New Jersey's state overseer has reached a deal with the Borgata that will pay Atlantic City's top casino $72 million to settle a long-running tax dispute that had threatened to push the cash-strapped city into bankruptcy.
The deal announced Wednesday by Jeff Chiesa, a former U.S. senator and New Jersey attorney general, was for less than half the amount the city owed the casino from a series of successful tax appeals the gambling hall filed.
"The settlement took both sides working closely together to find common ground," he said.
It covers the years 2009-15, and includes the casino dropping pending appeals for 2013-15 which could have added another $65 million to the total the city owed.
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The debt has its roots in the continuing contraction of Atlantic City's casino industry, which has seen five of its 12 casinos shut down since 2014. But even before that, an onslaught of competition from casinos in neighboring Pennsylvania badly hurt Atlantic City's casino market. [[238427591, C]]
Because of the lower levels of business they were suddenly doing, Atlantic City's casinos were able to successfully argue that their property tax assessments were too high. A series of appeals won by many casinos over the years blew large holes in the city budget.
Atlantic City was unable to pay the full $165 million it owed the Borgata, which was allowed by a court to withhold current tax payments. Those payments will now resume as part of the deal.
In November, Republican Gov. Chris Christie appointed Chiesa to oversee Atlantic City's finances as part of a five-year state takeover of the city's assets and decision-making power.
"The city administration, despite all the time and opportunity given to them, failed to accomplish this goal as they have with so many others," Christie said. "This agreement saves $30 million more for taxpayers than what Atlantic City had anticipated settling for under its five-year plan."
Republican Mayor Don Guardian's administration declined comment Wednesday night.
It was not immediately clear how Atlantic City would pay the debt, even at its newly reduced level.
MGM Resorts International said it agreed to accept less to settle the case in order to help Atlantic City as a whole.
"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."