Three years ago, state Senate President Stephen Sweeney stood beside Gov. Chris Christie at a half-built Revel casino as the governor signed legislation overhauling the casino industry and Atlantic City.
With the stroke of Christie’s pen came a promise to block casino expansion for five years while the state set an agenda for the city, and with it, a new state-run Tourism District.
Midway through the state’s five-year plan to establish Atlantic City as a premier tourism destination, much remains to be done. There are success stories, including the planned Memorial Day opening of a Bass Pro Shops, the convention center expansion at Harrah’s Atlantic City and last summer’s Margaritaville debut at Resorts Casino Hotel. Yet some of the most ambitious undertakings have been slow to develop.
Today, Sweeney acknowledges the state could have done better. It was slow to move on major economic boosters, such as the takeover of Atlantic City International Airport by the Port Authority of New York and New Jersey and the subsequent deal with United Airlines bringing flights from Houston and Chicago.
Locally, pressure is mounting. At a recent unveiling of a new advertising push from the Atlantic City Alliance, Atlantic County Freeholder Chairman Frank Formica called out officials, saying the state is spending money, sometimes without results, while simple tasks such as road paving haven’t been addressed. The alliance is a marketing coalition created by Tourism District legislation, which is supported by $30 million from the casinos annually.
“We’re in a moment of truth, and if we’re not ready to admit that where we’re spending the money isn’t working ... then I think we’re going to go backwards here,” Formica said. “We’re running out of time, and we’re running out of money.”
The state supported Revel Casino-Hotel, which Sweeney describes as a beautiful facility that had a “horrible” business plan. Sweeney and others made that clear to then-CEO Kevin DeSanctis, whom he says resisted the state’s opinions, despite a $261 million backing in the form of tax credits that restarted construction on the property that survived bankruptcy in its first year of operations.
He also said he believes Atlantic City’s future is brighter without former Mayor Lorenzo Langford in office. Had Langford not lost his re-election bid in November to Don Guardian, Atlantic City could have been dealt a far different hand by the state this year.
Sweeney and Christie spent time discussing Atlantic City’s future — a future that certainly would have included greater state oversight of city government if not a complete takeover of the city.
“To be perfectly honest with you, we were in discussions. I was in discussions with the governor to get very aggressive in Atlantic City because you can’t just let it go, and that’s what happened there,” Sweeney said.
“People were letting Atlantic City slip into, basically, the ocean. The previous mayor, I never saw someone that ran an administration that really didn’t care what happened. That’s why the governor and I talked.”
Sweeney speaks with a disdain for Langford’s administration, still questioning why the man who so vehemently opposed the takeover in public discourse never called him in the days when he was crafting the legislation. He regrets changes made to the bills signed Feb. 1, 2011, that initially would have added code enforcement to the list of functions under state control.
That function was removed at the urging of Assembly Speaker Sheila Oliver, and in Sweeney’s mind, that city function became a “disaster.”
“They have (the Casino Reinvestment Development Authority) that’s willing to pay for additional code enforcement to make the place look nicer, and you don’t accept it. Explain that to me,” Sweeney said, referring to a $130,000 infusion from the CRDA that went unspent for months in the city.
Defending the CRDA’s work at the alliance’s campaign unveiling, CRDA Deputy Executive Director Susan Ney Thompson said the responsibilities of making the Tourism District truly clean and safe do not just fall to the CRDA, the alliance or the city, but rather all stakeholders.
“Clean and safe directly, it’s been a real problem getting things through code enforcement and mercantile,” Thompson said. “The city has had very real management problems.”
The state, Sweeney said, hoped a change in leadership would come even as it discussed the possibility of a total takeover of the city. Today, the state will likely be involved in further steering of Atlantic City’s future, but in a different way.
Among the resort’s most significant hurdles are the city’s tax issues. Facing casino tax appeal after casino tax appeal and bonding for millions, many have questioned whether the city will follow in the footsteps of Detroit, the most recent example of a U.S. city filing for bankruptcy.
“Atlantic City won’t go bankrupt. We’re not going to let it go bankrupt,” Sweeney said. “But we also can’t continue to allow it to go in the direction it’s going either.”
Sweeney said he is working with state Sen. Jim Whelan, D-Atlantic, on legislation that will deal with the tax situation the city faces with the resort’s 11 casinos, which file tax appeals year after year. Massive appeals from the casino industry left taxpayers facing a 22 percent property-tax increase last year.
He would not elaborate on what specifically the legislation will allow, saying only that the solution is forthcoming and would not have happened had Guardian not been elected mayor in November.
“Sen. Whelan, myself (and) the administration are looking at options to try to help Atlantic City — and the new mayor, to be perfectly honest with you,” Sweeney said.
The Senate president remains confident that progress can be made. South Jersey’s economy depends on it, he said. He’s encouraged by the state’s increases in non-gambling revenue, even despite an additional 6 percent decline in casino revenue in 2013 as the industry retracted to 1989 revenue levels, pulling in $2.86 billion.
Meanwhile, online gambling isn’t quite as quick to catch on as some might have hoped. The industry picked up only $8.4 million in a little more than a month of operation, likely falling millions short of state tax revenue predictions.
And as the Tourism District faces its three-year anniversary, it’s also marred by another distinction: the closing of the Atlantic Club Casino Hotel. After filing for bankruptcy in October, the casino shut its doors Jan. 13.
The closing came despite signs that the property was making progress, with a 12 percent increase in gambling revenue in 2013. Caesars Entertainment Corp. and Tropicana Entertainment Inc. teamed up to buy the casino for a record low $23.4 million and shut it down.
Despite the gains, Sweeney called the closing inevitable and rejected the idea that the state could have or should have done anything to intervene.
“The state would then have to make major investments,” Sweeney said. “We can’t step in and bail out or become casino operators. That’s not our job.”
The state did step in with Revel — which is now openly looking for a buyer — in the form of promised future tax rebates rather than an instant cash infusion. The promise gave investors new hope for the property and allowed the stalled project to restart. Sweeney referenced reports that Hard Rock is interested in buying Revel, saying the property would still need a complete remodel to function as a Hard Rock casino.
Still, efforts to promote gambling expansion beyond Atlantic City persist. Already this year, a bill has been introduced in the Assembly that would allow for the study of gambling expansion in Bergen County. The bill has arisen before but hasn’t gained traction in the Senate, likely thanks to Sweeney’s persistence.
He promises the state will not consider gambling expansion until Atlantic City’s health has been evaluated at the end of five years, coming in February 2016. That evaluation, he says, will focus on the strength of gambling revenue, non-gambling revenue, Internet gambling revenue, the pace of development, hotel room occupancy and the success of flights at Atlantic City International.
If success is determined at the end of five years, the Tourism District commitment could stay in place longer, he said.
“We are much better off finding ways to strengthen Atlantic City,” Sweeney said. “It’s like the goose that laid the golden egg, and the goose is sick. So don’t kill it. Let’s nurture it back to health, because we’ve all benefited from the goose.”
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