ATLANTIC CITY (July 29, 2019) – Board members of the Casino Reinvestment Development Authority have expressed concerns the agency is running low on funds for future projects, but the agency’s financial reports paint a different picture.
According to the CRDA’s Dec. 31, 2018, Financial Statements and Supplementary Information, the general fund had $94.5 million available for new projects at the end of last year, and $16.5 million in reserve for projects already approved.
About $21 million has been designated for projects from that fund so far this year, according to CRDA Chief Financial Officer Kathleen Marshall, leaving a balance of about $73.5 million.
About $3.4 million of that is for entertainment events and is likely to be charged to luxury-tax revenues at the end of the year, which would add that amount back into the general fund, said Executive Director Matt Doherty.
So far, only $15 million for the AtlantiCare expansion, $1.5 million for the resort’s community policing program and about $1.2 million for a variety of smaller projects will come out of the General Fund, which is what CRDA has been using for community and economic development.
At the July CRDA meeting, however, board member Howard Kyle cautioned that if the authority spent $10.5 million toward a renovation of Jim Whelan Boardwalk Hall to provide rent-free office space for the Atlantic City Board of Education, it would use up a third of its remaining funds.
Board Chairman Bob Mulcahy said he estimated CRDA had about $31 million left in its general fund.
Doherty stressed funding for the BOE project would come from luxury-tax funds, not the general fund.
“We are not running out of money,” Doherty said Thursday.
The BOE project is a chance to use luxury-tax revenues to benefit the taxpayers of the city, he said, by saving them $650,000 a year they have been spending on rent in a privately owned building at 1300 Atlantic Ave.
Luxury-tax funds are growing as the Atlantic City casino economy expands, Doherty said. They are restricted to paying off Atlantic City Convention Center and Boardwalk Hall debt service, to cover maintenance and capital improvements in the two buildings, and for marketing the city through advertisements, events and entertainment.
The luxury tax on hotel rooms, alcohol and ticket prices brought in $37 million in calendar year 2018, according to the agency report, and CRDA officials estimate it will bring in $38.5 million this year.
The luxury-tax fund has a reserve fund of about $25 million. Doherty said $10.5 million of that would be used for the BOE project, and he expects to be able to keep a running reserve of $5 million going forward.
The general fund is slowly depleting, however, Doherty said.
It no longer receives a 1.25% tax on gross gaming revenue, called the Investment Alternative Tax, which is expected to be about $37.5 million in 2019 on about $3 billion in revenue.
Now, that money is diverted to pay off city debt, Doherty said.
Smaller revenue streams keep it going, including almost $7 million from state sales tax rebates and about $2.4 million from interest and investment income. But that also has to pay for CRDA operations, including salaries and administrative costs.
Doherty said there is also a $22.4 million fund designated for housing projects, left over from years ago when casinos could lessen their IAT burden by negotiating with the CRDA and allowing it to use a lesser amount paid for noncasino development.
That fund will pay for a $4.5 million loan to WinnDevelopment to renovate three low-income housing projects it owns, and possibly for the Phase II expansion of Stockton University, which is expected to request $10 million toward a new dormitory.