Other casinos are lining up to have their assessments reduced. If successful, tax revenue could fall by up to $100 million per year. Guardian says he will negotiate with the casinos to avoid litigation and reach a compromise that will be acceptable to them and provide sufficient revenue to the city. Considering the revenue declines, casinos will be hard-pressed to pay more than they would likely pay with an appeal.
Making matters worse, one casino has closed and the possibility exists that another one or two may follow. Offsetting this will be new development, like Bass Pro Shops, the Breakers beachfront townhouses, the Waterfront Conference Center, and the expansion of the Walk. But will it be enough?
The mayor correctly emphasized the importance of "Meds and Eds" to a city. Atlanticare continues to expand, and so has Atlantic Cape Community College. Guardian says he wants to lure Richard Stockton College to Atlantic City, with the hope of having a vibrant, four-year campus with 1,500 students attending classes and 400 of those students living in new dorm facilities. Stockton's entrepreneurial president, Herman Saatkamp, seems to be listening, so this may happen.
The mayor also wants more people to live in the city. He says he will give them land for free, providing they agree to build a new home within two years and live in it for 10 years. He is hoping for 400 new housing units within six years. Will this work?
The problem in Atlantic City is not only land costs, but, more importantly, building costs. Labor is expensive in the city and, even with free land, it may not be economically feasible for people to build.
The five-year graduated real estate tax abatement will also help, but since a new buyer receives a 100 percent discount the first year - followed by reductions of 80 percent, 60 percent, 40 percent, and 20 percent for the next fours years (no reduction after that) - it may not be enough. In Philadelphia, for instance, the city offers a 100 percent real-estate-tax deduction for 10 years, meaning a new home buyer pays no real estate taxes for the first 10 years of ownership. While this plan caused much pushback from residents when it was introduced, it has resulted in Philadelphia flourishing.
For those of us who have been longtime residents of Atlantic City or the surrounding communities, we really hope that the mayor can pull this off. He seems enthusiastic, passionate, and reasonable, so he may be able to do it. We hope so, but we realize how difficult and painful this may be.
Michael Busler is a public policy analyst and a professor of finance at Richard Stockton College. Michael.Busler@stockton.edu