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Atlantic City Casinos Appeal Tax Assessments

6 March 2003

ATLANTIC CITY, New Jersey – As reported by the Press of Atlantic City: "This is the year that could `make us or break us,' the city's business administrator said.

"On one hand, the Borgata casino is coming and the city administration plans three years of stable taxes after last year's tax increase. On the other hand, the city may be lumbering toward a financial landmine.

"Nine casinos are appealing their tax assessments and demanding an astronomical refund - perhaps as high as $350 million - in back taxes.

"There's a good chance the casinos will settle for less. But the possibility of losing $350 million disturbs some city officials.

"…According to the city's 2001 property tax rolls, casinos represented about $5.2 billion, or about 78 percent, of the city's ratable base. Non-casino businesses made up only about 4 percent of the ratable base.

"…The reason for the casinos' tax appeals and for the mystery surrounding their total cost is simple: It is not easy for the city tax assessor to determine how much a casino is worth, and how much it should be taxed.

"…No two casinos even seem to be equivalent for tax purposes; each is a unique blend of restaurant, hotel, retail and gambling establishments. Deducing a casino's market value from the last time it was sold is nearly impossible, said George Frino, a lawyer who represents Atlantic City in some casino tax-related matters.

"…That lack of a clear guideline makes it easy for Atlantic City casinos to say they're being overtaxed. And difficult to prove they aren't. Last year the city agreed to scale back assessments of some Claridge and Resorts properties, and to give back $5.5 million it has collected from those corporations since 1997.

"How much the nine casinos appealing their assessments this year get and whether a refund will be anything close to their $350 million in demands, is unknown.

"But the potential exposure led City Business Administrator Benjamin Fitzgerald to tell City Council recently that `2003 is going to be a watershed year in terms of tax appeals; it's either going to make us or break us.'

"Fitzgerald called this an important year partly because the tax appeal by Tropicana Casino and Resort is currently in court…"

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