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BG Value

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BG Value

businessweek.com/news/2013-10-21/borgata-cas…

oyd Gaming Corp. (BYD:US) and MGM Resorts International (MGM:US) won a 61 percent reduction in property taxes on their Borgata Hotel and Casino in Atlantic City, a cut reflecting the decline in business there.

The assessed value of the resort, New Jersey’s top-grossing casino, was reduced to $870 million from $2.26 billion for 2010, according to an Oct. 18 decision released today by the Tax Court of New Jersey.

The tax reduction will boost profit for the casino’s owners while reducing revenue for the city. The Borgata, under its previous valuation, represented about 16 percent of Atlantic City’s $14.4 billion tax base, according to Michael Stinson, the city’s director of revenue and taxation.

“We certainly didn’t expect this,” Stinson said in a telephone interview. “The city’s expert came up with a value of $2.3 billion.”

The companies will be owed refunds totaling $48.8 million for the 2009 and 2010 tax years, or by about 61 percent, as well as interest, according to calculations by A. Paul Genato, a tax attorney in Princeton, New Jersey, who wasn’t involved in the case.

“This is a devastating blow to Atlantic City,” Genato said in an e-mail.

Stinson said the city will appeal the decision. “We certainly don’t have $50 million sitting in the bank,” he said.

Increased competition for players on the East Coast has hurt Atlantic City casinos prospects “for the foreseeable future,” according to the decision.

Casinos in the city routinely challenge their tax valuations, and the Borgata decision was the last for the 2010 tax year, Stinson said. Boyd and MGM, which co-own the property, have challenged the 2011 and 2012 assessments as well, he said. The decision, if it stands, will impact values for all of the casinos going forward, Stinson said.

New Jersey
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1. Re: BG Value

This may be good for Borgata but its devastating news for the city that is already laying off around 50 firefighters due to budget problems.

GardeniaPalm
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2. Re: BG Value

I hope they've fired that 'expert.' Even in 2009/10, no property was close to being worth over $2 billion.

No honest appraiser would have come up with such a number. It makes me wonder if they weren't instructed to raise figures to bolster the city's coffers in what were trying times during the Great Recession.

Washington
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3. Re: BG Value

The City, during the appeal process decision, won't reimburse Boyd/MGM one penny. During the process, interest will accrue on the amount whereas, the city will owe the companies even more should they lose the appeal. The city fully realizes they owe 48.8 million. But I suspect they will fight it to the hilt, hoping they & Boyd/MGM can perhaps work out an agreement (through arbitration) whereas, both sides settle for less.

Edited: 6:16 am, October 24, 2013
Pittsburgh, PA
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4. Re: BG Value

I never understand why a casino property is valued at how much revenue it brings in. My home assessment doesn't change based on my yearly income.

Second I bet AC is following Detroit's bankruptcy trial very carefully as the total reimbursement will be 200-300 million once all the casinos for the last 3 years get done appealing and this will also impact future revenue collection.

5. Re: BG Value

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