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  • NJ A3209
  • Concerns taxation of casino gaming property; redirects investment alternative tax proceeds; abolishes Atlantic City Alliance.
Introduced
(2/22/2016)
In Committee
(2/22/2016)
Crossed OverPassedSignedDead/Failed/Vetoed
2016-2017 Regular Session
This bill is intended to address the dire situation that has occurred in Atlantic City with the recent closure of four of the 12 casinos in the city. These closures, coupled with large property tax refunds owed by the city to several of the casinos as the result of successful real property assessment appeals have created fiscal challenges for the city. In addition, Atlantic County's property taxpayers will have to pay more property taxes for county purposes due to the city's declining property values. The purpose of this bill is to provide certainty to the casinos with respect to their financial obligation to Atlantic City, and to provide certainty to Atlantic City about the financial obligation of the casinos to Atlantic City, Atlantic County, and the Atlantic City School District. Under the bill, beginning with calendar year 2016, and for the next succeeding nine calendar years, casino gaming properties located in Atlantic City are exempt from local property taxation on real property and existing improvements, including accessory hotels, conference centers, parking garages, and other appurtenant facilities. The provisions of the bill shall not apply to any casino property that operates under a small scale casino facility license or a staged casino facility license pursuant to section 1 of P.L.2010, c.115 (C.5:12-80.1). In exchange for the property tax exemption granted in the bill, each owner of each casino gaming property shall sign a financial agreement with Atlantic City for each casino gaming property promising to make quarterly payments to the city of its allocated portion of an annual payment in lieu of taxes (PILOT). The owner of each casino gaming property shall be responsible for the payments allocated to that property and shall be subject to the lien provisions of R.S.54:5-6 if those payments are not made. Any new owner of a casino gaming property following the effective date of the bill shall immediately become responsible for signing a financial agreement with Atlantic City promising to make payments consistent with the bill. The total PILOT amount for calendar year 2016 is $120 million. For calendar year 2017 and each calendar year thereafter, the total amount of the PILOT would increase by two percent per year provided that there was no upward adjustment in the base amount of the PILOT. For calendar year 2017 and for each tax year thereafter the base amount of the payment in lieu of taxes, excluding the amount of any annual two percent increase to date, would be determined as follows: If the amount of the gross gaming revenue (GGR) in the preceding calendar year is between $3.4 billion and $3.8 billion, the base amount would be $165 million; If the amount of the GGR in the preceding calendar year is between $3.0 billion and $3.4 billion, the base amount would be $150 million; If the amount of the GGR in the preceding calendar year is between $2.6 billion and $3.0 billion, the base amount would be $130 million; If the amount of the GGR in the preceding calendar year is between $2.2 billion and $2.6 billion, the base amount would be $120 million; If the amount of the GGR in the preceding calendar year is between $1.8 billion and $2.2 billion and the aggregate gross revenues from all of the casino gaming properties located in Atlantic City from all revenue streams, excluding GGR, have not increased by more than the percentage by which GGR decreased compared to the prior calendar year, as determined by the Division of Gaming Enforcement, the base amount would be $110 million; If the amount of the GGR in the preceding calendar year is $1.8 billion or less and the aggregate gross revenue from all of the casino gaming properties located in Atlantic City from all revenue streams, excluding GGR have not increased compared to the prior calendar year by more than the amount by which GGR is less than $1.8 billion as determined by the division, the base amount shall be $90 million. The amount of the payment in lieu of property taxes owed pursuant to the bill would be calculated annually each calendar year for each casino gaming property using a formula implemented by the Local Finance Board, in consultation with the division, using the following criteria: The geographic footprint of the real property, expressed in acres, owned by each casino gaming property; The number of hotel guest rooms in each casino gaming property; and The gross gaming revenue of the casino in each casino gaming property from the prior calendar year. When a new casino gaming property is added or when an existing casino gaming property no longer qualifies as a casino gaming property as defined in subsection a. of section 3 of the bill, Atlantic City's financial agreement with each owner of each casino gaming property would be amended to reflect the change and the allocation of the payment in lieu of property taxes between the casino gaming properties. In addition to the amounts required to be remitted under the bill, the owner of each casino gaming property would be required to make a separate payment to the State in calendar years 2015, 2016 2017, 2018, 2019, 2020, 2021, 2022, and 2023, where the aggregate amount of these payments paid by the casino gaming properties shall equal the following: $30,000,000 for calendar year 2015, $30,000,000 for calendar year 2016; $15,000,000 for calendar year 2017; $10,000,000 for calendar year 2018, $5,000,000 for calendar year 2019; $5,000,000 for calendar year 2020; $5,000,000 for calendar year 2021; $5,000,000 for calendar year 2022; and $5,000,000 for calendar year 2023. The amount remitted by each owner of a casino gaming property that operates as a casino during the year in which the payment is due would be based on the proportion of gross gaming revenue generated by the casino in each casino gaming property in the prior year. The Local Finance Board, in consultation with the division, would have to determine the amount owed for each casino gaming property based on the proportion of gross gaming revenue of the casino in casino gaming property in the prior year. The owner of each casino gaming property where a casino is operated during the year in which the payments required by this section are due would remit its payment to the State. The funds comprised of the payments collected under the bill would be remitted from the State to the City of Atlantic City upon approval of the Local Finance Board, at the board's discretion, of a financial plan submitted by the City of Atlantic City. The financial plan must, at a minimum, set forth specific actions that the City of Atlantic City shall take to improve its financial condition and address its fiscal imbalance. The Local Finance Board, at its discretion, may require that the City of Atlantic City take steps to implement the financial plan before releasing the funds comprised of the payments to the City of Atlantic City. A portion of the annual payment in lieu of property tax moneys collected would be remitted to Atlantic County and to the school district. The three-year historical average of the county percentage of the total Atlantic City tax rate from 2013 to 2015 is 10.4%. With the expectation that Atlantic County will take on additional responsibility for and on behalf of Atlantic City, it is anticipated that 13.5% of the payment in lieu of property tax moneys collected by Atlantic City will be remitted to Atlantic County. This bill would also require the Department of the Treasury to issue a report to the Governor and the Legislature no later than June 30, 2021, which estimates the amount of property taxes that each casino gaming property would have likely paid in each year of the payment in lieu of taxes program established by the CPTSA. This report would be published on the Treasury's website. If the Treasury's estimate exceeds the total amount of the payments in lieu of taxes paid by the casino gaming properties over the preceding five years by 10% or more, then the base amounts of the PILOT would increase by that percentage and apply to future determinations of the base amount. This bill also reallocates the receipts collected by the Casino Redevelopment Authority (CRDA) from the casino investment alternative tax (IAT) for the Atlantic City Tourism District to Atlantic City for the purposes of paying debt service on municipal bonds issued, excluding any amount of the revenues pledged for payment of bonds issued by the CRDA or otherwise contractually obligated by the authority prior to the effective date of the bill. All monies so allocated are to be considered State aid that is subject to the "Municipal Qualified Bond Act," P.L.1976, c.38 (C.40A:3-1 et seq.). The bill also creates the Atlantic City Review Commission and provides that this commission would review the PILOT program in 2024. Finally, the bill provides that the State of New Jersey would have a first priority lien on all payments made under this bill to secure repayment of any loans, or aid requiring repayment made to Atlantic City by the State of New Jersey. Under the bill, the city would utilize amounts received under this bill to first repay the State of New Jersey.
Budget
Introduced, Referred to Assembly Budget Committee  (on 2/22/2016)
 
 
Date Chamber Action Description
2/22/2016 A Introduced, Referred to Assembly Budget Committee
Date Motion Yea Nay Other
None specified