A federal district court affirmed a bankruptcy court order that Lake County, Gary and other taxing units must pay the Majestic Star Casino LLC a $7.3 million property tax refund.
The U.S. District Court for Delaware last week upheld the bankruptcy court's finding Lake County over-assessed the Majestic Star Casino boats, resulting in the casino company paying dramatically higher property taxes from 2006 to 2010.
Lake County Attorney John Dull said the county will talk to the local taxing units in Gary to see if they should file an appeal together.
"They are aware of the decision," Dull said. "We just have to figure out what we do next."
An appeal would have to be filed within 30 days with the 3rd Circuit Court of Appeals. Dull noted about 40 percent of such cases that come before the circuit court are assigned to a mediator.
If the county does not succeed on appeal, or does not appeal at all, it would probably attempt to work out a deal with Majestic Star where the $7.3 million would be credited against future tax bills, Dull said. That way, Majestic Star would basically get a tax cut but the county would be saved the trouble and immediate expense of having to write out a check.
Majestic Star officials could not be reached for comment Monday.
In its Dec. 10 order, the district court in Delaware noted Lake County nearly tripled the ad valorem real property assessments of Majestic Star I and Majestic Star II for the 2006 to 2010 period. Both casino boats are moored at Gary's Buffington Harbor.
The basis of that appeal ended up being contested in bankruptcy court because Majestic Star filed for Chapter 11 bankruptcy protection in November of 2009. An order in regards to the Lake County assessments was issued by the bankruptcy court in September 2011.
Majestic Star filed appeals of those valuations under former owner Don Barden, but the refund is due to Minnesota-based Wayzata Investment Partners LLC, which bought the casinos out of bankruptcy in 2011.
In 2011, the bankruptcy court upheld Majestic Star's proposed assessed valuations for the 2007 assessment date of $6.29 million for Majestic Star I and $5.58 million for Majestic Star II and proposed valuations for the 2010 assessment date of $3.5 million and $3.2 million respectively.
Dull said Monday the county felt the district court had erred because it allowed Majestic Star to use a boat for sale in another part of the country, and that was no longer in use, as a comparable for valuing the casino boats at Buffington Harbor. Dull said the Majestic Star boats were technically for sale, but they were definitely still in use with no interruption in gaming during the bankruptcy process.
The district court ruled the bankruptcy court had used the correct valuation method for the casinos and rejected a Lake County argument that the bankruptcy court erred in accepting Majestic Star's valuation for the two gaming boats.