The Taj Mahal Casino in Atlantic City is set to lock its doors, ceasing all operations in less than two weeks. A prospective buyer, investment magnate Carl Icahn, would like to purchase the property, invest in renovation and keep it open, but only if certain conditions are met. Atlantic City Mayor Don Guardian says the tax stabilization proposal currently moving its way through state legislation would fulfill those needs, saving the casino from closure and its 3,000 workers from the unemployment line.
Icahn proposed a buyout of the casino’s owner, Trump Resorts International, which is prepared to hand over the reins to the billionaire on December 20th, but only if its Union drops its current litigation. Local 54, part of the Unite-HERE Union, has appealed the court’s decision to approve a cost-savings package that would negatively affect Atlantic City’s casino employees. If that appeal is dropped, Icahn will take over Trump Resorts and invest $100 million into the property.
Mayor Guardian spoke in support of the proposed tax bills at a Senate hearing in Trenton, NJ on Monday. “I do believe this legislation is going to save the Taj from closing,” testified Guardian. “It’s exactly what the proposed new owner has been asking for.”
The tax plan received approval from the Senate budget committee on Monday. It essentially gives land-based casinos in New Jersey a look into the future where annual property taxes are concerned. Atlantic City’s 7 casinos would be responsible for a combined payment of $150 million per year for the first two years, followed by a diminution to $120 million per year for the following 13 years. That figure reflects a stabilized casino market, however, and could fluctuate if the market’s revenue fails to fall within the projected range.
Monday’s hearing revolved around a proposed amendment designed to help any casino that the tax plan ends up billing a higher amount than its previous year. The Taj Mahal would most assuredly fall into that category. Thus any overage payment would be redirected towards the operator’s mandatory reinvestment tax.
Presently, the Casino Reinvestment Development Authority collects that tax, but another bill included in the tax stabilization package alters the course of those funds, reserving $25-$30 million to pay off the city’s debts each year. Additional measures in the package will convey a portion towards the city’s education department and set up modicum benefits for casino employees. The Atlantic City Alliance, which secures $30 million annually to promote New Jersey’s casino market, would be dissolved, directing those funds to other beneficial programs around the city.
The casino industry’s revenue has fallen dramatically in the last 8 years, from $5.2 billion in 2006 to just $2.86 billion in 2013. This year’s revenue is projected to fall even further. Gov. Chris Christie has suggested an emergency manager to oversee the city’s expenditures that would result in non-gambling property taxes being frozen while permitting the city to evade pension payments on a provisional basis.
Mayor Guardian does not support Gov. Christie’s plan as it would drop the burden of property taxes on the shoulders of the city’s remaining casinos – and number that fell from 11 to 8 (and soon to be 7 if Taj Mahal closes) this year alone. “It’s unsustainable,” Guardian said, “but we think we can fix it.”