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State senate approves 200-room casino bill for Atlantic City; Hard Rock says it will begin work as soon as bill is signed
The state Senate on Thursday overwhelmingly approved a bill to allow two new casinos to be licensed in Atlantic City with fewer hotel rooms than current law requires.
The bill, sponsored by Sen. Jim Whelan, D-Atlantic, would allow two casinos with just 200 rooms, fewer than the currently required 500 rooms, and with less casino floor space than today's gaming halls.
Both properties would have to be built close to the Boardwalk, and at least one would be expected to expand into a full-sized 500-room casino with increased floor-space within five years.
"We've seen larger projects die on the vine because investment capital dried up, and no one is willing to take a chance during a difficult economic period," Whelan said following the vote. "Not only does this bill lower the investment threshold to get new casinos in to redevelop blighted areas in Atlantic City, but it creates a safety net so that development capital is available in good times and bad, and a guarantee that construction actually takes place."
Lawmakers had considered the proposal - which has earned the nickname "boutique casinos" - in the spring, when Republicans were lukewarm about the concept. Casino executives represented by the Casino Association of New Jersey told Whelan during a Senate wagering committee hearing that they did not support the idea. Joe Corbo, then-head of the association, cited concerns about overcrowding of the market and potential new casinos failing to meet a high standard for the resort.
Whelan amended the bill earlier in September to address those concerns, reducing the number of proposed new licenses from four to two. Whelan also limited eligible projects to newly constructed facilities. That amendment persuaded the two Republican assemblymen from Atlantic County to support the concept.
"We need to get people back to work in Atlantic County, and bring in capital investment," Assemblyman Vincent Polistina said Thursday night.
He and colleague John Amodeo said they would co-sponsor an Assembly version of the bill.
While Whelan has said the bill lowers the entry fee for doing business in the resort, new licensees will have to pay significant money to the state upfront and throughout the life of their projects. The two licensed properties would have to pay $2 million upon commitment to a license. The money would be shared between the city government and the state to complete infrastructure improvements around the casino sites.
As an incentive to expand, the two developers would also pay 5 percent of their gross revenue into a fund that could then be used for expansion and structural improvements. But if they decide not to expand in five years, they would pay an additional 5 percent of gross revenue to the same fund, and that money could be used by other casino businesses or by Atlantic City government on capital improvements within the Boardwalk district.
That provision, which was added in the last two weeks, leaves open the possibility that the fund could assist in operation of a proposed new state-run tourism district surrounding Atlantic City's Boardwalk, Inlet and Marina areas. Gov. Chris Christie proposed the district in July. This was the first piece of Atlantic City-related legislation to pass a full vote since the governor's announcement.
The bill is also a catalyst for a proposed Hard Rock casino hotel which parent company Hard Rock International would build in partnership with New York-based investment group Och-Ziff Real Estate. Hard Rock Chief Executive Officer Jim Allen said work on the estimated $400 million to $450 million project would begin almost immediately after the boutique casino bill receives final approval by the Assembly and Christie.
"Certainly, if this bill passes, we'll continue to travel down this path," Allen said in an interview with The Press of Atlantic City. "We are still very enthused about a Hard Rock in Atlantic City."
Design work on the Hard Rock casino would take about six to eight months, with construction stretching out over another 18 to 22 months, Allen said. Although Hard Rock is far from finalizing its designs, preliminary plans call for 200 to 300 hotel rooms to start, eventually building up to 500, he said.
"We're committed to going ahead and meeting the 500-room minimum," he said.
Hard Rock remains one of the few developers serious about building a new casino in a gaming market mired in a four-year revenue slump and hounded by competitors in surrounding states. Atlantic City has been further plagued by the sluggish economy, but Allen said there are signs of a recovery on the horizon. He also believes Atlantic City has absorbed the worst from the rival Pennsylvania casinos.
"There are a lot of good things happening here if people begin reading between the lines," he said.
Hard Rock is encouraged, Allen said, by Southwest Airlines' pending takeover of AirTran, a carrier that serves Atlantic City International Airport from Atlanta. The merger potentially means expanded AirTran service to Atlantic City or Southwest could bring in its own brand of flights to the city, Allen said.
Staff Writer Donald Wittkowski contributed to this report.
Contact Juliet Fletcher:
609-292-4935
Posted in ATLANTIC-CITY PLEASANTVILLE BRIGANTINE | TOP THREE | BUSINESS | ATLANTIC CITY on Thursday, September 30, 2010 11:00 pm Updated: 5:06 pm.
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