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State sells $68.3M in bonds to pay for Atlantic City casino tax settlements

The state has sold $68.3 million in bonds to pay for property tax settlements with seven Atlantic City casinos.
The quick sale at a 4.1 interest rate shows “that investors view the state’s involvement in Atlantic City as having a stabilizing influence on the city’s finances,” the the Christie administration said in a release.
“Atlantic City is now getting excellent access to the bond market, which is amazing for a city that was contemplating bankruptcy before we stepped in to manage its finances,” said state-appointed monitor Jeffrey Chiesa. “The fact that the city obtained bond insurance and sold the bonds at a low interest cost means it is well-positioned to responsibly pay down the tax refunds it owes to casinos while preserving critical public services.”
The bonds that sold Wednesday under the State’s Municipal Qualified Bond Act program will finance all the remaining property tax appeals, including Bally’s, Caesars, Golden Nugget and Harrah’s for 2016; Tropicana for 2015 and 2016; for the former Taj Mahal for 2014 to 2016; and the former Trump Plaza from 2014 to this year.
The appeal settlements total approximately $71.1 million.
“We are well prepared to comments the payback with the 2018 budget,” Mayor Don Guardian said. “We will also be working hard to ensure that there will not be a tax increase next year.”
The mayor pointed to the 5 percent tax decrease in 2017, which both the city and the state have taken credit for those cuts.
“For as long as I am mayor, we will continue to rebuild Atlantic City by attracting more businesses, developments and ratables that will help further reduce taxes for all residents and business owners,” Guardian said.
In May, the state sold $69.8 million in bonds at a 4.66 percent interest rate. That funded settlements with MGM Resorts International, which owns Borgata Hotel Casino & Spa; a settlement that was less than half of the $158 million in property tax appeal judgments and claims for the Borgata.
The state point out that a pre-state takeover sale in 2015 had an interest cost of more than 6 percent, “despite those 2015 bonds having a lower par amount and shorter maturity schedule.”
“Through a lot of hard work, we resolved all outstanding property tax appeals filed by casinos in the city through settlement agreements that are saving the city millions of dollars, we implemented a plan to finance this debt that fits within the city’s budget, and we shepherded the successful sale of bonds, which sold at very attractive interest rates for the city, to fund this debt that heretofore had been crushing the city,” Chiesa said. “The city is in a much better place and is back on the road to stability.”

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