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Decision on closing Taj hinges on judge's ruling on union contract

Decision on closing Taj hinges on judge's ruling on union contract

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WILMINGTON, Del. – Trump Taj Mahal could decide as soon as Monday to close without concessions from Local 54 of UNITE-HERE, representatives of Trump Entertainment Resorts told a federal bankruptcy court judge Tuesday.

Saying it was “a complex set of facts,” federal Bankruptcy Court Judge Kevin Gross said he would rule Friday on whether to force Local 54 to accept new contract terms.

Trump Entertainment said it has to cut costs by $14.6 million annually to have a chance at keeping Trump Taj Mahal Casino Resort open, comparing it to a medical patient needing multiple organ transplants. To survive, Trump financial adviser William H. Hardie III said, the casino is seeking a “three-legged stool,” including union givebacks, legislative action and investment.

The hospitality workers union contract was the central issue in Tuesday’s hearing. Hardie said state politicians made it clear that the union contract had to come first before any other discussions.

“If there is a patient with a pulse, they will work with us,” Hardie said.

The union has publicly fought the casino’s proposals, which have included dropping company-paid health care to be replaced by Affordable Care Act coverage and a $2,000 stipend, and replacing pension payments with a 401(k) plan and eliminating the current 1½-hour paid breaks in favor of an unpaid half-hour.

Local 54 is concerned that a “most-favored nations” clause could lead to the resort’s other casinos making similar claims on the workers.

Hardie said Trump paid $9.6 million in health and welfare benefits to Local 54 and was looking to save $5 million. He argued because so many of the low-paid work force would qualify for government subsidies on health care, “for the vast majority of the Local 54 population they will either pay nothing or, depending on the plan, they may have to pay a small amount.”

In his closing statement, attorney Allan S. Brilliant said billionaire financier Carl Icahn remains willing to buy the property, even if changing the contract would lead to a Local 54 strike.

Saying “the window is open,” Brilliant said, “If we miss this window and it closes, it will be very hard to get the Taj Mahal back open.”

“We need it to keep Atlantic City alive,” Trump Entertainment Resorts attorney Kristopher Hansen said, urging Gross to forcibly break the union contract. “Unfortunately, we have an unwilling counterparty.”

But Kathy Krieger, attorney for Local 54, said that for some reason, it seemed the debtors decided someone had to go first, and they decided “these workers have to (take) a permanent and irrevocable hit.”

Hansen accused the unions of showboating instead of negotiating.

“The unions have spent countless hours in front of the microphones and cameras,” he said, adding later, “Why is Local 54 so hell-bent on shutting down the Taj Mahal?”

Icahn essentially holds the mortgage on Trump Taj Mahal and Trump Plaza via about $286 million in debt. He has pledged to convert the debt to ownership while investing $100 million, depending on the union concessions.

Hardie estimated the Taj is worth about $220 million and expected it would continue to lose value, reflecting downturns around the resort.

Beyond the Local 54 contract, Trump officials said they are seeking money where they can. Hardie said Trump successfully upped the amount tenants Robert’s Steakhouse and Scores Gentlemen’s Club paid by $100,000 and was seeking increases at Hard Rock Cafe and Il Mulino.

Trump Entertainment also freed up some cash by selling off mattresses and televisions from Trump Plaza, which closed in September. Once they sell off all the slot machines, officials said Trump could stop paying $175,000 a week in state-mandated security costs.

Hardie said the casino is seeking about $175 million in incentives over five years. Most of this would be through a five-year, $30 million payment-in-lieu-of-taxation proposal with the city.

The remaining $25 million would come through separate state Urban Revitalization and Economic Redevelopment grants under a broader state rescue package for Atlantic City. But there have been major public stumbles.

State Senate President Stephen Sweeney said at a rally last week, “You’ll get nothing from us until you treat workers with respect and dignity.” And Atlantic City Mayor Don Guardian publicly rejected the casino’s earlier property-tax relief bid to cut its assessment by almost 80 percent.

State AFL-CIO President Charles Wowkanech also criticized the casino for pushing to end paid lunch breaks. In a statement Tuesday, he said, “How could billionaire businessman Carl Icahn look himself in the mirror after proposing to end paid lunch breaks for casino workers earning less than $12.50 per hour to pad Trump Entertainment Resorts’ bottom line?”

Union attorney William T. Josem argued the reduced pay and the stipend would mean that average employees would have about $350 a year on average to buy health insurance.

Josem also argued that the union proposed pension changes at a potential $2.4 million savings, which was rejected in favor of the original 401(k) with a 1 percent match. With the average Local 54 employee earning about $19,200, Josem pointed out that would lead to employees annually seeing about $192 in company retirement contributions.

Hansen said he was scheduled to tell the New Jersey Division of Gaming Enforcement on Monday whether the Taj Mahal would close Nov. 13. He said he held off, waiting for Gross’s ruling on the contract.

Trump Entertainment accused the union of being intransigent. The casino’s chief negotiator, Craig Keyser, said the union asked for three to five times as much information as is typical.

“It was very apparent to me they wanted to bog the process down,” Keyser said.

After a nearly four-hour negotiating session Oct. 10, Keyser said they made themselves available through the week and weekend, but the union never responded.

Keyser said the union also steered conventiongoers away from the Taj Mahal, contacting attendees such as the Mid-Atlantic Food Trades Organization. It had planned to meet there this week, but Keyser said they were canceling.

Hansen said the union told attendees the rooms would not be cleaned, there would be no perishable foods and they would receive “50 percent service.”

Contact Derek Harper:

609-272-7046

DHarper@pressofac.com

@dnharper on Twitter

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