Luzerne County is retaining a San Francisco-based company to help determine how much the Mohegan Sun Pocono casino in Plains Township should be valued for real estate taxes.
The casino paid $2.9 million in lieu of property taxes this year as part of a 2007 court order settlement, but that agreement expires at the end of this year. This court order barred taxing bodies from seeking additional tax revenue as the casino expanded and added a hotel, officials said.
The county opted to follow the example of several other Pennsylvania counties with casinos by seeking an expert to determine the new recommended assessment.
County Budget/Finance Division Head Brian Swetz said he and a team of reviewers selected HVS Gaming because it has proven experience valuing gaming facilities throughout the world, including three appraisals of Pennsylvania casinos completed in recent years for county assessment offices.
Five entities responded to the request for proposals with prices ranging from $24,000 to $92,000, Swetz said.
HVS is charging the highest price but also had the most experience, he said.
The county is not required to accept the cheapest option because professional services are treated differently than those for supplies or construction, which must be awarded to the lowest responsible bidder.
“I’m not trying to spend more tax dollars on a valuation, but this is a high-valued property,” Swetz said. “In this case, I think we need to go with the most experienced.”
Taxing bodies have a lot at stake because the casino will be among the highest valued properties in the county, Swetz said.
Mohegan Sun’s current payment in lieu of taxes has no direct tie to a specific assessment, but a property charged that amount of taxes would be valued around $125 million.
The administration doesn’t need county council approval for the HVS contract under the home rule charter because there is money in the budget and the expense does not spill into the next year, Swetz said. The contract will be drafted and finalized soon, he said.
HVS estimates it will take 45 to 65 days to complete field work and research, come up with an opinion of value and prepare a report, Swetz said.
The administration wants to finalize the assessment by the end of the year so it will take effect at the start of 2016, which would avoid the need for temporary agreements, officials said.
Right to appeal
The county assessor’s office ultimately sets the final value but would base that decision on the HVS report. Mohegan Sun will receive a change of assessment notice stating the new value and have the right to file an appeal if it disagrees with the amount.
Listed under Connecticut-based Downs Racing LP, the Mohegan Sun complex is 264 acres.
According to documents submitted by HVS:
The company is recognized as an expert performing appraisals and tax assessment consulting services on a broad range of facilities, from “full-service destination casino hotels and integrated ‘Las Vegas style’ mega-resorts, to riverboat complexes, racinos, and card rooms.’
“Appraisals of gaming and hotel properties prepared by HVS are given immediate credibility due to our strong reputation and well-reasoned analysis, which is based in part upon our extensive database of gaming and hotel information.”
HVS has provided financial and valuation consulting services for more than 35,000 entities throughout the world since 1980 and has a staff of more than 400 industry specialists.
The company was hired by Pennsylvania county assessment offices to value the Parx Casino in Bensalem, the Sands Casino Resort in Bethlehem and the Hollywood Casino at Penn National Race Course in Grantville.
The company also provides expert testimony for assessment court challenges, though additional fees would be involved if that service becomes necessary.