Carl Icahn Casino Tax Appeal Could Cost New Jersey Millions
The casinos are contesting the value the state assessed the properties at in past years. The economic downturn in the city the past few years resulted in valuations for properties plummeting.
Icahn wants his casinos to adjust tax payments accordingly. Those adjustments could cost the city millions of dollars.
Icahn’s fourth year appealing Trump and Taj assessments
The news Icahn is appealing the state’s assessment of Trump Plaza and the Taj Mahal for 2017 is not surprising. He has open appeals on both properties dating back to 2014 and pending appeals for past assessments for Tropicana as well.
Icahn would not comment on how much money his companies are seeking in tax refunds, as the negotiations are ongoing.
Last year Icahn paid a combined $32 million in property taxes across the three casinos. The valuation of the three properties plummeted by hundreds of millions of dollars over the past three years.
The county assessed Trump Plaza at $31 million this year. The number is just 15 percent of the 2014 assessment of $209 million per the city clerk’s office.
Since the state took over operations of the city last year, officials from the capital will handle discussions and negotiations regarding Icahn’s appeal. The negotiations are managed by the state overseer, former US Sen. Jeffrey Chiesa.
New Jersey Gov. Chris Christie appointed Chiesa to the role late last year. The two have close ties dating back to before Chiesa’s current role with the state.
Christie said the state was open and willing to negotiate, but issued a word of warning about the forthcoming proceedings.
“What everyone needs to understand is there’s not much money left here,” he said.
Atlantic City just settled on similar tax refund with Borgata
The news Icahn is fighting to get money back is the latest financial setback for the already cash-strapped Atlantic City.
In February, the city finalized a settlement with MGM Resorts and Borgata Casino over tax reimbursements from 2009 to 2015. The casino company was seeking over $160 million. The settlement ended up being for $72 million.
“We have agreed to this reduced payment because we are committed to being a catalyst of Atlantic City’s strong and vibrant future,” John McManus, executive vice president of MGM, said about the settlement.
MGM, which is now the sole owner of Borgata, possibly agreed to lesser amount in order to engender goodwill with the state. The company still hopes to convince government officials to allow casino expansion into North Jersey.
Settlement payment, PILOT tax program creating problems for AC
What the Borgata settlement press release did not mention is how the city is going to pay back the $72 million.
As Christie pointed out, the city does not have millions to dole out to every New Jersey casinos seeking compensation.
Moreover, the Atlantic County Mayors Association recently convened for an emergency meeting to discuss the newly introduced PILOT tax program. Namely, the group wanted to discuss the possibility of losing even more casino tax dollars thanks to the new payment plan.
The PILOT program allows Atlantic City casinos to pay a flat fee of $120 million collectively across the properties each year instead of property tax.
Critics of the bill, including Atlantic County’s Dennis Levinson, point out the bill eases the tax burden for casinos,. However, the non-casino companies in the county still suffer. The county’s mayors are concerned that the PILOT money going to the county government is less than initially advertised.
With less money in the coffers from PILOT and millions more possibly owed to Icahn, things might be getting dire for Atlantic City just when it seemed like things were turning around.
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