New Jersey’s economic development agency Tuesday approved state tax incentives to help finance a $135 million casino conference center that promises to bring a new level of corporate business to Atlantic City.
Funding from the Economic Development Authority will give Harrah’s Resort $24.1 million in tax reimbursements over 20 years and represents a key piece of the project’s multifaceted public and private financing.
Don Marrandino, president of the Eastern Division of Caesars Entertainment, corporate parent of Harrah’s Resort, said the company is moving ahead to secure bank financing as the final part of the funding.
“We have three of the four pieces. The goal is, the second we get everything, we want to get moving,” Marrandino said. “Getting this (EDA funding) approved is a big piece moving forward.”
Construction on the nearly 250,000-square-foot facility is expected to begin in the second or third quarter of next year, with completion by late 2014, according to an EDA project summary.
The EDA’s timetable differs slightly from the construction schedule outlined Tuesday by Marrandino during an interview with The Press of Atlantic City. Marrandino indicated construction work will get under way early next year and should be completed by September 2014.
Marrandino said the project will create 300 to 400 construction jobs, giving a boost to local trade unions. An EDA memo noted that 140 workers would staff the conference center.
In addition to securing about $54.2 million in bank financing, Harrah’s plans to invest about $34.7 million of its own money in the project. A $46.2 million contribution by the state Casino Reinvestment Development Authority, approved last month, completes the funding sources, according to an EDA breakdown of the financing.
The conference center will cost about $135 million. However, the EDA puts the project’s total price tag at $144.5 million. But that also includes a $9.5 million contribution by Harrah’s to help finance an indoor marketplace in Atlantic City. The marketplace contribution was a condition of the CRDA funding for the conference facility.
Unlike the project’s construction financing, the EDA-approved tax incentives are not an upfront payment, the agency stressed. They consist of $24.1 million in state sales, corporate and income tax rebates on the conference center over the next 20 years.
“We don’t give them a blank check over 20 years,” EDA spokeswoman Erin Gold said.
Gold said that EDA funding support for Harrah’s comes from the same Economic Redevelopment and Growth Grant program that supplied $261.4 million in state reimbursements for the $2.4 billion Revel casino, also for a 20-year period. When the EDA approved Revel’s tax incentives in February 2011, it helped complete a new $1.1 billion financing package that allowed Revel to resume construction on what was then a half-finished project.
Revel, Atlantic City’s newest casino, opened April 2. Revel has committed to using all of its state tax rebates to fund improvements to the city’s South Inlet section surrounding the casino site, company spokeswoman Maureen Siman said.
Revel, which has struggled to generate gambling revenue in its first eight months of operation, has made group business and leisure customers a major part of its overall strategy.
Harrah’s proposed conference center also represents a strong emphasis on group and corporate business. The two-level facility would be modeled after Caesars Entertainment’s conference center at the Caesars Palace casino in Las Vegas, Marrandino said. He described it as the only one of its kind on the East Coast.
“The meetings center will be a world-class facility,” he said. “There’s nothing else like this. It’s state-of-the-art, all under one roof.”
Harrah’s will target corporate meetings held by Fortune 500 corporations based in New Jersey, Pennsylvania and New York. Marrandino said the facility will attract corporate visitors who will stay in Atlantic City for two or three nights and will also spend their money elsewhere in town, including at the hotels and restaurants.
Initially, there was concern that Harrah’s conference site would cannibalize business from the Atlantic City Convention Center. However, the EDA noted that a market study conducted by a CRDA consultant concluded that the conference center would create new business instead of stealing from existing facilities.
“It would attract a different audience,” Gold said.
The Atlantic City Convention Center will primarily serve big conventions and trade shows, while the Harrah’s facility would focus on smaller corporate groups and meetings, Marrandino explained.
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