Is Revel Entertainment Group "a bad corporate neighbor" for appealing its property-tax assessment in Atlantic City?
City Councilman Frank Gilliam, and others, think so. "This is very distasteful. We bent over backwards to make sure Revel got up and going," Gilliam said.
That's an understandable reaction - but a misguided one, in our opinion.
No doubt much of the outrage is fueled by the fact that Revel is in line to receive a $261.4 million tax break from the state over 20 years. Under that controversial, and often misunderstood, program, Revel will get to keep that amount of future tax revenue once the casino is up and running; $125 million of the reimbursement is dedicated to help redevelop the South Inlet neighborhood where Revel is located.
That deal was crucial to getting financing to finish the project and makes excellent sense. If Revel didn't get built, the state would get zero tax revenue.
But still, the reimbursement plan rankles many. And the news that Revel, which currently pays about $15 million a year in city property taxes, wants to lower its assessment from $820.5 million to $30 million has further enflamed the critics.
Granted, the tax appeal isn't exactly a great public-relations move. But consider: Every other casino in Atlantic City has also filed a tax appeal. Casinos have been changing hands lately for a fraction of their assessed values, and Revel attorney Lloyd Levenson is correct when he says the company has fiduciary responsibility to its investors "to watch our pennies."
Any business in a similar situation would do the same thing. So would any homeowner. Tax appeals are common. Filing one does not make you a bad neighbor.
Revel does seem to have started the process with a lowball proposed assessment of $30 million, because that's the amount investors paid to buy out Morgan Stanley, which initially owned the project. But this tax appeal will likely end up in state Tax Court where the process will be overseen by a judge whose only interest is determining a fair assessment.
Any business has an obligation to operate as efficiently as possible. Making sure property-tax assessments are in line with reality is part of that. And considering that Resorts Casino Hotel, assessed at $479 million, recently sold for $31.5 million, and that the Trump Marina Hotel Casino, assessed at $653 million, is about to be sold for $38 million, the city's casinos have good reason to file tax appeals.
Rather than call Revel a bad neighbor, the city should be thinking hard about what it is going to do if it loses these casino tax appeals. That's going to be a tremendous financial hit - and one with a ripple effect that will cost every town in the county.