The administration of Gov. Chris Christie announced it resolved an ongoing tax dispute between Borgata Hotel Casino & Spa and the government of Atlantic City. The result? Borgata will get $72 million to settle all outstanding disputes regarding property tax refunds the city owes to it.
The announcement came from Christie, as the state has taken over the finances of the troubled resort town.
More on the Borgata tax deal
The tax dispute was one of the major black clouds hanging over Atlantic City’s finances as the state tries to save it from bankruptcy and financial ruin. The full amount Borgata was disputing was $165 million. The $72 million it is accepting is less than half of the amount it could have been awarded should the resort have moved forward and won all of its appeals.
More from Christie:
“This settlement has been one of my administration’s priorities since Atlantic City’s fiscal crisis forced us to assume control of operations there in November with a plan to stabilize property taxes and return the city to a sound financial footing. The city administration, despite all the time and opportunity given to them failed to accomplish this goal as they have with so many others. This agreement saves $30 million more for taxpayers than what Atlantic City had anticipated settling for under its five-year plan.”
MGM and NJ find middle ground
It was obviously not in MGM Resorts International‘s best interest to squeeze every penny out of AC in the tax dispute. (MGM took over full interest in Borgata last year.) Getting extra money that would simply hurt its host city would have been counter-productive. At the same time, MGM wanted to get as much money back as possible.
Former U.S. Sen. Jeffrey Chiesa, who is leading the takeover of AC for the state, also weighed in on the deal:
“The settlement took both sides working closely together to find common ground. As good corporate citizens, MGM Resorts and Borgata understand the financial realities facing Atlantic City and are jointly committed to the revitalization of the area as a good place to live and a prime destination for tourism.
We are grateful for the company’s cooperation in addressing its claim in a manner that provides the City an opportunity to continue on a path to financial recovery – an outcome in which we are all invested.”
And John McManus, MGM Resorts International Executive Vice President, General Counsel and Secretary:
“We have agreed to this reduced payment because we are committed to being a catalyst of Atlantic City’s strong and vibrant future. With this agreement we are assured the relative certainty of payment, and the avoidance of additional cost and time related to further litigation. MGM Resorts and Borgata believe this was the right deal for all parties concerned and is in the best interests of MGM’s shareholders.
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Certainty for Borgata, but lots of uncertainty in AC
Meanwhile, the city has balls in the air regarding other resorts:
- TEN AC (formerly Revel) has plans to reopen next week, although that timeline appears unlikely.
- Trump Taj Mahal owner Carl Icahn said he wants to sell the property.
The city’s casino industry has stabilized in terms of revenue, however, despite some of the chaos surrounding it. Just a few months ago, MGM CEO Jim Murren said AC’s darker days are behind it.
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