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.