Atlantic City’s Borgata casino appears to have scored another major tax win in New Jersey after MGM Resorts bought out Boyd gaming’s half of the property for 0 million.
The May 31 sale could be used as a real-market indicator of the company’s value, putting it at about $1.8 billion, points out an analysis in the Press of Atlantic City.
However, Borgata has won a series of tax appeals in the state that have the casino currently assessed at $850 million. The $900 million deal reflects the business value of the casino and not just the value of the property.
More importantly, the state’s legislature has just adopted an emergency aid package for the struggling resort that creates a payment in lieu of taxes plan for the city’s casinos.
According to the Press, the timing of the sale prevents the deal from having any impact on what Borgata pays under the new law. Instead, a three-piece formula using gaming revenue, hotel rooms and property size will determine what each casino pays in lieu of property taxes.
That has caught the attention of city officials as the municipality struggles to repay back taxes to the casino won in tax court. Borgata has skipped its last two quarterly tax payments as the city owes it about $170 million in back tax refunds.
“The ink isn’t even dry on the PILOT deal and this transaction takes place, and it’s worth more than what the judge said it should be,” said Atlantic City Council President Marty Small. “I think we need to keep our options open to basically get another look at that ruling.”
According to the Press, Borgata is currently billed $29 million per year for property taxes based on its assessed value and will likely be locked in at a similar amount under the Pilot program.
The city’s casinos will collectively pay $120 million per year in lieu of property taxes, so long as casino revenues stay at current levels.
John McManus, executive vice president and general counsel at MGM, told the paper that the legislation played no part in the timing of the announcement of the deal with Boyd.
“The Borgata negotiation had been underway long before and was not concluded when the PILOT legislation passed,” McManus said.
The PILOT bill was proposed more than a year ago, but was not passed until last month after a lengthy battle in Trenton over rescuing the city’s finances.
