Glenn Straub says the Revel Building should not be considered a casino for property tax purposes.
Glenn Straub, owner of the former Revel Casino, is suing the State of New Jersey for $3 million to keep from paying a PILOT bill he considers to be overstated. The suit is asking a Superior Court judge to remove the Revel Building from a list of casinos required to make PILOT taxes.
The legal filing in Straub’s lawsuit states, “The PILOT Act penalizes it by requiring it to pay based on the fact that at one time the property was licensed to operate as a casino, but does not generate the level of revenue as casino properties because no casino operates there and, in fact, never did operate there in the entire ownership period of the plaintiff.”
Straub and his lawyers believe the Revel Building should be assessed taxes based on its property value, which would be $5.1 million. Instead, it is assessed taxes as if it is an operating casino, causing the price tag to be $8.3 million taxes owed at present. In Glenn Straub’s reasoning, that is against the spirit of the PILOT law, which was passed in 2016.
What Is a PILOT Payment?
The Payment In Lieu of Taxes (“PILOT” for short) was passed in 2016 by the New Jersey State Legislature. The PILOT payments are made instead of property taxes, which are assessed on a yearly basis.
Ironically, the reason the PILOT payments were enacted was to avoid lawsuits over tax bills. Each year, the Atlantic City casinos filed suits, claiming their taxes were over-assessed. This led to long court battles which cost taxpayer money and casino revenues.
Borgata’s Property Tax Case
In a couple of cases, it was found that Atlantic City’s property taxes were much higher than they should have been. Over a course of three years, Borgata paid $170 million more in taxes than a judge found reasonable. Atlantic City could not repay Borgata, which was one of the reasons AC’s credit rating was downgraded. Atlantic City’s financial overseers eventually negotiated a much lower price for Borgata’s repayment, but the city’s leading casino operator doubtless came away convinced PILOT payments were better.
Revel Casino’s Closure
Glenn Straub does not think so. Since Revel Casino closed in September 2014, the building has not housed a business. Glenn Straub’s sought to reopen the hotel portions of the Revel Building on June 15 of 2015 and 2016, but both deadlines passed without an opening. In both cases, Straub could not receive an alcohol license to make an opening feasible.
It is his inability to procure a casino license that upsets Glenn Straub so much. He has sued the Casino Control Commission, because of its requirement that he obtain a full casino license.
The Florida real estate developer claims he should not have to obtain a full license, because he does not plan to manage the casino. Straub believes the management company should be required to gain a full casino operator’s license, while he should receive a lesser form of accreditation.
Glenn Straub’s Frustration Level
New Jersey regulators at the Division of Gaming Enforcement do not see it that way. Over time, Glenn Straub has expressed public frustration at his inability to obtain a license in a timely fashion, even saying he would not have bought the Revel Casino, had he known how difficult it was to secure gaming and alcohol licenses. He also criticized New Jersey regulators for their lack of support for business operators in a city which needs to create jobs.
Straub has called on the Revel Casino to be assessed taxes as if it is an “abandoned building”, because it has been empty for more than three years now. Once again, New Jersey officials choose to assess Revel’s part of the PILOT bill as if it was fully operational.
The Revel Casino’s owner, who changed the name of the business to TEN Casino, told the local newspapers that the PILOT law is being misapplied. He said, “It’s crazy. It’s not a casino, because the state says we need a license. They are penalizing us millions and millions of dollars….The whole PILOT is like putting a Band-Aid over a 7-inch-deep cut.”
Of course, Glenn Straub is not the only one to sue the state over the PILOT taxes — he’s the third. In May 2017, the advocacy group “Liberty and Prosperity” sued the state, in order to stop the PILOT payments.
Atlantic County PILOT Lawsuits
In September 2017, Atlantic County sued the state over the PILOT bills. Both lawsuits claimed the PILOT law is unconstitutional. In addition, Atlantic County claims that the current level of taxation will cause an increase in property taxes for the county’s residents — and thus is unfair.
Recently, Judge Julio Mendez combined the two lawsuits, so it is possible that Glenn Straub’s similar lawsuit might be combined with those cases. If so, then Straub might get the satisfaction he believes he deserves. One county official believes the PILOT bill cannot stand a legal challenge.
Dennis Levinson, a county executive in Atlantic County, said of the PILOT lawsuits, “The state knows in their heart of hearts that they are fighting a losing battle. The state is the only one that is pushing it.”
