TAXES: CASINO'S TAX PROTESTS FELT BY GOVERNMENTS

CARUTHERSVILLE, Mo. -- Schools, hospitals and government agencies in Pemiscot County are being hindered in their attempts to provide services because Casino Aztar, the county's largest taxpayer, has withheld nearly $1 million in revenue.

Aztar Missouri Gaming Corp. and Pemiscot County Assessor Donna Snider agreed on the assessed valuation of the riverboat casino's real and personal property when the company opened for business in 1995, Snider said. And the gaming company had no objections to the assessments from 1995 through 1998, paying those taxes in full and on time.

But Aztar has protested its tax bills in 1999 and 2000.

The tax protests have had the effect of withholding more than $432,847 from governmental entities in each of the last two years while the protests are pending.

"I've got seniors 70 and 80 years old on fixed incomes of $500 or $600 a month and they pay their taxes," Snider said. "Here Aztar has $40 million worth of property and can't pay theirs."

Aztar Caruthersville general manager George Stadler did not return telephone messages left at his office seeking comment on the matter.

Coming to terms

Aztar built its riverboat casino in Caruthersville in 1994 for more than $40 million, according to documents filed then with the Federal Securities and Exchange Commission. The firm also touted the investment in local newspaper advertisements.

Under an agreement between Snider and Aztar officials, the company's real property was given a fair market value of $11,970,280 for tax purposes, which translated under Missouri law into an assessed valuation of $3,830,490. The terms of the same agreement set the casino's personal property value at $5,736,270 or an assessed valuation of $1,892,970.

The valuations have not changed since the casino began operations in 1995, Snider said, with the sole exception of a $968,510 reduction in the valuation of personal property that Snider granted this year as a concession to the company.

At more than $17 million, Aztar's valuation accounts for more than 10 percent of the county's $151,064,983 total valuation.

Aztar paid its taxes on time and in full in each of the first four years of operation.

Protesting taxes

But something that occurred in 1999 prompted Aztar to protest its assessments as "overvalued." The official tax-protest documents filed by Aztar Missouri Gaming Corp. proposed a fair market value of the real property to be $5 million -- less than half of the agreed amount and about 11 percent of what the company actually spent to develop the business. The $5 million figure translates into an assessed valuation of $1,600,000.

Similarly, the company estimates the market value of its personal property -- the boat and everything on it, including slot machines, bars, furniture and other equipment -- at $750,000, or an assessed value of $249,750.

"They say their property is only worth the salvage value ... and the boat's highest and best use is as a grain barge," Snider said.

The tax assessment appeal process has several steps in Missouri. The first step for the taxpayer is to appeal directly to the assessor. If unsatisfied with the results, the assessment can next be appealed to a board of equalization. The next appeal is to the State Tax Commission of Missouri. Finally, if either the taxpayer or assessor is still unsatisfied, an appeal can be filed through the circuit court.

Taxpayers must still pay their property taxes in full and on time -- by Dec. 31 -- during the appeals process. But the funds are held in escrow while the appeal is pending.

Snider did not change the casino's valuation and the board of equalization declined Aztar's request to lower its valuation. The State Tax Commission has conducted a hearing on the 1999 dispute but has yet to rule.

Thus Pemiscot County Collector Keith Jean is holding $432,847.57 collected from Aztar Missouri Gaming Corp. for 1999 taxes and will have an additional $430,000-plus in escrow from Aztar by the end of the year for 2000 taxes, also protested.

Who is affected?

Caruthersville School Superintendent Olin Parks is $268,000 short of revenue projected in his 1999 budget because of protested taxes being held in escrow. In a couple of months, that figure will exceed a half-million dollars.

"The only thing I can do is spend from my reserves," Parks said.

He said the school district is not affected as adversely as other taxing bodies because revenues from the state will make up some of the shortfall.

But that's not all Aztar is withholding. Parks said that the casino company negotiated a deal with the city to provide five $5,000 scholarships for students each year. But Aztar is now providing five $1,000 scholarships, Parks said.

The city of Caruthersville is short $92,797 this year and likely will see an identical shortfall next year due to the tax protest, city Operation Supervisor and Economic Developer Martin Lafferty said.

"That is general-fund money that is used to fund fire and police protection, parks and recreation, and other city services," Lafferty said.

But, he said, the city still receives more than $1 million annually from a 2 percent gaming tax and an additional $100,000 a year for parks and infrastructure under the terms of the city's original development agreement with the casino.

Why it's happening

Aztar is represented in its appeal by Joseph Sansone Co., a St. Louis-based consultant that recently was successful in its effort to get the St. Louis-based President riverboat casino's assessment reduced. The President decision has prompted nearly every casino in the state to file a protest, Lafferty said.

"A lot of people are upset, but I'm sure it's just a business decision Aztar had to look at," Lafferty said. "They are a business and, like any business, they're in it to make money. It only makes sense for them to pursue it."

Regardless of the State Tax Commission's decision, Lafferty said, one of the parties will probably appeal to circuit court.

"In that event, the parties will probably reach a settlement somewhere near the middle that everyone can live with," Lafferty said.