Bill Text: NJ A3209 | 2016-2017 | Regular Session | Introduced
Bill Title: Concerns taxation of casino gaming property; redirects investment alternative tax proceeds; abolishes Atlantic City Alliance.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2016-02-22 - Introduced, Referred to Assembly Budget Committee [A3209 Detail]
Download: New_Jersey-2016-A3209-Introduced.html
Sponsored by:
Assemblyman VINCENT MAZZEO
District 2 (Atlantic)
Assemblyman LOUIS D. GREENWALD
District 6 (Burlington and Camden)
SYNOPSIS
Concerns taxation of casino gaming property; redirects investment alternative tax proceeds; abolishes Atlantic City Alliance.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the stabilization of the finances of a municipality in which casino gaming is authorized, amending R.S.54:5-6 and P.L.2011, c.18, and supplementing Title 52 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) Sections 1 through 7 and section 9 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be known and may be referred to as the "Casino Property Tax Stabilization Act."
2. (New section) The Legislature finds and declares that:
a. In 1976, the voters of the State approved an amendment to the New Jersey Constitution (Article IV, Section VII, paragraph 2, subparagraph D), which authorized casino gaming in Atlantic City.
b. For over 30 years, casinos grew and profited in the City of Atlantic City, until competition from other states in our region, particularly Pennsylvania, siphoned off much of the out-of-State and foreign gamblers who had frequented Atlantic City casinos for many years.
c. The regional competition in casino gaming has had a deleterious effect on Atlantic City in several ways, including: an increase in unemployment due to the recent closing of four casino properties, representing fully one-third of the number of casinos operating in Atlantic City in 2013; a strain on Atlantic City's municipal budget due to property tax refunds required by successful assessment appeals of casino gaming properties; and an increased property tax burden on Atlantic City and Atlantic County residents based on the decreasing value of casino gaming properties.
d. In the "New Jersey Economic Opportunity Act of 2013," P.L.2013, c161 (C.52:27D-489a et al.), the four New Jersey cities with the lowest median family income based on the 2009 American Community Survey from the United States Census, (Table 708. Household, Family, and Per Capita Income and Individuals, and Families Below Poverty Level by City: 2009) were designated as Garden State Growth Zones and were declared blighted areas and areas in need of rehabilitation; provided, however, that the declaration alone could not be used to allow any property to be taken or acquired.
e. The Legislature has previously recognized the extraordinary situation in Atlantic City, by designating a municipality which contains a tourism district as established pursuant to section 5 of P.L.2011, c.18 (C.5:12-219) and regulated by the Casino Reinvestment Development Authority as a Garden State Growth Zone for purposes of incentive programs administered by the New Jersey Economic Development Authority in P.L.2014, c.63 (C.34:1B-251 et al.).
f. Consistent with the Legislature's acts with respect to the other Garden State Growth Zones, a municipality which contains a tourism district as established pursuant to section 5 of P.L.2011, c.18 (C.5:12-219) and is regulated by the Casino Reinvestment Development Authority is hereby declared a blighted area and area in need of redevelopment; provided, however, that this declaration alone shall not be used to allow any property to be taken or acquired.
g. The accurate assessment of casino gaming properties is especially difficult because they are unique properties and their year-to-year value is greatly influenced by the performance of casino gaming properties in other nearby states and by extreme weather events like Super Storm Sandy.
h. It is appropriate for the Legislature to address the extraordinary situation in Atlantic City by devising a program that avoids costly assessment appeals for both the casino operators and Atlantic City, and that provides a certain mandatory minimum property-tax related payment by casino properties that Atlantic City can rely upon each year.
i. Article VIII, Section I, paragraph 2 of the New Jersey Constitution empowers the Legislature to grant property tax exemptions by general law.
j. It is constitutional to classify Atlantic City, the only municipality wherein casino gaming is authorized, as a special class unto itself for economic purposes related to casino gaming. Courts have routinely concluded that the Legislature has the ability to address the concerns of Atlantic City and the casino industry separately from other local entities and industries due to the unique role casino gambling plays in Atlantic City and the State. The fact that, even though almost 40 years have passed since the approval of casino gambling in New Jersey, Atlantic City remains the only municipality wherein casino gaming is authorized, proves that its unique classification continues to allow the Legislature to treat it as a special case under State law, and permits changes to the casino "experiment" in Atlantic City.
k. Casino gaming properties represent a unique classification of property that can be exempted from normal property taxation by general law, in favor of a certain guaranteed mandatory minimum payment in lieu of property taxes when it is primarily in the public interest to do so.
