New Jersey officials announced a settlement of outstanding tax refunds owed the Borgata casino in Atlantic City in one of the first major moves to help ease Atlantic City’s massive debt since the state took over the resort’s finances.
Under the settlement, Borgata will receive about $72 million, far short of the $165 million it is owed after winning a series of tax appeals for the years 2009 to 2014.
“The settlement took both sides working closely together to find common ground,” Jeffrey Chiesa, who the state appointed to oversee the city’s finances said in a press statement. “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.”
The city has been unable to pay the Borgata the tax judgments and the casino has been withholding its municipal tax payments since last year under a judge’s ruling. The casino will again start making the payments under the settlement, officials said, though those payments are now payments in lieu of taxes paid by all city casinos under other legislation designed to stabilize the city’s casino tax revenue.
Governor Chris Christie pointed to the settlement as validation for the state moving in and taking over the city’s finances late last year.
Christie said in a press statement that settling the tax dispute “has been one of my administration’s priorities since Atlantic City’s fiscal crisis forced us to assume control of operations there.”
“The city administration, despite all the time and opportunity given to them, failed to accomplish this goal as they have with so many others,” he said. “This is a great step forward in bringing Atlantic City back to fiscal health.”
MGM Resorts International, which owns Borgata, said the company wanted to settle the dispute to help the ailing municipality.
“With this agreement, we are assured the relative certainty of payment, and the avoidance of additional cost and time related to further litigation,” said John McManus, the company’s executive vice president. “MGM Resorts and Borgata believe this was the right deal for all parties concerned and is in the best interests of MGM’s shareholders.”
The settlement is less than a proposed settlement for $105 million put forward by city officials before the state takeover went into effect. Christie made a point of showing that the state had negotiated a better deal than city officials, but no details were released on how the city or state will pay the $72 million.
