Bangor says casino’s valuation when changing hands doesn’t justify abatement request

While casino officials are providing few details about how they calculated that value, public records show it is not the first time they have asserted it on tax forms.

State and federal records show Penn National Gaming Inc., parent to Hollywood Casino, transferred ownership of the gaming venue three times in one day during the fall of 2013, each time listing the fair market value as the same $61.38 million.

Agents for the casino submitted the property transfer records with their Jan. 9 abatement request, apparently to support the argument that the city’s $98.18 million assessment of the gaming venue is too high.

But City Assessor Phil Drew rejected the transactions as grounds for an abatement, arguing in his May 6 denial letter that property transfers between related companies do not represent true market value.

Asked about the correlation, casino spokesman Dan Cashman denied that the value on the property transfer records is the basis for the casino’s case that the city overvalued the gaming venue.

“The basis of the appeal was due to the increased property tax at a time when we’re experiencing softness in the market,” he wrote in an email to the Bangor Daily News.

Hollywood officials have stated multiple times a soft economy and increased competition for gambling revenues in the state justify the property tax reduction.

Public records show Bangor did increase its assessment of the casino from $94.75 million in the 2013 tax year to $98.18 million in 2014. That equaled a $71,217 tax increase for the casino.

Asked for specifics about the $61.38 million appraisal, Cashman only said the casino enlisted international auditing firm Ernst & Young to provide an appraisal of the property after the increased assessment.

“We are relying on their expertise through this process,” Cashman said. “At this point, we are simply continuing to weigh the possibility of an appeal.”

In his official denial letter, Drew rejected the casino’s abatement request on multiple grounds. He noted the “owner’s opinion of value” at $61.38 million “apparently serves as the basis for the amount of the abatements requested.”

Drew ultimately rejected that argument for abatement, writing the transactions were not conducted at “arm’s-length” because the companies taking part in the transfers were too closely related.

According to John O’Donnell III, president of John E. O’Donnell and Associates, a company that performs property tax assessments for a number of towns in southern Maine, Drew probably was right to reject an abatement request made on those grounds.

Tax law does not allow related entities to sell property to each other at reduced prices then claim that as evidence of reduced value, he said.