ATLANTIC CITY — Revel owes the city $20 million in property taxes for the second and third quarter of 2014 — and the city says it will get its money, one way or another.
Revel has not paid tax installments due on May 1 and Aug. 1 totaling about $19.6 million, with an additional $395,000 in interest, according to a brief filed with U.S. Bankruptcy Court on behalf of the city, in advance of a hearing scheduled for Oct. 7.
The city is seeking relief from an automatic stay granted as part of the casino’s second bankruptcy that would allow for a tax sale.
Revel, built for $2.4 billion, closed Sept. 2.
City Finance Director Mike Stinson said the city holds an accelerated tax sale in December for any property that does not make its payments.
“Different investors and hedge funds will come in and will pay the taxes on the property not paid and take a lien on the property,” Stinson said.
After two years, the purchaser of the tax certificate will be able to ask the courts to foreclose. If there is no purchaser, the city will be able to initiate a foreclosure proceeding six months after the tax sale.
There is still the question of how would this affect the possible sale to Florida-based real estate mogul Glenn Straub.
Straub put in a bid of $90 million cash on Sept. 10 and has deposited $10 million in cash into an escrow account.
If no other qualifying bid is received by the Sept. 23 deadline for the next day’s auction, Straub would be the official buyer. Revel is also asking the U.S. Bankruptcy Court to approve a $3 million breakup fee for Straub if the deal doesn't go through, though a court trustee has objected to that clause.
Stinson said that “if the property owner is about the sell the property that has a lien on it, it has to satisfy the lien before they clear title. All I can assume is that (Straub) is fully aware that taxes are due on the property.”
Mayor Don Guardian agreed, saying that “at this point, the taxes have to be paid. It’s not a bankruptcy issue where there’s a discounted price. Either they or the new owners have to pay.”
Guardian said that Revel signed an agreement with the city that it would pay assessed value for 2014 and establish a special assessment for 2015 of about $625 million.
That provided a “comfort level” to the owners, “knowing they wouldn’t have to appeal taxes or wait five years (for refunds).”
Trump Taj Mahal also recently told regulators it plans to indefinitely defer payment of its property taxes.
The city’s attorneys argue in the filing that not allowing the tax sale “will have a negative impact on the city and its residents” in terms of budget shortfalls and funding services.
The city’s tax rate increased 29 percent this year, mostly due to successful tax appeals from casinos. The city, with financing assistance from the state, issued $140 million in tax refunding bonds this month due to successful appeals from several casinos.
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