Atlantic City state overseers have struck a deal with Borgata Hotel Casino & Spa that pays the casino $72m, less than half of what the city owed the casino. The settlement over the city’s crushing tax appeal debt to Borgata, announced by the state Wednesday, saves the city tens of millions of dollars and resolves one of the largest issues facing the cash-strapped resort.
The city owed Borgata $165m in property tax refunds, according to officials overseeing the state takeover of the city. Borgata had withheld property tax payments last year to offset some of the refunds, a move that exacerbated the city’s financial woes.
Under the agreement, Borgata will forego pending tax appeals for 2013 to 2015 and will make its quarterly payments in lieu of property taxes this year, according to a statement from the Department of Community Affairs.
“The settlement took both sides working closely together to find common ground,” said former U.S. Sen. Jeffrey Chiesa, who is leading the state takeover of the city. “As good corporate citizens, MGM Resorts and Borgata understand the financial realities facing Atlantic City and are jointly committed to the revitalization of the area as a good place to live and a prime destination for tourism.”
It wasn’t immediately clear how the city would pay for the settlement. The city already has $224m in bonded debt, most of which covers prior property tax appeals from casinos, according to the city’s 2016 annual debt statement.
John McManus, executive vice president of Borgata’s parent company, MGM Resorts International, said it agreed to the reduced payment “because we are committed to being a catalyst of Atlantic City’s strong and vibrant future.”
“With this agreement we are assured the relative certainty of payment, and the avoidance of additional cost and time related to further litigation,” he said. “MGM Resorts and Borgata believe this was the right deal for all parties concerned and is in the best interests of MGM’s shareholders.”