Saturday, February 13, 2016

Atlantic City finances weaken: report

Will Jimmy Buffett, Bass Pro turn the tide?

Atlantic City finances weaken: report

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With the Revel bankrupt, and with Trump Plaza close to a sale deal for just $20 million (it's still assessed at around $250 million), casinos are suddenly asking for huge property tax refunds that the city can ill afford. (Eric Mencher / Staff Photographer)

Atlantic City's debt, already rated Baa1, could be cut further as its casinos continue to lose customers and value, writes Vito Galluccio, analyst at Moody's Investors Service, in a report to clients today.

Atlantic City real estate property values -- mostly casinos -- has fallen by more than a quarter in value since 2008, to around $16.6 billion, Galluccio reports. (The Borgata is the most valuable property at $1.8 billion, followed by Harrah's Marina at $1.5 billion, the bankrupt Revel at $1.2 billion, and Caesars and the Trump Taj Majal at $1 billion each.)

With Revel bankrupt, with Trump Plaza close to a sale deal for just $20 million (it's still assessed at around $250 million), casinos are demanding huge property tax  refunds which the city can ill afford. This plus the rise in local unemployument to a national high of 20%, and the rise in the local poverty rate, are all symptoms of the continued drop in gamblers -- to 29 million last year from 35 million in 20005 -- as more are caught by casinos in Pennsylvania, Delaware and New England, Galluccio notes. The city can't keep raising tax rates to balance falling values forever, he warned.

Positive signs: NJ Gov. Chris Christie's approval of A.C.-based online gambling will pour fees into city coffers; and the city is very belatedly attracting non-gambling developments, like a $36 million Jimmy Buffett's Margaritaville beachside bar development, a Bass Pro Shop retail store, and Harrah's $135 million midweek corporate conference center; plus city tourism ads targeting golfers, live shows and, of course, the beach.

More coverage
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Filing offers closer look at Revel's troubles
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About this blog

PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, 215.854.5194, @PhillyJoeD. Read his blog posts at http://www.philly.com/PhillyDeals and his Inquirer columns at http://www.philly.com/philly/columnists/joseph-distefano/. Bloomberg posts his items at NH BLG_PHILLYDEAL.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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