The Borgata had filed a lawsuit against Atlantic City stating that city officials overvalued its property deliberately to get the resort to pay a higher property tax.
US.- The Borgata Casino Hotel & Spa filed a lawsuit against Atlantic City accusing its officials of deliberately overvaluing its property to get the complex to pay a higher property tax. The tax assessor had valued the casino property in 2009 and 2010 to be around US$2.2 billion but that estimate was overruled in 2013 after a 3 week bench trial that caused the tax court judge to slash that estimate by more than fifty percent and valuing the property at only US$880 million.
On its part, Atlantic City decided to appeal that ruling but it was upheld and the Supreme Court decided not to review the case. The city opted to settle with the Borgata Casino in 2014 for US$88.2 million. Then in December 2014, the city defaulted on its payment of US$62 million to the Borgata and the casino filed another case with the state tax court to get a formal judgement for recovering the extra property taxes it had paid.
Now, this week, Superior Court Judge Julio Mendez ruled in favour of the Borgata stating that the casino can leverage the ‘Freeze Act’ to recover even more money from the city. Under the ‘Freeze Act’ taxpayers appeal the estimated value of their property and obtain a judgement in their favour which reduces the estimate. Then, they become eligible to request the tax court to use the same estimate to the previous two years as well. In other words, the US$880 million assessment for 2010 can now be applied to 2011 and 2012 which means that Atlantic City will have to pay the Borgata a much larger sum of money. The city filed an appeal against the Freeze Act in December 2015 and the Borgata contested that appeal by terming the appeal as absurd and claiming that this was yet another attempt by the city to escape payments.
The Borgata casino has decided to stop paying the city its first quarterly tax payment of 2016 which is estimated to be around US$7.5 million. The casino affirms it will continue to withhold its quarterly tax payments until it clears the US$62 million debt that the city owes it. Atlantic City is facing financial collapse and the city’s biggest debtor at this point is the Borgata Casino Hotel & Spa, which also happens to be the city’s biggest employer and highest taxpayer.