Gambling mecca gone bad-Atlantic City, NJ

By Martin J . Milita, Jr., Esq.

It seems like only yesterday that Detroit filed for bankruptcy. It’s actually been more than two years since the initial filing, and almost a year since a judge approved the bankruptcy plan.

In the East, the fortunes of Atlantic City have always followed casinos, which is not a good sign in today’s economy. With four of the big gambling houses bankrupt, Atlantic City finds itself hurting for revenue.

The city has a $100 million hole in its budget. This is made worse by the fact that it keeps losing tax refund lawsuits. So far the city has been forced to refund $186 million in taxes after Casino owners contested their assessments.

But the pain isn’t all on the revenue side.

Atlantic City employs 29 city workers per 1,000 residents, almost triple the rate of Newark, with 11 employees per 1,000 residents, and Jersey City, with 10 employees per 1,000 residents. The mayor recommended laying off more than 200 workers, but that would still leave the city with a much higher worker-per-resident ratio than other cities.

So far, the New Jersey government, including the governor, has been quiet on the possibility of a bankruptcy in the state. The state has gone so far as to give the city more time to repay state loans. If Atlantic City goes under, it would be the first municipal bankruptcy in New Jersey since the depression.

While the state government hasn’t mentioned that the city might go bankrupt, it hasn’t taken that option off the table either. It could be that the governor wants to keep all avenues open, since he has the same financial issues at the state level. As long as bankruptcy is possible, he might have more leverage when negotiating pension reforms with unions.

Many other towns, counties, and states have fiscal woes that will only be addressed through some version of bankruptcy or negotiated restructuring. By the time that happens, investors and taxpayers have already lost.

Martin J. Milita, Jr. Esq. is senior director at Duane Morris Government Strategies, LLC.

Duane Morris Government Strategies (DMGS) supports the growth of organizations, companies, communities and economies through a suite of government and business consulting services. The firm offers a range of government relations and public affairs services, including lobbying, grant writing; development finance consulting, media relations management, grassroots campaigning and community outreach. Milita works at the firm’s Trenton and Newark New Jersey offices.

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NJ Senate Panel Backs Housing Tax Credit For Atlantic City

A New Jersey Senate committee on Tuesday approved legislation that would create a new tax credit program to encourage the development of owner-occupied housing in Atlantic City as the municipality works to diversify its tax base and recover from a rash of casino closings.

The New Jersey Senate Budget and Appropriations Committee backed the formation of the Atlantic City Growth Tax Credit Program in a 11-2 vote, though the bill drew concerns from Democrats who suggested projects elsewhere in the state should have a shot at the incentives and Republicans who disagreed with the size of the credits.

The program would fall under the umbrella of the New Jersey Housing and Mortgage Finance Agency and provide developers of nonrental housing in Atlantic City with gross income tax credits of up to 80 percent of their costs for land acquisition, capital improvements, engineering fees and architectural fees.

Projects covered under the bill, S2654, couldn’t be more than eight stores and would have to include at least eight newly constructed residential units. At least 80 percent of the project’s units would have to be owner occupied.

During Tuesday’s hearing, Committee Chairman Paul Sarlo, D-Bergen, said he supported the proposal but added that other New Jersey municipalities such as Paterson and Passaic could also benefit from such a program.

“It should be expanded,” Sarlo said. “We all want to help Atlantic City, but I get frustrated sometimes.” (Credit Bergan Record).

The size of the proposed tax credit didn’t sit well with other lawmakers. State Sen. Sam Thompson, R-Middlesex, called the incentive excessive, while state Sen. Jennifer Beck, R-Monmouth, urged her colleagues to take a harder look at the potential cost.

“I think there should be some type of tax credit, but I just feel like that encompasses a very big number and should be revisited,” Beck said. (Credit Bergan Record).

The bill was previously advanced by the Senate Economic Growth Committee in January. Sponsors of the measure include state Sens. Jim Whelan, D-Atlantic, and Robert Singer, R-Ocean.

Nearly three-quarters of Atlantic City’s residents are tenants, according to the bill. Meanwhile, homeowners are facing a serious hardship as the city’s property tax burden shifts from its gaming sector and other commercial businesses, the bill says. Expanding the city’s pool of residential property taxpayers would help lessen that burden, according to the bill.

The HMFA would stop accepting new applications for the program by either Jan. 1, 2020, or when the city’s proportion of homeowners to renters has evened out to at least 50 percent.

Twelve casinos in Atlantic City made up 70 percent of annual property taxes as of 2013, but a flood of closures has left the city with eight operating casinos and a tax base that has fallen from $20.5 billion in 2010 to $7.3 billion, according to a March report from the city’s state-appointed emergency manager, Kevin Lavin.

Casino tax appeals have only added to that strain. The city has taken on $186 million in debt to repay casino tax reassessments for 2010-13, but there were $126 million in resolved tax appeals that didn’t have bonding behind them, the report said.

NJ Legislature Considering Special Tax Zone For Atlantic City

In a 6-3 vote with one member not voting, the New Jersey Assembly Commerce and Economic Development Committee on Thursday approved a bill that would create an urban enterprise zone in Atlantic City; an effort to incentivize businesses with tax credits to spur economic development in the ailing resort city.

The committee signed off on A3920, authorizing the creation of an urban enterprise zone in Atlantic City for a one-time term of 10 years to provide the city with a shot in the arm to create jobs, spark economic development and provide vital property tax relief.

The UEZ designation would allow qualifying businesses in Atlantic City to collect a sales and use tax that’s half of what it would normally have to collect and to receive up to a $1,500 tax credit for every new permanent full-time employee they hire.

The bill would also allocate a significant portion of the sales and use tax collected during the 10-year period to go directly back to the city for property tax relief.

The measure is an attempt to stem the bleeding in Atlantic City, which has been hit with a brutal downturn in gaming tax revenues amid heavy competition from rival gaming destinations that has prompted the shutdown of four casinos — Atlantic Club, Revel, Showboat and Trump Plaza — and the loss of 8,000 jobs in 2014 alone.

However, some committee members expressed concern as to whether UEZs have been proven to spur economic development in the cities and regions where they’ve been established. New Jersey’s UEZ program, which was launched in 1983, currently has 32 designated UEZs.

The woes in Atlantic City have been mounting. Gov. Chris Christie last month installed an emergency management team to oversee the city’s finances after a brutal downturn in gaming tax revenues. In addition to the more recent shutdowns in September of the Revel, Showboat and Trump Plaza, another Atlantic City casino, Trump Taj Mahal, is also at risk of closing as a bitter feud between its owners and workers’ unions threatens to derail a potential Chapter 11 reorganization for Trump Entertainment Resorts Inc.