l. In the interest of the
revitalization of Atlantic City and the continuation of the casino industry and
its associated economic benefits to the State, it is reasonable that the
Legislature, in seeking to revitalize the city, should choose to experiment
with a payment
in lieu of property tax mechanism to address the issues of persistent property tax appeals and the damage that those appeals, together with declining casino property values, have wrought on the tax bases of both Atlantic City and Atlantic County.
m. It is a primary public purpose to grant casino gaming properties an exemption from normal property taxation for a limited period of time, in exchange for a guaranteed mandatory minimum payment in lieu of property taxes, because Atlantic City will be able to depend on a certain level of revenue from casino gaming properties each year, making the local property tax rate and need for State aid less volatile; casino revenue supports many social programs, such as property tax relief for seniors, medical assistance, housing for disabled residents, transportation assistance, and other social services programs for elderly and disabled New Jerseyans; casinos provide a unique recreational experience to the residents of New Jersey within the State; and because, with a long-term predictable payment in lieu of property tax liability, casino gaming properties will know how much of their income will be required to pay their obligation to Atlantic City, Atlantic County, and the Atlantic City School District. This ability to depend on a stable payment in lieu of property tax obligation will in turn help to stabilize the casino business models and the workforce required to run those business models, and the casino gaming properties will be better able to compete with out-of-State casino gaming properties in the region to preserve, and perhaps grow, the many benefits that casino gaming has brought to the State, and more particularly, to the Atlantic City region.
n. It is also a primary public purpose to stabilize the casino industry for the benefit of the casino employee workforce, many of whom have worked in the casinos since the first casino opened over 30 years ago. It is anticipated that the financial stability granted to the casino gaming properties by a guaranteed mandatory minimum payment in lieu of property taxes for a 10-year period will greatly enhance the ability of the casino gaming properties to adapt their business models to the changes in the regional casino gaming market, which will in turn allow them to remain open for business and to pay their employees good wages and benefits, including health care and pension benefits, for many years to come.
o. This plan to provide a guaranteed minimum in lieu of property tax payment for 10 years, and ending casino property tax appeal litigation would provide some economic stabilization to Atlantic City and allow it time to plan for its future, which it cannot do if it descends further into an economic free-fall.
p. The public purpose of a property tax exemption and payment in lieu of property tax program for casino gaming properties seems evident without examining the specific local, regional, and Statewide economic benefits of the continued success of the casino industry and the general economic viability of Atlantic City. Arguably, the local, regional, and State economies could be bolstered by such a property tax exemption and, thus, be seen by a court as a primary public purpose furthered by the legislation. The exemption of casino property from property taxation is a proper exercise of the Legislature's power to grant property tax exemptions by general law, since Atlantic City casinos are a unique classification which does not exclude any similar properties in the State. Such an exemption primarily furthers several public purposes, while providing an incidental benefit to casino properties.
q. The Legislature intends to request in the budget process that $10,000,000 is appropriated for economic development projects in Atlantic City and that $8,000,000 is appropriated for funding for the promotion, marketing, and advertising of the City of Atlantic City. Any amount so appropriated to Atlantic City shall not impact, reduce, or otherwise affect the amount appropriated for Transitional Aid to Localities.
3. (New section) a. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"Atlantic City" means the City of Atlantic City, in Atlantic County;
"Base amount" means the amount of the payment in lieu of taxes as determined by subparagraph iv of paragraph (3) of subsection c. of this section;
"Casino gaming property" means one or more parcels of real property located in Atlantic City, and any adjacent property utilized in connection with such property, upon which there is located a facility licensed to be used for casino gaming in 2014 or thereafter, whether or not in actual operation, which has more than 500 guest hotel rooms, and is not subject to recorded covenants prohibiting casino gaming;
"Division" means the Division of Gaming Enforcement in the Department of Law and Public Safety;
"Gross gaming revenue" (GGR) means the total amount of revenue raised through casino gaming from all of the casino gaming properties located in Atlantic City as determined by the division;
"Local Finance Board" means the Local Finance Board in the Division of Local Government Services in the Department of Community Affairs; and
"Treasury" means the Department of the Treasury.
b. Beginning with calendar year 2016, and for the next succeeding nine calendar years, casino gaming properties located in Atlantic City shall be exempt from local property taxation on real property and improvements, including accessory hotels, conference centers, parking garages, and other appurtenant facilities, except that any new improvement developed on a casino gaming property that is made outside of the perimeter footprint of any improvement existing as of the effective date of this bill and any real property, not formerly qualified as casino gaming property shall not be exempt from local property taxation in any calendar year and shall be subject to local property taxation annually at Atlantic City's general property tax rate. The provisions of this section 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).
c. (1) In exchange for the property tax exemption granted in subsection b. of this section, each owner of each casino gaming property shall sign a 10-year financial agreement with the City of Atlantic City for each casino gaming property promising to make quarterly payments to the city of its allocated portion of the annual amount of the payment in lieu of taxes as determined by this section. 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.
