atlantic City properties. That likely won’t sit well with local officials in New Jersey, nor the thousands of workers who were laid off as a result of his closing of the Trump Taj Mahal last fall.
Icahn challenging the valued assessments of the Tropicana, shuttered Trump Plaza, and since sold Taj Mahal, isn’t anything new. The corporate raider now has open property tax appeals that date back to 2014.
Trump Plaza and Taj Mahal aren’t part of the city’s PILOT program, the controversial Payment In Lieu of Taxes initiative that essentially freezes property tax increases for the remaining casino resorts. The seven properties still in operation are required to collectively pay the city $120 million annually for 10 years, so long as their gaming revenues do not dramatically increase.
Icahn says the valuations of the two former casinos under the Trump Entertainment Resorts umbrella, a company he acquired in bankruptcy last year, are too high. He’s appealing their tax in hopes of having millions of dollars refunded to his corporation.
Contacted by the Press of Atlantic City, Jeffrey Chiesa, who’s overseeing the state takeover for Governor Chris Christie’s (R) administration, explained, “We’re in discussions with Mr. Icahn and his representatives right now about trying to resolve outstanding monetary issues.”
High Stakes Dealings
The PILOT program came in the New Jersey Legislature as a result of the US recession, which put much of Atlantic City underwater economically. The town’s local government saw revenues decrease as gaming and tourism plummeted, which led to the closure of four resorts in 2014 alone.
To make up the difference, Atlantic City government increased property taxes on resorts. The casinos were quick to fire back, saying their valuations were being increased while their revenues were diminishing.
The Borgata, Atlantic City’s most profitable resort, now fully owned by MGM, reached a $72 million tax refund settlement with the city earlier this year. A court found that the Borgata overpaid by $165 million, but MGM agreed to the reduced refund in good faith.
“We are committed to being a catalyst of Atlantic City’s strong and vibrant future,” MGM Resorts executive John McManus said in February.
Potentially Costly Outcome
While MGM was willing to compromise, it’s not clear if Icahn will be hospitable to a settlement in order to better Atlantic City.
Icahn could be looking at a substantial refund. For example, the Taj Mahal was valued at $812 million in 2014, but today has a value of just $225 million. Icahn’s sold the property earlier this year to Hard Rock at an undisclosed price.
Icahn is arguing he’s been wrongly assessed by the city for years, and restitution is in order. Chiesa hopes Icahn and other casinos appealing their taxes are willing to negotiate.
“We are hopeful this settlement (Borgata) demonstrates to other Atlantic City casino property owners with tax appeals that the State is committed to good-faith negotiations to the benefit of all parties,” Chiesa declared.
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