The Atlantic City Council has decided to issue bonds to pay for more than $38 million which is owing to property owners in refunds for successful real estate tax appeals. According to an article in the Atlantic City Press, more than 90 percent of those refunds will be paid to the resort casinos.
This is not the first time that Atlantic City has chosen to borrow monies by issuing bonds to finance property tax refunds. A similar measure was approved last year, but that only applied to a certain group of property tax appeals. The current bond issue is intended to provide monies sufficient to pay all refunds currently owing, but will not cover anticipated refunds from any pending tax appeals. Municipal officials supporting this action suggest that the 3.5% interest rate that the City will pay to its bondholders would ultimately cost the City and its taxpayers less than the statutory rate of interest of 5% which would be owed on the refunds if they are not paid with the loan created by the bond issuance.
The long-term fiscal impact of this situation is, at a minimum, uncertain, as the City will now likely increase its deficit, and is all but certain to face decreasing property tax revenues in the foreseeable future as pending appeals are resolved and new appeals are filed by other property owners in the 2012 tax year. The potential problem is exacerbated by the fact that the monies raised by past years’ property tax revenues has already been spent. Without further budget cuts or additional sources of revenues in the near future, this doesn’t appear that it will go away any time soon.
- N.J. officials urge residents to apply for property tax rebate programs, including ‘Senior Freeze’ (nj.com)
- Atlantic City Development Authority Gets New Executive Director (njcondemnationlaw.com)
- Atlantic City casino workers continue to work without new contract (nj.com)
- Montclair Tax Assessment: Might be Wrong, But Not In Error (realestatetaxappealsnj.com)