(2) Any new owner of a casino gaming property following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) shall immediately become responsible for signing a financial agreement with the City of Atlantic City promising to make payments consistent with this section.
(3) (i) The total amount of the payment in lieu of property taxes owed to Atlantic City for calendar year 2016 shall be $120 million. To the extent that any owner of a casino gaming property has paid property taxes for calendar year 2016 prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the amount of property taxes so paid shall be credited toward that owner's allocated share of the $120 million total payment in lieu of property taxes.
(ii) For calendar year 2017 and for each calendar year thereafter, the amount of the payment in lieu of property taxes owed to Atlantic City shall increase by two percent per year in every year in which there is no upward adjustment to the base amount of the payment in lieu of taxes from the previous calendar year as determined by subparagraph (iv) of this paragraph.
(iii) For calendar year 2017 and for each calendar year thereafter, the total amount of the payment in lieu of property taxes owed to Atlantic City shall be the base amount as determined by subparagraph (iv) of this paragraph and the total amount of the annual increases to date as determined by subparagraph (ii) of this paragraph.
(iv) Subject to section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill), for calendar year 2017 and for each calendar year thereafter, the base amount of the payment in lieu of taxes shall be determined as follows:
If the amount of the GGR in the preceding calendar year is between $3.4 billion and $3.8 billion, the base amount shall be $165 million, or in the case of an upward adjustment, $15 million more than the PILOT in the previous year, whichever is greater;
If the amount of the GGR in the preceding calendar year is between $3.0 billion and $3.4 billion, the base amount shall be $150 million, or in the case of an upward adjustment, $20 million more than the PILOT in the previous year, whichever is greater;
If the amount of the GGR in the preceding calendar year is between $2.6 billion and $3.0 billion, the base amount shall be $130 million, or in the case of an upward adjustment, $10 million more than the PILOT in the previous year, whichever is greater;
If the amount of the GGR in the preceding calendar year is between $2.2 billion and $2.6 billion, the base amount shall be $120 million, or in the case of an upward adjustment, $10 million more than the PILOT in the previous year, whichever is greater;
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 compared to the prior calendar year by more than the amount by which GGR is less than $2.2 billion, as determined by the division, the base amount shall be $110 million, or in the case of an upward adjustment, $20 million more than the PILOT in the previous year, whichever is greater;
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.
(4) The amount of the payment in lieu of property taxes owed pursuant to this subsection shall 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.
Each of these three criteria shall bear equal weight in the formula implemented by the Local Finance Board, in consultation with the division, pursuant to this paragraph, provided that during calendar years 2016, 2017, 2018, 2019, and 2020, if the formula results in any individual casino gaming property being allocated an amount that is in excess of the total real property taxes due and payable by the casino gaming property in calendar year 2015, then that casino gaming property shall receive a credit against the obligation of the operator of that property under paragraph (2) of subsection a. of section 3 of P.L.1984, c.218 (C.5:12-144.1) in the amount of such excess. If, after that credit against the obligation of the operator of that property under paragraph (2) of subsection a. of section 3 of P.L.1984, c.218 (C.5:12-144.1), that casino gaming property would still be liable for a payment in lieu of property taxes in excess of the total real property taxes due and payable by the casino gaming property in calendar year 2015, the casino gaming property shall not be required to make any additional payment in lieu of property tax payment. Instead, any additional amount that would have been owed by that casino gaming property shall be added, by proportional share, to the payment in lieu of property taxes to be paid by every other casino gaming property in order to provide Atlantic City the total amount of the payment in lieu of property taxes due and owing for that calendar year.
d. 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 P.L. , c. (C. ) (pending before the Legislature as this bill), Atlantic City's financial agreement with each owner of each casino gaming property shall be amended to reflect the change and the allocation of the payment in lieu of property taxes between the casino gaming properties.
e. The provisions of R.S.54:5-6 shall apply to any amount required to be paid under section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), and the municipality shall have the same rights against any casino gaming property for such unpaid amounts relating to that property as if such amounts were unpaid property taxes.
