Late last year, two New Jersey senators introduced a plan to give tax breaks to Atlantic City casinos, looking for a way to salvage the businesses and recoup revenues in the city. More recently, a new bill being delivered to Gov. Chris Christie could allow casinos to make payments in lieu of taxes (PILOT) for 15 years.
According to the Associated Press, the owners of the former Trump Plaza casino in Atlantic City responded to this bill by announcing their plans to shut down the casino for a decade in order to save on taxes. Trump Entertainment Resorts filed a deed restriction for the casino, preventing the property from being used as a casino for at least a decade. However, the building could be used for another purpose.
The new tax plan applies to any property licensed to operate as a casino in 2014 that does not have a deed restriction. The Trump Plaza operated for eight and a half months during 2014, therefore it may be included in the alternative tax plan.
"The Plaza could be required to make mandatory payments under the PILOT program notwithstanding the fact that it generates no revenue and its hotel rooms are closed," the company wrote Friday in its filing with a Delaware bankruptcy court. The deed restriction was also revealed in this filing. "The PILOT program applies to casino gaming properties that are 'not subject to recorded covenants prohibiting casino gaming.'"
Trump Entertainment has already appealed its 2014 and 2015 property taxes, and believes it can get a better deal outside of the PILOT program. Should Christie sign the program into law, casinos will not be able to appeal their property taxes.
According to Casino News Daily, the deed restriction also applies to any potential buyer of the property, though it could be canceled if the buyer pays Trump Entertainment an undisclosed release fee. Trump Entertainment's recent filing in bankruptcy court also revealed that Carl Icahn, the businessman in line to purchase Trump Entertainment, approves of the deed restriction.
The deed restriction is to go before a bankruptcy judge on July 9.