New Jersey Desperation: Tax Breaks for Revel

Unfinished Revel Casino may get tax break


TRENTON — A state board is planning to vote Tuesday on a tax break for the unfinished $1.2 billion Revel Casino in Atlantic City while Gov. Chris Christie will head to the ocean resort to make an announcement, according to a source familiar with the matter.

The state Economic Development Authority will consider a tax reimbursement for Revel Atlantic City, LLC and Revel Entertainment Group, LLC in a special meeting. The source said the tax reimbursement would be worth more than $50 million.

State leaders believe the tax break is worthwhile because the state is currently not collecting any taxes on an unfinished casino, the source said, and the new work will generate jobs.

Sen. Jennifer Beck, R-Monmouth, said the program will involve the state crediting state revenue to the casino so that proceeds would be used to improve roads, sewer and other public infrastructure associated with the project.
She said it is similar to tax breaks being employed at the site of the former Fort Monmouth Army post.

"The state has taken this methodology because we don't have the money for grants to attract businesses here," Beck said. "We have to come up with new creative ways of attracting businesses."

The Revel, a behemoth in blue glass, has sat unfinished since construction was largely halted in January 2009, in the midst of the financial crisis. The initial plans called for two hotel towers, with 1,900 rooms each, enough casino floor to cover three football fields, and stores, restaurants and other entertainment, covering 500,000 square feet.

The head of Revel Entertainment, Kevin DeSanctis, could not be reached for comment.
Assemblyman John F. Amodeo, R-Atlantic, said he is aware the ownership group is looking for some $200 million in financing for the project. He said crews in the past two months have largely completed rebuilding the boardwalk outside of the Revel, as well as other work on the building.

"If you drive up on the site, the loading docks are concreted in," Amodeo said. "The ramps are completed. If you look at it, it looks 95 percent complete from the outside."

Sen. Jim Whelan, D-Atlantic, said he also supported the tax financing for the casino.
"There's a lot of jobs there in construction, and then permanent jobs," Whelan said. "These are tax dollars you would never see but for the Revel being completed. The reality for Atlantic City is that we've lost 30 percent of market share, and 12,000 jobs. We can't sit here and do the same old same old."

A tax break proposed for the casino last year proved controversial because the project has been owned by Wall Street investment bank Morgan Stanley and because Atlantic City unions contend that a new mega-casino would result in the failure of other casinos in the city.

Sean Maher of Economy.com said he believes it is likely that weaker casinos would go out of business under the weight of more competition, but the project would be better for Atlantic City in the long run.

"That's important to get this project to finish; Atlantic City needs something to jump start the industry," Maher said. "It would be good in the long run to refresh everything, to shake that run-down image they've been stuck with."

The ownership picture of Revel was unclear at press time, but the group headed by DeSanctis is the entity seeking the tax break. Morgan Stanley, however, still had a seat at the table as recently as last week.

Bloomberg reported last week that Christie had spoken with Morgan Stanley leaders about reviving the project and said it would be a centerpiece of his effort to revive Atlantic City. Morgan Stanley has already written down and taken losses on almost all of its value in the buildings.

DeSanctis told the Press of Atlantic City last week that he wanted to lead a management buyout of Morgan Stanley's stake. According to corporate records, Alan Greenstein and Michael Schaller are both officers in the firm.

Because of new casinos in Pennsylvania, Delaware and New York, gaming in Atlantic City has been falling for years, and it has continued to drop rapidly during and after the financial crisis.

In December, the state reported that casino revenues had fallen another 9.6 percent in 2010 to $3.6 billion.