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County says loan bailout for Boscov's not done deal
By JULIET FLETCHER Staff Writer, 856-237-9020


Published: Thursday, November 20, 2008

  VINELAND - A day after a proposal was announced for two southern New Jersey governments to help the department store chain Boscov's return from bankruptcy, Atlantic County Executive Dennis Levinson sounded a strong note of caution to anyone assuming the deal is done.

While Atlantic County joins Vineland in considering a multimillion-dollar loan to the ailing business, which operates about 40 stores across the Northeast and three in the area, Levinson said he could not guarantee that help would come in time for Boscov's.

Officials from the firm have said they expect to reach settlement on buying back their former assets by next Wednesday.

That timeframe was not long enough for the county to decide whether a $4 million loan to the firm could be leveraged against a federal grant, Levinson said.

"There's no way to get the money in that short a time," Levinson said Wednesday. "We are in the exploratory phase of this, and I would say it's impossible, or close to impossible, to get this process done by next week."

Heads of Boscov's, among them family members who inherited and ran its 90-year-old business, will hear from a federal court Friday on whether they, as bidders, can purchase back property and inventory claimed by creditors following Chapter 11 bankruptcy in August. The former company head, Al Boscov, has been reported as saying he wants to complete that purchase before Black Friday, the banner day for pre-holiday shoppers.

But according to Levinson and officials from Vineland in Cumberland County, Boscov's has reached out personally to them, asking for help in advancing the money.

Sandra Forosisky, who is in charge of Vineland's redevelopment, said the city was seriously considering loaning the firm $2.7 million in order to save the store at Cumberland Mall, Vineland's main shopping district.

Levinson said he was similarly concerned about the survival of the store at Shore Mall in Egg Harbor Township, especially since the recent closure of another retailer, Value City, which left that location.

Both Atlantic County and Vineland can leverage a grant they receive through the U.S Department for Housing and Urban Development to realize a loan that is five times the grant's value.

But Levinson drew a clear line between the tough call facing his county and Vineland's decision, which will be considered by its city council Tuesday.

"Vineland sits in an Urban Enterprise Zone," he said, pointing out that the city planned to front the funds to Boscov's first through an emergency line of credit from the UEZ.

"We can't do that," he said. Instead, the county freeholders would take at least two weeks to consider the loan as an ordinance. "We can't speed that up," he said.

Officials had to consider what would happen should Boscov's default on that federal loan.

"Any money that they couldn't pay back would come out of our grant," he said, referring to the Community Development Block Grant, a sum of more than $1.5 million that HUD gives to the county.

"Around 20 towns rely on those funds," he said. Atlantic City, Egg Harbor Township and Hammonton are the only areas not to receive help from the grant.

Levinson said that the loan was under consideration by the Atlantic County Improvement Authority, and that county freeholders would ultimately determine whether or not to go ahead.

He sounded cooler to the idea than Vineland Mayor Robert Romano, who said Tuesday he was in strong support of keeping Boscov's in the area, and crediting the family with past generosity to local causes.

"The Boscovs are wonderful neighbors," Levinson said. "I can't think of a time when local groups have asked him for help and he's said no. So obviously we want to do all we can to help."

"But I won't ultimately put the county taxpayers on the hook to save Boscov's. We have to guard against that."

"And on a personal note," Levinson continued, "I don't know where it all ends, with all these bailouts." With many retailers hurting or worse at the start of what should be their busiest period, he said he thought the loan may signal that the county would help others.

"Once you open that door to government bailing out enterprise, I don't know where it all ends."

E-mail Juliet Fletcher:

JFletcher@pressofac.com

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