4. (New section) a. In addition to the amounts required to be remitted under section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), the owner of each casino gaming property shall 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: (1) $30,000,000 for calendar year 2015, (2) $30,000,000 for calendar year 2016; (3) $15,000,000 for calendar year 2017; (4) $10,000,000 for calendar year 2018, (5) $5,000,000 for calendar year 2019; (6) $5,000,000 for calendar year 2020; (7) $5,000,000 for calendar year 2021; (8) $5,000,000 for calendar year 2022; and (9) $5,000,000 for calendar year 2023.
b. The Local Finance Board, in consultation with the division, shall 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 shall remit its payment to the State. The Local Finance Board shall provide the owner of each casino gaming property required to make a payment under this section with written notice of the amount of the payment for each casino gaming property, and instructions for how each payment shall be made. Each owner of a casino gaming property required to make a payment under this section shall remit its payment within five business days of receipt of the written notice from the Local Finance Board.
c. The funds comprised of the payments collected under this section shall 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 shall, 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.
5. (New section) Annually, a portion of the payment in lieu of property tax moneys collected pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be remitted to the county and the school district for their own purposes. These moneys shall be remitted to the county and to the school district in the same manner as property taxes are paid to counties and school districts pursuant to R.S.54:4-74, R.S.54:4-75, and R.S.54:4-76, except that the Local Finance Board may, in its discretion, apportion a specific percentage of the payment in lieu of property tax moneys to be remitted to the county.
6. (New section) a. On January 1, 2024, there shall be established the Atlantic City Review Commission, to review and determine the efficacy of the payment in lieu of property tax program established by P.L. , c. (C. ) (pending before the Legislature as this bill). Specifically, the commission shall determine: the economic vitality and viability of Atlantic City's casinos; the economic vitality and viability of Atlantic City government; the effect of the payment in lieu of property tax program on the economic viability of the casinos, and on Atlantic City's ability to fund its own government and to provide services to the residents of Atlantic City; and the feasibility of continuing the payment in lieu of property tax program for an additional period of time.
b. The commission shall consist of seven members:
A member of the public, appointed by the Governor, who shall be the Chairperson of the Commission;
The Commissioner of Community Affairs, or the commissioner's designee;
The Atlantic City Mayor or the mayor's designee;
The Atlantic County Executive, or the county executive's designee;
A representative of the casino industry, appointed by the Governor;
A representative of a casino employees' union, appointed by the Governor upon the recommendation of the President of the Senate; and
A representative of the business community of Atlantic City, appointed by the Governor upon recommendation of the Speaker of the General Assembly. This member shall be a resident of Atlantic City and shall not be an executive or an employee of any of the casinos in Atlantic City. This member shall be appointed from, and shall represent on the commission, the interests of the non-gaming business interests in the city.
c. The commission shall issue its findings and recommendations in writing not later than July 1, 2024 to the Governor, the President of the Senate, and the Speaker of the General Assembly pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1). The commission shall expire on the 30th day next following the issuance of those findings and recommendations.
7. (New section) The State of New Jersey shall have a first priority lien on all payments made under P.L. , c. (C. ) (pending before the Legislature as this bill) to secure repayment of any amounts outstanding, at the time of the payment, on any loans made to the city of Atlantic City by the State of New Jersey, including any office, department, division, bureau, board, commission or agency of the State, including without limitation loans made pursuant to the "Supplemental Municipal Property Tax Relief Act," P.L.1991, c.63 (C.52:27D-118.32 et seq.), or any aid provided by the State of New Jersey, including any office, department, division, bureau, board, commission or agency of the State, to Atlantic City requiring repayment. Atlantic City shall utilize amounts received under P.L. , c. (C. ) (pending before the Legislature as this bill) to first repay the State of New Jersey for any such outstanding loan or aid amounts.
8. R.S.54:5-6 is amended to read as follows:
54:5-6. Taxes on lands and payments in lieu of property taxes pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), shall be a continuous lien on the land on which they are assessed and all subsequent taxes, or payments in lieu of property taxes pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), as appropriate, interest, penalties and costs of collection which thereafter fall due or accrue shall be added to and be a part of such initial lien.
(cf: P.L.1994, c.32, s.5)
9. (New section) Notwithstanding the provisions of section 3 of P.L.1984, c.218 (C.5:12-144.1) or any other law to the contrary, including subsection k. of section 5 of P.L.2011, c.18 (C.5:12-219),
the moneys received by the State Treasurer derived from the payment of the investment alternative tax in the amount specified in paragraph (2) of subsection a. of section 3 of P.L.1984, c.218 (C.5:12-144.1) and the investment alternative in the amount as specified in section 17 of P.L.2013, c.27 (C.5:12-95.19), except for any amount thereof pledged for the payment of bonds issued by the Casino Reinvestment Development Authority or otherwise contractually obligated by the authority prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall be allocated to the city of Atlantic City for the purposes of paying debt service on bonds issued by Atlantic City prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).
