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Luzerne County officials must find a new expert to value the Mohegan Sun Pocono casino in Plains Township for property taxation due to a potential conflict of interest.
The casino’s property assessment must be calculated because its tax payments to date have been covered by a 2007 court-ordered assessment appeal agreement that expires the end of this month. That agreement had no correlation to an assessed value.
County officials had retained San Francisco-based HVS Gaming to complete a valuation but recently discovered the company had previously completed appraisal work for another casino affiliated with Mohegan Sun in Connecticut.
That past work could present a conflict of interest if the county needs HVS to provide expert testimony in a court-level assessment challenge that may be filed by the local Mohegan Sun casino, county Budget/Finance Division Head Brian Swetz told the county council Tuesday.
The conflict came to light because Mohegan Sun Pocono alerted the county in a recent letter, said county Chief Solicitor C. David Pedri.
County officials say they weren’t aware of the work because the HVS website and proposal submitted to the county did not include the Connecticut casino on an extensive list of casinos that the company has appraised.
The county’s request for proposals also required prospective vendors to disclose any real estate appraisals they have completed on behalf of Mohegan Sun, Downs Racing, LP, or the Mohegan Tribal Gaming Authority, and none were noted on the HVS submission, Pedri said.
Pedri sent HVS a contract termination letter last week, saying the company’s failure to disclose the potential conflict may violate the county’s public procurement process.
“Despite the fact that the accounts which caused these conflicts may now be finalized, the failure to disclose these conflicts is what causes concern to the county,” he wrote.
The county’s only expense on the contract was a $30 fee to stop a check that had been issued to the company. HVS was set to receive a total $92,000 upon completion, with the option for additional payments if expert testimony was required.
Swetz said county officials are reviewing proposals from other entities that had submitted quotes to complete the appraisal work.
Five entities responded to the request for proposals with prices ranging from $24,000 to $92,000, Swetz said. HVS charged the highest price but also had the most experience, he said.
It’s unlikely the chosen company will be able to complete the appraisal before the county’s tax bills are mailed early next year, officials said.
County Assistant Solicitor David Schwager, who handles assessment matters, said all three taxing bodies are trying to work out an agreement with the casino that will ensure some payment is made while the assessment is calculated.
Mohegan Sun ’s current tax payment —a combined $2.9 million to the school, county and township — is not tied to a specific assessment, but a property charged that amount of taxes would be valued around $125 million.
The breakdown of the $2.9 million payment: Wilkes-Barre Area School District, $2.01 million; county, $653,360; and township, $261,460.
County Manager Robert Lawton has said he does not expect a significant windfall in tax payments from the new assessment, but county Councilman Stephen A. Urban has said the county should receive a “pretty hefty increase” because the original payment was calculated before the addition of a hotel/convention center and other amenities.
Listed under Connecticut-based Downs Racing LP, the Mohegan Sun complex is 264 acres. The owner will receive a change of assessment notice stating the new value and have the right to file an appeal.