The Borgata Casino Hotel has reportedly withheld a .2 million tax payment to Atlantic City as it continues to fight for 0 million the city owes it for successful tax appeals.
A judge has allowed the Borgata to stop making tax payments while both sides explore a settlement over the remaining payments, which were the result of six years of successful tax appeals by the casino. The court also reaffirmed the city’s obligation to pay $62.5 million in payments for tax years 2009-10, according to the Associated Press.
The Borgata and the city also reached a settlement with the city for tax years 2011-14 of $88.25 million, which was supposed to be paid by Dec. 31, 2014. The city, however, also missed that payment and the two sides continued to negotiate, according to the AP.
The Borgata has also been accumulating interest on the payments, bringing the total bill to about $170 million.
Atlantic City Mayor Donald Guardian said his city is quickly running out of money and called the withholding of the Borgata payment “devastating.” He has said the city may be forced to declare bankruptcy.
For its part, Borgata executives said they have tried to reach an agreement with the city, but accused city officials of failing to bargain seriously, according to the AP.
The Borgata is the city’s largest employer with 5,803 jobs as of Feb. 2, representing nearly 25 percent of all casino jobs in Atlantic City, according to the AP.
In a related matter, Atlantic County executive Dennis Levinson told the local Press of Atlantic City that the county—which has a much higher credit rating than Atlantic City—will not issue bonds to pay the city’s debts.
“Atlantic County will not bond to pay the city’s debt to Borgata. That idea is dead on arrival,” Levinson said. “What Atlantic City needs to do is to find a solution that serves the best interest of the taxpayer not just the creditor. The Borgata debt needs to be negotiated down. … Remember, the Borgata debt is unsecured. It is not protected by a guarantor or tied to an asset. So where is Borgata’s leverage?”