10. (New section) Notwithstanding any law, rule, or regulation to the contrary, all monies allocated pursuant to section 9 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be considered "funds appropriated as State aid and not otherwise dedicated to specific municipal programs so payable to such municipality that are withheld or are required to be withheld by the State Treasurer under P.L.1976, c.38 (C.40A:3-1 et seq.) as set forth in the "Municipal Qualified Bond Act," P.L.1976, c.38 (C.40A:3-1 et seq.).
11. Section 1 of P.L.2011, c.18 (C.5:12-218) is amended to read as follows:
1. As used in P.L.2011, c.18 (C.5:12-218 et al.):
"Atlantic City" or "city" means the City of Atlantic City, Atlantic County.
"Atlantic City convention center project" or "convention center project" means the project authorized by paragraph (9) of subsection a. of section 6 of P.L.1971, c.137 (C.5:10-6).
"Atlantic City Tourism District" or "tourism district" means the district within Atlantic City established pursuant to section 5 of P.L.2011, c.18 (C.5:12-219).
"Authority" means the Casino Reinvestment Development Authority established pursuant to section 5 of P.L.1984, c.218 (C.5:12-153).
"Convention center authority" means the Atlantic City Convention and Visitors Authority established pursuant to section 3 of P.L.1981, c.459 (C.52:27H-31).
"Convention Center Division" or "division" means the division created pursuant to paragraph (1) of subsection b. of section 12 of P.L.2011, c.18 (C.5:12-226) to exist within the authority as a division of the authority.
["Corporation" means the not-for-profit corporation with which the authority is to undertake an agreement pursuant to subsection a. of section 7 of P.L.2011, c.18 (C.5:12-221).]
"Development and design guidelines" means the development and design guidelines for site plan applications, which guidelines are to be adopted by the authority pursuant to section 6 of P.L.2011, c.18 (C.5:12-220).
"District land use regulations" means the regulations, applicable within the tourism district, that are to be adopted by the authority pursuant to P.L.2011, c.18 (C.5:12-218 et al.).
"Gaming" means, in addition to any meaning otherwise provided by law, any legalized form of gambling in New Jersey including, but not limited to, casino gambling and horse racing.
"Nonconforming use" means a legal or pre-existing use or activity which fails to conform to the development and design guidelines or land use regulations adopted by the authority pursuant to P.L.2011, c.18 (C.5:12-218 et al.).
"Public safety improvements" means the development of infrastructure in the tourism district made for the purpose of increasing safety. Such improvements would include the development of appropriate security technology and the installation of increased lighting in outdoor areas, the installation of surveillance cameras, and the installation of emergency phones and lights throughout the tourism district for use by appropriate security and law enforcement personnel.
"Road and highway authority" means any State or local entity, including, but not limited to, Atlantic City or any agency thereof, Atlantic County or any agency thereof, the New Jersey Department of Transportation, and the South Jersey Transportation Authority established under section 4 of P.L.1991, c.252 (C.27:25A-4), or any other State or local entity having jurisdiction over (a) the roads and highways in the tourism district, (b) the roads and highways adjacent to the tourism district, (c) the land area in which the authority is an interested party pursuant to subsection c. of section 6 of P.L.2011, c.18 (C.5:12-220), or (d) the portion of the roads and highways in Atlantic City which provide direct access to the tourism district.
"Tourism district master plan" or "Master plan," or "plan," means the authority's comprehensive master plan for the redevelopment of the tourism district.
"Transfer Date" means, with respect to the assumption by the authority of the powers, duties, assets, and responsibilities of the convention center authority, the date on which (a) the chairs of the authority and the convention center authority certify to the Governor that all of the bonds issued by the convention center authority cease to be outstanding within the meaning of the resolutions pursuant to which the bonds were issued, and (b) the authority assumes all debts and statutory responsibilities of the convention center authority.
(cf: P.L.2011, c.18, s.1)
12. Sections 7 and 9 of P.L.2011, c.18 (C.5:12-221 and C.5:12-223) are repealed.
13. This act shall take effect immediately, provided, however, that sections 4, 11, and 12 shall be retroactive to January 1, 2015.
STATEMENT
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.
