UPDATED Union v. Union in Christie's Atlantic City takeover drama

UPDATE

In the suit by the state, meanwhile, Mendez set a 1:30 p.m. Friday for a telephone conference on the state's request that the city "show cause" as to why the judge should not prohibit it from spending any money - i.e. making payroll - that would prevent the city from making school district payments.

The suit acknowledges that the city is up to date in payments to the school district, having made a March payment of $8.5 million. The next payment is due April 15, also for $8.5 million. Mayor Don Guardian has said he will continue to make payments to the school district.

The hearing is set for the same date the city is supposed to pay its workers and then run out of cash until quarterly tax payents arrive May 2. The City Council is expected to approve a plan to pay workers on a 28-day cycle which would allow the city to keep operating during the rest of April.

The impasse has pitted elected officials against one another, and also unions. While the building trades unions have supported Sweeney and his championing of North Jersey casinos, the municipal unions have rallied behind Prieto, who has refused to post the takeover bill to be voted on because it would give the state the right to terminate collective bargaining agreements.

Meanwhile, the NJEA, the teacher’s union, which has historically had a chilly relationship with Christie, came out in favor of state action to ensure that the city makes its schools payment. 

The takeover bill supported by Christie specifically exempts the teacher’s union from language allowing the state to unilaterally terminate or modify city union contracts.

The lawsuit filed by Christie’s education comissioner to force the city to pay the schools before it makes its own payroll basically pits city payroll against school payroll.

Keith Bennett, the   state delegate for the Atlantic City Policeman’s Benevolent Association, said the governor seemed to be courting the NJEA, perhaps in anticipation of Sweeney’s run for governor. Sweeney, who  is pushing for  casinos in North Jersey, has the support of building trades unions.

Christie, in turn, accused Prieto of blocking the takeover legislation by playing “public sector union politics,” as a way to boost the gubernatorial campaign of Jersey City mayor Steve Fulop.

EARLIER REPORT

The bad news keeps piling up for the City of Atlantic City. A day after the state of New Jersey filed suit against the city to compel it to turn over tax money due April 15 to the school district, a judge ruled the city has violated its settlement agreement to repay $88.2 million to the Borgata Hotel and Casino.

The settlement stems from tax appeals Borgata filed for the years 2011, '12, '13 and '14. The city had reached a settlement, but because it was unable to access bond markets to borrow, had been paying $150,000 a month toward the $88.2 million.

The ruling from Atlantic County Superior Court Judge Julio Mendez finds the city in breach of the settlement and allows Borgata to pursue a trial on the tax appeal in Tax Court.

However, the judge _ who is also hearing a companion case regarding a $62 million judgment on a separate Borgata tax appeal that did go to trial in Tax Court, as well as the schools case _ ordered the parties to continue mediation and report back to the court "on a regular basis," on their progress, including Thursday by telephone.

"The parties have been and continue to be open to negotiations for a global resolution of all the tax years," Mendez wrote.

Mendez wrote that he recognized the city "has made a good faith effort to obtain bond financy to pay Borgata," but ruled the settlement still allows Borgata to take the case to Tax Court if the city fails to refund the full amount by the end of 2014. The $150,000 monthly payments stop, under the settlement agreement, when Borgata elects to pursue an appeal.

 The ruling, citing "the public interest involved here," keeps the settlement agreement in place pending further court action in tax court to allow mediation to continue. 

Mendez said he had delayed ruling on the case "to allow for settlement discussions" but moved forward "upon Borgata's request." 

"In weighing the equities, the Court takes into account that the City substantially over assessed the real estate value of Borgata's Properties for years and has received an over payment of taxes during that time," Mendez wrote.

Keeping the settlement agreement in place, but allowing Borgata to pursue an appeal in Tax Court, provides "stability and structure for an outcome that benefits both parties," Mendez wrote.

His ruling also relieves the city of its obligation to make monthly payments of $150,000 to Borgata under the existing settlement agreement.

The tax appeals by Borgata and other casinos have contributed to the current fiscal crisis faced by the city, and were addressed in legislation twice vetoed by Gov. Christie which would set up a Payment in Lieu of Taxes system for casinos to prevent any tax appeals. 

Borgata obtained permission from Mendez to withhold its quarterly $7.2 million payment earlier this year, to offset the $62 million owed to them by the city in the appeal of the years 2009 and 2010. Mendez ruled that Borgata was entitled to collect on that money, but continued to urge that the parties reach a mediated resolution.

The legislation along with more than $60 million in redirected casino revenue to help the city pay off debt and a takeover bill, are stalled in an impasse among top elected officials in Trenton: Christie, State Senate President Steve Sweeney and Assembly Speaker Vincent Prieto.

The city, meanwhile, says it will run out of cash on Friday, and was prepared to shut its government down except for essential services. but may instead approve a delayed payment plan for its municipal workers that it said would keep the city running as normal.

Joe Corbo, Borgata's general counsel, declined to comment on the ruling Tuesday. The Mayor's office did not respond to a request for comment.

In the suit by the state, meanwhile, Mendez set a 1:30 p.m. Friday for a telephone conference on the state's request that the city "show cause" as to why the judge should not prohibit it from spending any money - i.e. making payroll - that would interfere with their ability to make payments to the school district. 

The suit acknowledges that the city is up to date in payments to the school district, having made a March payment of $8.5 million. The next payment is due April 15, also for $8.5 million. Atlantic City Mayor Don Guardian has said he will continue to make payments to the school district.

 The city has said they will make school district payments but have been running on a schedule set by the state monitor that makes them late every month, but up to date. The hearing is set for the same date the city is supposed to pay its workers and then run out of cash until quarterly tax payents arrive May 2. The City Council is expected to approve a plan to pay workers on a 28-day cycle which would allow the city to keep operating during the rest of April.