Mazzeo-backed Casino Tax Stabilization Act passes

Authored by Assemblyman Vince Mazzeo (D-2), who stands in one of the state’s most (and only) competitive general election districts mazzeo[1]this year, Assembly Bill No. 3981, otherwise known as the “Casino Property Tax Stabilization Act,” passed this afternoon by a vote of 51-20-2.

The bill requires that beginning with tax year 2015, and for the next succeeding 14 tax years, casino gaming properties located in the City of Atlantic City would be exempt from local property taxation on real property and improvements, including accessory hotels, conference centers, parking garages, and other appurtenant facilities.

According to the language of the bill, Assembly Bill  3981 defines “casino gaming property” as one or more parcels of real property, and adjacent property utilized in connection with such property, upon which there is located a facility licensed to be used for casino gaming in 2014 or thereafter, whether or not in actual operation, which has more than 500 guest hotel rooms and is not subject to recorded covenants prohibiting casino gaming.  For this 15-year period, casino gaming properties would be required to fulfill their property tax liabilities by making annual payments in lieu of taxes (PILOT), the amount of which would be based on casino gaming revenues.

In exchange for the property tax exemption granted in the bill, the owners of casino gaming properties must sign a financial agreement with the City of Atlantic City promising to make quarterly payments to the city totaling $120 million in 2015.  In 2016 and in each tax year thereafter, the total PILOT amount would be determined based on “gross gaming revenue” which is defined in the bill as the total amount of revenue raised through casino gaming from all casino gaming properties in Atlantic City.  Increases or decreases in the PILOT payment are capped at no more than two percent per year.  The city is required to allocate an unspecified portion of the PILOT to the Atlantic City School District and Atlantic County.

The bill requires the owners of casino gaming properties holding casino gaming licenses to collectively organize as the “Casino Operator’s PILOT Council” for the purpose of determining each casino’s share of the annual PILOT payment and to convey that payment to the City of Atlantic City.  The amount owed by each casino gaming property will be determined using a formula that gives equal weight to three criteria: (1) the geographic footprint of the real property, expressed in acres, owned by each casino gaming property; (2) the number of hotel rooms in each casino gaming property; and (3) the gross gaming revenue of the casino in each casino gaming property.  If a new casino property is added or an existing casino property closes, the financial agreement must be amended to reallocate the PILOT amount among the casino gaming properties.

If, during 2015 to 2019, a casino gaming property is allocated a share of the PILOT that is greater than its property tax liabilities in 2014, that property would receive a credit for the difference against its investment alternative tax obligations for that year.  If, after the credit is applied, the casino gaming property would still be liable for a PILOT in excess of its 2014 property taxes, the additional amount will be added, by proportional share, to the PILOT amounts owed by every other casino gaming property for that tax year.  In tax years 2015 and 2016, the council would be required to make a separate additional payment of $30 million to Atlantic City.  Each casino’s liability, paid through the council would be based on the proportion of gross gaming revenue generated by each casino gaming property in the prior year.  The bill also provides that PILOT payments constitute a lien on the casino gaming property.

The legislation also establishes, on January 1, 2028, a 7-member Atlantic City Review Commission.  The commission is charged with reviewing and determining: (1) the efficacy of the PILOT program, (2) the economic vitality and viability of Atlantic City’s casinos; (3) the vitality and viability of the Atlantic City municipal government; (4) the effect of the PILOT program on the economic vitality of the casinos, Atlantic City’s ability to fund its municipal government and provide services to its residents; and (5) the feasibility of continuing the PILOT program.  The commission is required to issue its findings and recommendations in writing to the Governor, President of the Senate, and Speaker of the General Assembly by July 1, 2028.

The bill was one of a five-bill package Democrats had Mazzeo sponsor to ostensibly bring property tax relief and stability to Atlantic City’s residents and businesses as part of efforts to reinvigorate the region’s economy and create jobs.

All five bills passed on Thursday.

“We need to stop the bleeding in Atlantic City,” said Mazzeo. “Reducing the property tax burden on families and businesses is a top priority. This legislation will bring real reform to Atlantic City and help stabilize the tax base to bring new investment and businesses to the region. Atlantic City’s new status as an Economic Growth Zone will be the catalyst that delivers hundreds of millions of new investment to the city, but we know businesses won’t come without real reform.”

The other bills in the package would:

  • (A3982) – Require the holder of a casino license to submit proof to the state that all agreements it’s entered into with representatives of its employees for collective bargaining provide for suitable health care benefits and retirement benefits for all full-time employees. A casino that fails to comply would be subject to forfeiture of its license.
  • (A-3983) – Establish an additional category of state school aid to help Atlantic City decided by the education commissioner.  Under the bill, a school district may receive this aid if it’s situated in a municipality in which: 1) commercial property accounted for at least 75 percent of the total assessed property valuation in 2008, and 2) between 2008 and 2013, the assessed value of commercial property declined by at least 25 percent.  The Atlantic City School District is the only district that meets these criteria.  Commercial property accounted for nearly 78 percent of the municipality’s total assessed property valuation in 2008, and declined by nearly 32 percent, from nearly $16 billion to less than $11 billion, between 2008 and 2013.
  • (A-3984) – Reallocate the casino investment alternative tax to Atlantic City to pay debt service on municipal bonds.

“It’s all about property tax relief,” Mazzeo said.

  • (A-3985) – Repeal the law that requires the Casino Reinvestment Development Authority to enter into an agreement the Atlantic City Alliance for a five-year partnership.  The bill also repeals the portion of law that authorized the authority to assess a fee on casino licensees if the public-private partnership was terminated or otherwise ended.

The the bill (A-3982) was approved 46-26-1, the bill (A-3983) was approved 43-23-4, the bill (A-3984) was approved 49-22-3 and the bill (A-3985) was approved 71-0-3.

The bills now await further consideration by the Senate.

  Mazzeo-backed Casino Tax Stabilization Act passes