This past week, the financial side of those numbers hit the headlines once more. Local press announced that the state, on behalf of the city, had reached a $72 million settlement with Borgata Hotel Casino & Spa concerning the $165 million in property tax refunds the city owed Borgata.
The decision is another chapter of financial woes plaguing the East Coast gambling mecca. This past year, Atlantic City officials were unable to come up with a plausible budget to resolve its $224 million debt.
As a result, the state took over the city’s finances. At the helm of the financial renovation is former Sen. Jeffrey Chiesa, who told reporters the Borgata deal took a lot of compromise.
Chiesa told the Press of Atlantic City:
“The settlement took both sides working closely together to find common ground.
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.”
How did Borgata and AC get into this mess?
Atlantic City endured a tumultuous 2014, a year which saw five of the city’s casino properties close. Lost jobs and shuttered properties gashed AC finances and crippled its economy.
As a result, the city’s debt started to rise. Income-tax refunds owed to casinos became too pricey to pay out.
Borgata wasn’t happy with the city’s inability to follow through on promised payments, so the casino filed appeals on its 2013, 2014, and 2015 state tax returns.
The property also withheld its property tax payments last year, the Press of Atlantic City said, because the Borgata most likely knew the city wouldn’t be able to pony up the refunds.
AC’s plan to pay for the casino’s settlement
Because of the city’s financial hardship, $72 million might as well be $165 million.
Municipal bonds are chunks of investment money the city offers to investors who are promised a certain rate of return on the investment. The bond money is then used for city projects or, in this case, debt repayment.
These bonds are rated by various companies based on how stable they are. Moody’s, one of several ratings companies, has the Municipal Qualified Bond Program at an A3 rating (A1 is the highest).
Christie says Borgata blood is on city leaders’ hands
Gov. Chris Christie has long been outspoken about his frustrations over Atlantic City’s poor leadership.
He pushed for a state takeover of Atlantic City for many months, and only after the city failed in providing a solid budget did the governor have his way.
Christie used the Borgata settlement as another chance to voice his distaste for Mayor Don Guardian’s leadership, saying the beleaguered mayor’s cabinet “failed to accomplish this goal as they have with so many others.”