Borgata Hotel Casino & Spa sued Friday to block Atlantic City from borrowing $43 million in the bond market to repay a state loan due March 31.
The lawsuit, filed in Superior Court in Atlantic County, claims that the borrowing plan, endorsed by Atlantic City Council on March 4, violates a September ordinance allowing the city to borrow up to $140 million to pay property-tax refunds, such as $88.25 million owed to Borgata.
The Borgata lawsuit came just days before the city's emergency manager, appointed Jan. 22 by Gov. Christie, is expected to issue recommendations on stabilizing Atlantic City's finances, and it sets up a three-way fight among the state, the city, and Borgata, Atlantic City's most successful casino.
"Borgata is a significant creditor of the City of Atlantic City. As a creditor, we are pursuing this litigation solely to protect and preserve our rights," Tom Ballance, Borgata's president and chief operating officer, said in a statement.
"We strongly prefer discussing this matter directly with city officials and the emergency manager. We have reached out to both," Ballance said. "However, we have been advised by the emergency manager that he is not prepared to discuss the city's plans with us until his report is filed."
The deadline for the report is Monday, though it was not clear when its recommendations will be released to the public.
Borgata said it had to file its complaint Friday to beat a legal deadline to appeal Atlantic City's plan to repay the state, but not casinos owed tax refunds, which is what City Council authorized last year.
City and state officials did not respond to requests for comment.
A Jan. 16 bond offering statement said the city still intended to borrow $100 million this year to repay Borgata, but that was before the appointment of Kevin Lavin as emergency manager.
As recently as Feb. 18, Atlantic City Mayor Don Guardian said that the city wanted to negotiate with Borgata over paying less than the $88.25 million it agreed to pay in a settlement last June.
The settlement followed a $49 million tax court victory by Borgata in 2013. The city's appeal of that ruling is pending.
Before the settlement with Borgata, the city paid $185.5 million in property tax refunds to Borgata's casino competitors, according to the city's 2014 application for state aid.
Atlantic City's overall real estate assessments have fallen to $7.4 billion this year from $20.4 billion in 2010. Borgata's assessment is $850 million this year, down from $2.3 billion in 2010.
The $88.25 million owed to Borgata is significant considering that Borgata's entire capital budget for this year is $40 million, according to its parent company, Boyd Gaming Corp.