Atlantic City’s most successful casino will play an important role in the city’s financial future.
Mayor Don Guardian said Tuesday the only issue that’s keeping municipal bankruptcy on the table is negotiations with Borgata Hotel Casino & Spa’s parent companies, Boyd Gaming and MGM Resorts, over tax refunds the city owes the casino following successful tax appeals.
But he warned that bankruptcy would hurt Atlantic County taxpayers and the city’s image, and that the city was trying to avoid that outcome.
Guardian said other areas where bankruptcy initially made sense — such as the collective bargaining agreements with police and fire unions, outstanding lawsuits and a separate tax appeal by MGM — have been resolved.
With a new agreement and a federal grant, the city now pays the lowest cost per firefighter in the state, Guardian said. He said the potential savings from police and firefighters in a bankruptcy proceeding would be minimal.
“At this point, this is the single issue that makes bankruptcy work for the city,” Guardian said of the tax refunds owed to Borgata.
Guardian, who sat down with The Press of Atlantic City’s editorial board, said state emergency manager Kevin Lavin and his team are in the middle of negotiations with Borgata. He said the city cannot afford the $161 million in tax appeals, so payments would have to be over “an extended period of time” and the amount of money and how the city pays it would have to be negotiated as well.
Joe Lupo, senior vice president at Borgata, declined to comment.
Guardian said if “we go to bankruptcy court, then the Borgata has to realize that they’re going to get whatever the court decides. Or we can try to negotiate something we can afford to pay.”
Guardian said bankruptcy would hurt county taxpayers more than anyone else. Under a bankruptcy, the $161 million in tax appeals would become due immediately, Guardian said. While the city’s share of what it owes would drastically drop under the bankruptcy, the county’s 11 percent share of what’s owed — about $24 million — would have to be paid in full, as the county would not be in bankruptcy, Guardian said.
“I am very conscious about this, so as we try to put our financial house in order, we also want to make sure that it’s not detrimental,” Guardian said.
Guardian added that a bankruptcy would also hurt the resort city’s image.
“If you’re not coming to Atlantic City now because you say it’s dirty and it’s unsafe, now being bankrupt, it’s not a title that you want,” Guardian said. “To be the first city in the state of New Jersey to go bankrupt since 1932.”