A judge has granted Atlantic City a 45-day reprieve from the Borgata casino seizing city assets to collect $170 million in tax appeals it owes in hopes the two sides can come to a debt payment agreement.
Friday's ruling by Atlantic County Court Judge Julio Mendez came as the Borgata announced it would stop making tax payments until Atlantic City forks over a $62.5 million tax refunds payment it owed on Dec. 19. Mendez's decision allows Borgata to stop making current tax payments until the case is resolved.
"Borgata will exercise its right under New Jersey law to begin offsetting our property tax payments against the $62.5 million refund we are owed by the City of Atlantic City for tax years 2009 and 2010," said Joe Corbo, vice president & general counsel for the Borgata in a statement. "We have been tremendously patient, giving City officials every opportunity to pay the amounts we are owed, or to engage us in good-faith negotiations. But after years of delays and unsuccessful appeals by the City, we can wait no longer."
Atlantic City Mayor Donald Guardian has said that bankruptcy would be considered if an agreement cannot be reached with the Borgata. The city was set to discuss bankruptcy protection on Jan. 26 before New Jersey Gov. Chris Christie announced that new bills would be introduced in February that would grant the state five-year power over Atlantic City finances that includes the ability to restructuring municipal debt. A Jan. 21 report from former Atlantic City Emergency Manager Kevin Lavin said Atlantic City would run out of cash flow by April 1 absent state assistance.
"Although there is no doubt that we owe Borgata money back from prior rulings, the question has always been 'how' do we pay them back fair and reasonably given our current fiscal constraints," said Guardian in a statement. "We appreciate the fact that Judge Mendez ruled that a 45 day extension be given so that now the City, Borgata, and the State of New Jersey can immediately seek mediation to come to a settlement. However, having Borgata exercise the option not to pay their first quarter taxes would be devastating to Atlantic City."