Luzerne County Assessment Director Tony Alu said he won’t have a say in the assessed value of the Mohegan Sun at Pocono Downs complex until 2016.
The Plains Township casino has an unusual arrangement with taxing bodies to pay a set amount in lieu of property taxes annually through 2015. The payment schedule was cemented in a 2007 court order as part of a settlement stemming from a Wilkes-Barre Area School District assessment challenge.
The court order prevents taxing bodies from seeking more tax revenue when a hotel at the complex is completed, said Alu, because he can’t yet impose an assessed value or alter the payment amount.
“Is the casino’s payment where it should be? Is it too high or low? I don’t know. It’s out of my control at this time,” he said.
The court order required Mohegan Sun — the region’s largest entertainment venue — to pay the three taxing bodies an annual amount increasing from $1.55 million in 2008 to $2.9 million in 2015.
This year’s payment is $2.45 million — $1.68 million to the school, $548,700 to the county and $219,590 for the township.
Assessment not used
These payment amounts have no logical tie to assessments because they were established before the countywide reassessment and subsequent tax hikes.
What would a property have to be assessed at to pay these amounts? Anywhere from $103 million to $124 million.
For example, a property assessed $108.7 million would owe $1.68 million in school taxes based on Wilkes-Barre Area’s millage rate, but the value would jump to $124 million in Plains Township to owe $219,590 in municipal taxes at its current tax rate.
Though the assessed value has no bearing on the casino’s payments at this time, the county’s reassessment company pegged the value of the 264-acre property at $99.7 million during the 2009 countywide revaluation.
The casino’s tax bill would be $2.25 million if the reassessment value was in effect, or less than the casino’s payment in lieu of taxes.
The reassessment value is close to the $100 million appraised value cited by Wilkes-Barre Area in its 2007 challenge of the casino’s assessment. At the time of the settlement, school district officials publicly praised the amount of the casino’s payments in lieu of taxes.
Mike Bean, president and general manager of Mohegan Sun at Pocono Downs, said the payment amounts are fair to both the casino and taxing bodies. “We believe it was appropriate based on the manner in which casinos should be assessed, the methodology,” he said.
Mohegan Sun inherited the pending assessment challenge when it purchased the property in 2005, he said. The court order settled amounts that must be paid from 2002 through 2007 and formulated a plan through 2015, he said.
The casino wanted an agreement for payments in lieu of taxes to avoid repeated assessment challenges, Bean said. Mohegan Sun representatives said in 2007 that the settlement would allow the casino to proceed with its expansion plans.
“We wanted certainty for a period of years so we would not be spending time and resources defending something year after year,” Bean said, emphasizing the casino agreed to pay an amount that rises annually.
The court order said the county will set an assessment for the property for 2016. The county is normally prohibited from assigning a fresh value on a property out of the blue unless there’s a countywide reassessment, but Mohegan Sun agreed in the settlement to waive any claims against such spot reassessing.
Alu said the tax valuation of casinos and related amenities is complex, and he plans to follow the lead of some other counties by seeking an outside specialist to help formulate a value as the expiration of the court order nears.
Other counties have wrestled over their casino assessments.
The Mount Airy Casino in Monroe County was originally valued at a fair market equivalent of $85 million for taxation purposes, but a school district assessment challenge resulted in the casino paying taxes on a value of $93.9 million, said county Chief Assessor Thomas Hill.
Mount Airy’s property tax bill this year: $2.7 million.
Erie County valued the Presque Isle Downs & Casino at $143 million by analyzing the income that can be generated by the property, which is a permissible approach to assess the value of commercial structures, said the county’s senior appraiser, John Innocenzi.
Presque must pay $2.4 million in school, county and local taxes based this year, he said.
Assessment officials in Dauphin and Northampton counties could not be reached for comment Friday on the current values of casinos in their jurisdictions, but both counties hired consultants to come up with the values.
According to published reports, Dauphin County had set the value of its Hollywood Casino around $280 million, while Northampton County had planned to value the Sands Casino Resort in Bethlehem at $300 million.