In Atlantic City, tension growing between Marina and Boardwalk areas

ATLANTIC CITY - The Borgata wants out of an $860,000-a-year assessment as part of an expansion of the Special Improvement District under the new state-run tourism district the Christie administration created.

"We just don't belong in SID," said Tom Ballance, Borgata's senior vice president of development. "We are different."

As the Shore kicks off its busiest season with Memorial Day weekend, some say the legal case underscores the growing competitive tension between the Marina District and the Boardwalk as Atlantic City's gaming revenue continues to plummet.

Borgata filed a lawsuit in November to get out of the Special Improvement District, which it says provides services that disproportionately benefit casinos on the Boardwalk.

New Jersey Superior Court has yet to hear the case, which pits the Borgata and Marina District Development Co. L.L.C. against the Casino Reinvestment Development Authority, which oversees the tourism district and the Special Improvement District.

The case raises the question of whether the stronger gambling houses - such as Borgata, the city's top-grossing casino - should subsidize weaker competitors, like Resorts and the Atlantic Club, both on the Boardwalk, by contributing to a fund that directly benefits them.

"It's about the [casinos] taking costs out . . . as their business shrinks," said gambling analyst Andrew Zarnett of Deutsche Bank AG. "Everybody is looking to cut costs. That's why many of the casinos are in the process of having their property taxes reassessed."

In the last year and a half, seven of the city's 12 casinos, including the Trump Taj Mahal, Golden Nugget, Borgata, and most recently, Revel, have gone to court seeking lower property-tax assessments.

On Wednesday, the city reached an agreement with the Atlantic Club, formerly the A.C. Hilton, to reduce its property value to $165 million, less than a third of the $543 million assessment of 2008.

The Special Improvement District was established in 1993 to supplement city-provided services to clean and beautify the Boardwalk, along with portions of Pacific Avenue.

With the creation of the state-run tourism district last year, the CRDA expanded the borders of the Special Improvement District to include other parts of the city that fall within the tourism district. The CRDA said Borgata was within the new district boundaries.

Not so fast, said Ballance, who claims the $860,000 district assessment comes straight out of Borgata's profits. He said the casino was being forced to shoulder too much of the financial burden as the city's top casino. The Borgata, he said, was already contributing close to $6 million this year to the Atlantic City Alliance, the most among the city's casinos, as the amount is based on gross gaming revenue. The CRDA established the alliance to market Atlantic City through a $30 million-a-year rebranding campaign.

John Palmieri, executive director of the CRDA, said he couldn't comment on pending litigation, but he defended his agency.

"The Casino Reinvestment Development Authority is advancing initiatives to implement the goals and objectives of the tourism district law enacted by Gov. Christie last year," he said. "The Borgata, along with all of the other businesses in the authority's Special Improvement District, benefit from the authority's efforts to promote a cleaner, safer, and a more beautiful Atlantic City tourism district."

Special Improvement District assessments are based on casino properties assessment value. Auggie Cipollini, Borgata's senior vice president of operations, said Borgata had the highest property assessment among Atlantic City's casinos last year. The $860,000 fee represents about 14 percent of the district's proposed $6 million budget for 2012.

"Our [SID] assessment is higher than anybody else on the Boardwalk that gets all of those city benefits," Cipollini said. "We are supplementing our competitors. We're paying for ours and theirs."

Ballance said that because the land, roads, and infrastructure in and around the Borgata are private property, Borgata foots the bill for all security and maintenance, not the city or Special Improvement District, he said.

Of Atlantic City's $3.3 billion in total gaming revenue last year, about half came from the three Marina casinos - Borgata, Golden Nugget, and Harrah's Resort. All three have spent hundreds of millions of dollars in recent upgrades in preparation for Revel, which had its grand opening Friday.

Under the new tourism district and Special Improvement District, the focus has clearly been the Boardwalk and improving its image. About $5 million in new lighting has been installed.

The Steel Pier will debut the first phase of a $100 million project this summer to transform it into an enclosed, year-round entertainment complex by 2015.

The Taj Mahal and Resorts have Boardwalk facade renovations partially funded by the CRDA under way.

There are now 60 ambassadors, or concierges, hired by the Special Improvement District to walk along the Boardwalk and Atlantic and Pacific Avenues, guiding visitors seven days a week.

And there's Revel, the $2.4 billion must-see attraction on the Boardwalk's northern tip.

Liza Cartmell, chief executive of the Atlantic City Alliance, said, "We cannot comment on any issue in litigation, but it is important to note that Borgata has taken an important and active leadership role in the improvement of the city and in reinventing our city's brand."

The New Jersey Casino Control Commission is not a party in the litigation, but its chair, Linda Kassekert, is a CRDA board member.

"The boundaries of the tourism district mirror those of SID," she said. "They're the same."

The Borgata - the only casino challenging the new Special Improvement District borders in court - does receive SID-related benefits, she said. Kassekert cited the Route 30 corridor that leads to the Borgata as an example, because it is cleaned by the Special Improvement District.

Of the district's efforts, she said, "A rising tide raises all boats. If A.C. improves, and its image is improved and cleaned up, it benefits everybody - the Boardwalk, Revel, and all of Atlantic City."

This summer, perhaps more than any other in recent history, will test loyalties.

The Cavallaros, a retired couple from the Bronx, said they planned to spend most of their time on the Boardwalk.

"It's just so much nicer," Grace Cavallaro, 62, said of the recent changes, as she and husband, Gerardo, 69, sat on a bench in front of Revel last week with the ocean behind them. "Everything is beautiful on this end. Even the benches are nice and clean.

"It's what Atlantic City needs to feel safe," she said as a patrol car drove past.

But Barry Lynch, 59, a township supervisor from Union County, N.J., is putting his money on the Marina.

"I like it here better," he said while perched at the bar at the Chart House, one of several new restaurants opened at the Golden Nugget, formerly Trump Marina, as part of a $150 million makeover.

"There's no better piece of real estate in Atlantic City," he said as he peered out at the docked boats with the Revel in the distance. "And basically, no better view."