Consultant: New Orleans casino can’t pay $60 million tax for two years

Tuesday, Nov. 21, 2000 | 9:33 a.m.

Last week, the casino proposed a plan by which its $100 million minimum annual state tax would be cut to $50 million, then raised to $60 million annually over the second and third years of the deal.

Commissioner of Administration Mark Drennen, the top budget official to Gov. Mike Foster, said the state might be willing to accept $60 million to $70 million, if that sum was guaranteed for at least three years.

The state's counterproposal would be a "recipe for continued financial problems," said Richard Nevins, a financial consultant hired by the casino's owner, JCC Holding Co.

Nevins said Monday that the casino needs two years of payments lower than $60 million to have a chance at survival. Without the phase-in, JCC Holding would have trouble paying its debts as well as paying for routine operations, he said.

"We're not backing away from the $60 million, but we just feel like we need two years to get there," Nevins said.

The casino also wants the state to lift restrictions banning the casino from having its own hotel and unlimited restaurant service.

Nevins also said the city needs to make a $5 million concession to complete the proposed reorganization plan for the casino, which would require bankruptcy court action. JCC Holding says that if the plan gets through the Legislature, it can be approved in court without interrupting the casino's operations.

"There's no good reason for a reduction from the city," said Roy Rodney, an attorney for the Rivergate Development Corp., the landlord for the city-owned casino site. "The real question is whether a reduction will be required because of politics and the inability for the state and the city to work together.

JCC Holding is paying more than $20 million annually into the New Orleans community, including $12.5 million in rent.