BANGOR, Maine — City Assessor Phil Drew has denied Hollywood Casino’s request for a $36.8 million reduction in its property tax assessment, arguing in a three-page response that the gambling operation did not prove his assessment was “manifestly wrong” as required under Maine law.
The casino now has 60 days to appeal the decision to the Bangor Board of Assessment Review. Casino officials did not indicate Thursday whether they plan to appeal the decision.
“We’re reviewing the assessor’s response and are weighing our options in terms of next steps,” said Dan Cashman, a spokesman for the casino.
If approved, the requested property tax abatement would have forced the city to refund $876,840 of the $2.6 million in taxes already paid by the casino’s property holding companies for 2014.
In its request, the casino, represented by the accounting firm of Ernst & Young LLP, argued the value of three of its downtown properties was $61.38 million, not the $98.18 million assessed by Drew.
Drew wrote in his response dated May 6 and released Thursday that an assessment of all Penn National casino facilities was provided by Ernst & Young at his request.
That assessment by KPMG, a global professional services firm, contradicted the Ernst & Young figure, appraising the three Bangor properties at $108.43 million as of Nov. 1, 2013, five months before the city’s assessment, according to Drew.
“There was no evidence presented that the value of the properties changed materially in those five months, nor was there any evidence that the KPMG figure overstated the value of the property subject to taxation,” he wrote. “That was the taxpayers’ burden.”
Drew also noted the casino properties were insured for a total $93.48 million for all of 2015 and that no evidence was presented to suggest those insurance numbers were off.
Meanwhile, he rejected income and expense statements provided by the casino as evidence for the abatement because they did not provide a breakdown for the Bangor facilities.
“While the 250-page Master Lease Agreement for all the casino operations in 17 states made for interesting reading, there was insufficient data to make any but the most generalized determination of a valuation for the Bangor properties under the income approach,” Drew wrote.
In a statement this week, an official with Hollywood Casino said the gaming operation’s request for a tax abatement was not a sign that the casino is struggling, but he acknowledged the economy remains soft and that local competition has increased.
“Just like all businesses in Maine, we are managing continued softness in the economy with increased competition, so we have to tighten our belt and stay focused on our bottom line,” Hollywood Casino General Manager Jose Flores said. “But Hollywood Casino remains healthy, and it is business as usual.”
Flores attributed the abatement request primarily to the increase in assessed value applied by the city for the 2014 tax year.
The city increased its assessment of the casino’s fair market value by 3.6 percent in the 2014 tax year, from $94.8 million in 2013 to $98.2 million.
According to city tax records, Hollywood Casino’s properties in Bangor belong to HC Bangor LLC and GLP Capital LP. HC Bangor LLC, which owns the casino’s personal property, such as gambling machines and furniture, formed in August 2013 as part of Hollywood Casino, according to state records.
GLP Capital LP is a wholly owned subsidiary of Gaming and Leisure Properties Inc., a real estate investment trust formed in 2013 as a corporate spinoff of Pennsylvania-based Penn National Gaming Inc.
The spinoff enabled Penn National to continue running the casinos while reducing taxes and overcoming casino licensing restrictions by having the real estate investment trust take ownership of roughly half of Penn National’s casino properties, including the Bangor casino.
As publicly traded companies, Penn National and Gaming and Leisure Properties file annual earnings reports with the U.S. Securities and Exchange Commission. According to those reports, Penn National had a net loss attributable to shareholders of $233.2 million in 2014.
Gaming and Leisure Properties had a net income of $185.4 million the same year, according to those reports.
Follow Evan Belanger on Twitter at @evanbelanger.