By Daniel Kelley
ATLANTIC CITY, N.J. (Reuters) - Tax collectors in Atlantic City, New Jersey, garnered bids for less than half of the tax liens on bankrupt casinos they had hoped to auction on Thursday, another blow to the city's already weak coffers.
While a buyer snapped up about $22 million of tax debt associated with the Trump Taj Mahal and Trump Plaza casinos, nobody bid on the lien for $32 million in unpaid taxes owed by the Revel Casino Hotel.
The sale of the Trump liens, at least, gives Atlantic City an immediate cash infusion. Officials are also planning a $40 million note sale before the end of the calendar year, though that is only about a third of what the city previously hoped to borrow in the capital markets.
Those two revenue sources combined mean the city "has no issues regarding continuing operations," said city Revenue Director Michael Stinson.
Four of Atlantic City's 12 casinos have closed this year. Another - the Trump Taj Mahal, already in bankruptcy - is slated to close this month. The closures have gutted the city's tax base and eliminated nearly 10,000 jobs.
Atlantic City collects about $377 million in tax revenue annually, which includes collections on behalf of local schools and county government, Stinson said.
At least 29 U.S. states allow municipalities to sell tax liens, according to the National Tax Lien Association, which says that cities and counties fail to collect about $14 billion of property taxes across the country.
The casino liens sold on Thursday were for far larger amounts than the rest of the 1,100 tax debts auctioned by the city.
"These are very big tax liens," said David Bullock, managing director at Arque Advisors, whose firm has bought tax liens in the past. "And the collateral is the casinos, and who knows whether you can use them and re-deploy them for some other purpose."
The winning bidder pays the taxes, gaining the right to foreclose later if the property owner does not repay with interest, which in New Jersey can be as high as 18 percent.
Michael Sklar, an attorney with Levine Staller, was the only bidder on the Trump liens. The firm has represented the Trump casinos in the past but is in a legal dispute with the company over unpaid fees.
Sklar's bid was for zero percent. He declined to say if he was buying on behalf of a client.
(Reporting by Daniel Kelley in Atlantic City; Additional reporting by Hilary Russ in New York; Editing by Dan Grebler)