A.C. adviser: I have Vegas assurance on Borgata deal
A day after the city touted a $103 million settlement as part of its recovery plan, the city's biggest casino says no deal was reached. But the city and its advisers shrugged that off.
A day after the city of Atlantic City touted a $103 million settlement of more than $150 million owed its biggest taxpayer, Borgata Hotel and Casino, the casino denied any such deal.
But Mayor Don Guardian shrugged off Borgata's off-message comments, and said he was confident the deal would become final once the state approves the city's plan. Guardian, city council president Marty Small, Councilman Kaleen Shabazz and three financial advisers presented the plan to state officials Tuesday.
Advisor Ed McManimon also weighed in, saying he had assurances from a key executive at Boyd Gaming in Las Vegas that the deal was solid. Boyd owned half of Borgata until recently, when it sold its share to MGM Resorts International.
In a statement from Joe Corbo, general counsel of Borgata, the casino said it was still open to a compromise with respect to the amount owed to it, but would wait until the state had weighed in.
On Monday night, during a meeting at which Atlantic City Council approved a five-year plan to send to the state, financial consultant McManimon characterized the Borgata deal as "not in writing." The deal calls for Borgata to be repaid within 90 days, he said, and allows them another $8.5 million quarterly credit from property taxes in the fourth quarter of this year.
Corbo said in a statement from Borgata that the casino "has not agreed to accept any offer to settle its tax refund judgments and pending tax appeals."
"Borgata has had an ongoing dialogue with City and State representatives this year in an attempt to reach a fair and equitable settlement," the statement said. "In those meetings we have repeatedly expressed our willingness to compromise the amount due to Borgata. Once the City submits its fiscal plan and reaches consensus with the State, we look forward to resuming our settlement negotiations and putting this matter behind us."
The state now has five business days to approve the plan or reject it. Rejecting the plan would permit the state to move for a full takeover of Atlantic City government and assets.
Tamorri Petty, a spokeswoman with the Department of Community Affairs, whose commissioner Charles Richman will make the official ruling, said the plan was under review.
Tuesday afternoon, Guardian said he was not concerned with the Borgata statement. "Borgata clearly wants to make sure the plan is accepted and there is a funding source," he said.
Guardian, in Philadelphia for a bond traders conference, said the city had spent about two hours with state officialsTuesday morning going over the details of their plan and felt that it had been received well and thoughtfully. The plan calls for no tax increases, decreasing reliance on state aid, renewed access to the bond markets, cuts in city workers and other costs, and projects balanced budgets through 2021. The city has also approved agreements with nearly all its municipal unions — the lifeguards are still hold outs, Guardian said — that call for wage freezes for three years, reduction in overtime and other costs.
Guardian also visited the Inquirer's Editorial Board and will be in Trenton Wednesday morning to testify before an Assembly Judiciary committee.
Michael Hanley, a principal with NW Financial Group, which also advised the city, said he was confident that, armed with a plan approved by the state, the city would be once again succesful in borrowing money from the municipal bond markets. "With no plan, the view was they would go bankrupt," he said. Who would buy their bonds? This creates the market. It may not be the same market that Princeton has, but it's access to the market."
Regarding Borgata, McManimon said Tuesday that he was confident, through conversations with local Borgata attorney Jack Plackter, and Boyd Gaming vice president and general counsel Brian Larson, that the deal was solid. "I asked is this a dynamic where you will change your mind," he said. "I was told no."
Borgata has withheld about $23 million in quarterly tax payments to offset the money owed them, an action they were permitted to do by order of a Superior Court judge. It's unclear whether they would be allowed to continue withholding the payments in 2017, when the new Payment in Lieu of Taxes system begins. The debt owed Borgata is only the largest of numerous similar tax appeals filed by casinos that have left the city, its ratables down by about 60 percent, saddled with a half-billion dollars of debt and on the edge of bankruptcy.