Marina District Development Co. v. City of Atlantic City
27 N.J. Tax 469
N.J. Tax Ct.2013Background
- MDDC owns one Borgata parcel and leases the rest from MAC, located in Atlantic City as a single casino-hotel complex.
- As part of a city-wide 2008 real estate revaluation, assessments totaled about $2.21 billion and were raised to about $2.26 billion for 2009 and 2010.
- Plaintiff challenged 2009 and 2010 assessments, contending the true market value on Oct. 1, 2008 and Oct. 1, 2009 was lower; the municipality counterclaimed to raise the assessments.
- The Borgata expanded prior to the valuation dates, including the Water Club Tower (June 2008) and a prior casino expansion, increasing capacity and amenities.
- National and regional economic downturns, plus expanding gaming competition in neighboring states, depressed Atlantic City’s casino-hotel market beginning in 2007–2009.
- The court found that the income approach, incorporating industry trends and a Rushmore-style business value deduction, yields the most credible true market values of $880,000,000 (as of Oct. 1, 2008) and $870,000,000 (as of Oct. 1, 2009).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the income approach with business value extraction is credible | Plaintiff contends income approach withRushmore deduction best reflects value. | Defendant argues income approach is plausible but Rushmore deduction unnecessary or unreliable. | Income approach with Rushmore-extracted business value adopted as credible. |
| Whether cost or sales-comparison approaches are reliable for casino-hotel value | Plaintiff argues cost/sales approaches are unreliable for casinos and should not drive value. | Defendant argues cost approach is credible but undervalued due to market change; sales approach lacks reliable comparables. | Court rejects cost and sales approaches as primary; adopts income approach. |
| Whether the court properly overcomes the presumption of validity of the assessments | Plaintiff asserts credible testimony and data show assessments exceed true value. | Defendant contends presumption remains due to tax-law principles unless substantial evidence proves otherwise. | Plaintiff overcomes presumption; true market value found for both years. |
Key Cases Cited
- Ginnetti v. City of Atlantic City, 17 N.J.Tax 354 (Tax 1998) ( court may adopt expert value when credible)
- Ace Gaming, LLC, 23 N.J.Tax 70 (Tax 2006) (income approach favored for casino-hotels; cost approach insufficient)
- City of New Brunswick v. Division of Tax Appeals, 39 N.J. 537 (1963) (valuations standards and market-corroborated approaches)
- Rodwood Gardens, Inc. v. City of Summit, 188 N.J. Super. 34 (App.Div. 1982) (averaging income is inappropriate for projection of income)
- Prudential Ins. Co. v. Township of Parsippany-Troy Hills, 16 N.J.Tax 58 (Tax 1995) (Rushmore approach for hotel-enterprise valuation)