Taj Mahal dispute delays vote on Atlantic City recovery plan

ATLANTIC CITY — An economic recovery plan that would give Atlantic City’s casinos millions of dollars in tax relief was ensnared in a dispute Thursday between billionaire investor Carl Icahn and the union representing workers at the Trump Taj Mahal Casino Resort.

A final vote on the five-bill legislative package, which would help stabilize Atlantic City’s shaky finances, was postponed in the Senate and Assembly after Icahn could not reach a deal with Local 54 of UNITE-HERE.

Assemblyman Vince Mazzeo, D-Atlantic, a prime sponsor of the legislation, blamed Icahn’s “shenanigans” for the delay.

“This is all on hold because Carl Icahn put a snag in what we’re trying to do to get these bills passed,” Mazzeo said. “He decided not to sign a contract with the union. These types of shenanigans that are pulled, it’s not fair business to me.”

Icahn, who controls the debt on the Taj Mahal and is looking to take over the casino in bankruptcy proceedings, refused to sign a labor agreement with Local 54, Mazzeo said. The union deal is crucial for saving the financially troubled Taj Mahal.

Mazzeo said as long as the agreement with Local 54 remains in limbo, the Legislature cannot hold a final vote on Atlantic City’s economic plan because it includes tax benefits for the Taj Mahal. It now appears the vote will be delayed until January, Mazzeo said.

“From our perspective, the state is giving the Taj Mahal a property tax decrease, and we want the workers to have a contract, so all five bills are on hold,” he said.

Under the plan, Atlantic City’s casino industry would make payments in lieu of property taxes amounting to $150 million annually for the first two years and $120 million annually for the next 13 years. Mazzeo and other supporters say the so-called PILOT program would create stable and predictable payments in place of the Atlantic City’s volatile property tax structure.

The legislation includes substantial tax breaks for the casino industry. Icahn has been pressing for tax breaks or other economic aid from the state or city as part of his plans to take ownership of the Taj Mahal.

Sen. Jim Whelan, D-Atlantic, estimated the tax savings for the Taj Mahal at around $8 million. Whelan, another prime sponsor of the Atlantic City legislation, raised the possibly that the bills would have to be revised if Icahn does not reach a deal with the union to save the Taj Mahal from closing.

“When you take that out, you have to pause and say, ‘What’s the impact of this?’” Whelan said. “Hopefully, the Taj finds a way to get a deal done. If we don’t get a deal done, we have to recalibrate on the bills. We hope it doesn’t come to that.”

The Taj Mahal was supposed to shut down on Saturday, but it now appears it will stay open indefinitely while Icahn tries to work out a “global settlement” with the state, the city and the union. Icahn pledged in a letter Thursday to the Taj Mahal’s parent company to invest an additional $20 million in financing to keep the casino open throughout the bankruptcy proceedings.

“Many people would still argue that it would be a better financial decision for me to let the Taj close and wait to see whether a global settlement can be reached,” Icahn wrote to Trump Entertainment Resorts Inc. CEO Robert Griffin. “But I cannot be so callous as to let 3,000 hardworking people lose their jobs.”

In his letter, Icahn disputed that he is “anti-union.” Although he said he remains hopeful of eventually reaching a deal with Local 54, he added that he has plenty of reasons for walking away from the Taj Mahal and Trump Entertainment.

“Trump Entertainment Resorts Inc. is one of the most distressed companies I have ever come across in my 50-plus years of investing,” he wrote. “The company’s hometown of Atlantic City is in the midst of an unprecedented crisis. Intense competition from surrounding markets is steadily eroding gaming revenues for the city’s casinos. At the same time, relative to those surrounding markets, the costs of operating a casino in Atlantic City continue to escalate. As a result, four local casinos shuttered in 2014, and a once vibrant Atlantic City institution, your Taj Mahal, loses almost $10 million every month.”

Icahn could not be immediately reached for comment at his New York office. Mazzeo said his office tried to contact Icahn but did not get a response.

Until the Icahn-Local 54 dispute erupted, the Atlantic City economic plan had been breezing through the Legislature. Senate and Assembly committees approved the legislation in the past two weeks, setting up what was supposed to be an easy vote Thursday by both houses.

Assemblyman Chris Brown, a critic of the legislation and what he has called its “corporate welfare” for the casinos, said the delay will give more time to discuss the plan.

“As we saw today, rushing bills through that are not well thought out is unproductive. I believe we owe it to our middle-class families to work together in a bipartisan fashion and thoroughly vet each proposal through the summit process in order to make sure we get it right,” said Brown, R-Atlantic.

The legislation grew out of two economic summits convened by Gov. Chris Christie to pull Atlantic City out of its economic crisis. Four casinos have closed so far this year, with the Taj Mahal seemingly on the brink.

At the heart of the legislation is the PILOT program that would replace traditional casino property tax payments. Whelan and Mazzeo say the PILOT program would ensure steady payments by the casinos to help fund the city. Otherwise, Atlantic City would have to rely on a declining tax base that has been hurt by a series of casino tax appeals as well as the casino closings.

The PILOT program includes funding for the county and schools, in addition to providing aid for Atlantic City. PILOT payments would end the casino tax appeals that have dramatically lowered the city’s tax base, forcing ordinary taxpayers to shoulder more of the burden, Mazzeo said.

The legislation would eliminate the Atlantic City Alliance, the casino-funded marketing arm, and redirect its $30 million annual budget to help pay city expenses for two years. It would also redirect payments made to the Casino Reinvestment Development Authority, a state agency that oversees housing projects and economic development, to help pay down the city’s debts by $25 million to $30 million annually.

Source: Press of Atlantic City