The City of Atlantic City has reached a settlement of a major tax-appeal debt owed to the Borgata Hotel, Casino & Spa, which the state says agreed to accept less than half of the $165 million owed it.
The settlement was reached by overseers appointed by Gov. Christie under a law that placed control of Atlantic City in the hands of the state. The announcement came from the state, which headlined its release, "Christie Administration and Borgata Reach Settlement Agreement."
The long-standing debt, the result of crushing tax appeals won in court by Borgata, had stressed the city's finances and helped push it to the brink of bankruptcy. Borgata had even stopped paying its quarterly tax payments to offset the debt.
The state said Borgata agreed to accept $72 million to cover all judgments and claims for 2009 to 2015. The settlement precludes Borgata from pursuing tax appeals for 2013 to 2015.
Borgata also agreed to make payments under the Payment in Lieu of Taxes program that applies to the city's casinos beginning this year, the statement said.
Previous efforts overseen by state monitors, an Atlantic County Superior Court judge, and the city itself had failed to resolve the debt.
The latest negotiations were conducted with the involvement of the state's new overseer, former U.S. Sen. Jeffrey Chiesa, who was appointed in November to run the financially ailing city under the takeover law. Borgata also now is run by MGM Resorts International, which took sole control of the property from its partner Boyd Gaming last August.
Christie had made settlement of the Borgata deal a priority of past emergency managers appointed by the state, dating back to 2014, but placed the blame Wednesday on the city for the lack of a settlement before now.
"This settlement has been one of my administration's priorities since Atlantic City's fiscal crisis forced us to assume control of operations there in November," Christie said in a statement. "The city administration, despite all the time and opportunity given to them, failed to accomplish the goal, as they have with so many others."
The statement did not detail how the city would finance the $72 million. Other tax settlements with casinos were funded through bond payments. The city had proposed selling its municipal airstrip, Bader Field, to its Municipal Water Authority to help pay off debts, but that plan was rejected by the state.
Christie noted that the $72 million was $30 million less than what the city had proposed in its own five-year recovery plan, which was rejected by the state.
Chiesa, a lawyer with close ties to Christie, has also been trying to impose layoffs and contract changes to the police and fire departments. The fire department has sued and won a temporary stay of any unilateral action.
The takeover law gives the state control over Atlantic City's government, assets, and operations, and the authority to impose changes to collective bargaining agreements.
Chiesa praised Borgata and MGM for understanding the financial realities facing Atlantic City and "working closely together to find common ground."
The price MGM paid for full control -- $900 million for half of the property -- raised eyebrows, as the judgment from the tax appeals had reduced Borgata's total assessed value to about $800 million.
But MGM, which may want to pursue further development in Atlantic City or North Jersey, proved a more willing party to a settlement than Boyd.
"We have agreed to this reduced payment because we are committed to being a catalyst of Atlantic City's strong and vibrant future," John McManus, executive vice president of MGM, said in the statement. He said the settlement was in the best interests of shareholders and the right deal for all involved. He noted that it will prevent future litigation.