St. Louis County, Harrah’s battle over casino’s worth

Harrah’s Casino and St. Louis County are butting heads once again.

Jake Zimmerman, St. Louis County assessor, announced in June that Harrah’s’ personal property value this year is $439 million, up $152 million from last year, which would bring its total appraised value to $502.4 million for its combined real and personal property.

The appraised value amount is identical to Zimmerman’s appraised value for the property in 2011 before Harrah’s sought and received a reduction from the St. Louis County Board of Equalization.

The appraisal would increase the casino’s property tax from $6.2 million to $14.3 million.

“We just raised it back to the number we had it at last year,” Zimmerman said. “Last year, we commissioned help from an outside appraiser, who told us the casino was worth about $500 million. The casino fought us tooth and nail and argued that we were wrong and being terribly unfair to them.”

The assessor appraised Harrah’s’ real property at $62 million and personal property at $439 million. Harrah’s appealed the personal property valuation to the Board of Equalization and was granted a value reduction of $287 million. However, in May, Caesars announced that it had entered into an agreement with Penn National Gaming, Inc., owners of Argosy Casino Alton, to sell the Maryland Heights casino for $610 million, prompting the assessor’s adjustment.

“That certainly provides strong evidence that we were probably right all along,” Zimmerman said. “Once you back out some of the business value that’s not related to the property of a $600 million sale, $500 million looks pretty accurate to being the actual value.”

But Dan Peters, of Herzog Crebs LLP, Harrah’s’ lead attorney, disagrees and said Zimmerman is “going after businesses in St. Louis County and has dramatically gone off course for how appraisals and assessments have been handled by any assessor.”

“In 2011, he argued that he was using an income approach, and this year he’s arguing its because of the sale of the property,” Peters said. “With all the risk that an entrepreneur puts into a business, whether it’s a restaurant or plumbing company, … there are certain things they have to do to see if they can ever start the business with risking hiring employees, dealing with cash flow and line of credit, and all of those different things. … What he’s really doing is going after the business value of the property, which the law does not support.”

But Zimmerman said Peters does not understand basic concepts of property assessment.

“Property is assessed based on its value in commerce,” Zimmerman said. “Property is assessed based on what you can sell it for on the open market. When they sell this casino, Harrah’s is going to leave town and somebody else will reopen this casino under a new name. What they’re selling is property that can be operated as a casino and that’s where it is value-wise.”

“If that argument were to prevail, it would be highly unfair to everyone else in St. Louis County whose property is directly assessed based on what it sells for,” Peters said.

The two entities have already gone in front of the Board of Equalization, which is set to make its decision sometime in September.

Zimmerman and Peters both said they are confident that the Board will do the right thing.

“The Board of Equalization is an independent entity, and I’m confident that they’ll do the right thing,” Zimmerman said. “The bottom line is we have a piece of information we didn’t have last year: the hypothetical sale value of the casino.”