Borgata To Stop Paying Taxes Until Atlantic City Pays $62.5M
ATLANTIC CITY, N.J. (AP) — Atlantic City's Borgata casino says it will stop making tax payments until the city hands over $62.5 million in court-ordered tax refunds.
That move could cause the cash-strapped city to run out of money within weeks. Atlantic City owes more than $170 million to the Borgata in tax appeals that the casino won from tax courts by challenging its assessed value as the city's gambling market continues to shrink amid cutthroat competition in the northeastern U.S.
The casino's statement came shortly after Superior Court Judge Julio Mendez granted a motion Friday declaring that the city must pay the Borgata $62.5 million for tax years 2009-10 — payments that have already been ordered and upheld by previous court rulings, but not yet made.
The judge barred the casino from moving to seize city assets to collect the judgment for at least 45 days so that settlement talks can occur. But the judge allowed the Borgata to stop making its current tax payments while the case remains unresolved, which it has the legal right to do.
"We did not come to this decision lightly," said Joe Corbo, the Borgata's general counsel. "We have been tremendously patient, giving city officials every opportunity to pay the amounts we are owed, or to engage us in good-faith negotiations. But after years of delays and unsuccessful appeals by the city, we can wait no longer. We have a fiduciary duty to the shareholders of our parent companies to pursue collection of the amount we are owed, which currently stands at over $170 million with interest."
Mayor Don Guardian has said the debt could force the city into bankruptcy. City officials did not immediately respond to a request for comment after the ruling.
Corbo said the casino remains willing to negotiate with the city and the state of New Jersey in its oversight role of Atlantic City's finances.
"To date, they have not made a serious offer, leaving us no choice but to exercise our rights as a taxpayer," Corbo said.
In addition to the $62.5 million it is owed for tax years 2009-10, the Borgata 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. It was not, and both sides continued to talk, but no agreement was reached.
The failure of the city to meet the 2014 deadline enabled the Borgata to reinstate its tax appeals for those four years.
Atlantic City is grappling with severe budget problems caused by years of decline in its casino industry — by far its largest industry and taxpayer. State officials also accuse the city of decades of overspending and poor financial management, and have proposed taking over most of the city's major decision making authority, including the right to sell off city assets and land. A bill is pending in the state Legislature to give the state vast power over the city's operations.
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