Feb. 2, 2010--The escalating war between the union that represents Atlantic City's casino and hotel workers and the owner of the $2 billion Revel Casino proposed for the Boardwalk took another ugly turn yesterday.

Members of the casino workers union earlier this month tried to force a citywide vote to overturn a recent City Council decision that allows Revel to ask the state for what the union calls "a $300 million tax write-off" to help finance the construction. But the city clerk rejected the union's petition.

In Trenton yesterday, the tax breaks for Wall Street power broker Morgan Stanley, which owns the casino, sailed through the Senate Economic Growth Committee, 7-0.

Dozens of trade-union members packed the committee room in support of the project, which they hope will create jobs, while Local 54, the Atlantic City casino workers union, vowed a legal challenge.

State Sen. Raymond Lesniak (D., Union), a sponsor of the bill, said the tax breaks "will allow for the completion of a new casino with 1,900 hotel rooms, 150,000 square feet of gaming, 35,500 square feet of entertainment space, 170,000 square feet of convention space, 20 restaurants, and 44,000 square feet of beach amenities."

Lesniak said the $2 billion Revel project next to Showboat on the Boardwalk would produce $134 million a year in state and local revenues, not including income and payroll taxes. The project would create 2,600 construction jobs and 5,500 permanent jobs at Revel, and 2,500 related jobs, he said.

"Revel is not just another casino," Lesniak said. "It's a $2 billion investment in making Atlantic City a tourist destination, something that must happen for it to compete with new gambling attractions in neighboring states."

Revel is seeking $260 million from the state, which would come from a portion of the sales, hotel room, and other taxes -- revenue the state will not receive if the project isn't completed.

But Local 54 president Bob McDevitt has a far different view. He said the current Atlantic City market could not support another major casino. He predicted that the Revel casino, which already has downsized its original two-tower, 3,800-room design, would lead to the demise of two of the city's older and smaller casinos and the loss of up to 5,000 casino workers.

"Open one, close two," he said yesterday after the committee hearing. Revel "is no game changer."

"You already have properties on the bubble -- Trump Marina, Trump Plaza, the Hilton, and Resorts -- according to analysts," McDevitt said. "Any combination of two of those shutting down, you get 1,600-1,700 rooms taken off the market, with each [casino] employing 2,200-2,400 workers."

Beyond the zero-sum gain in employment and hotel rooms, McDevitt said, there is no reason for the state to subsidize a multibillion-dollar project and not allow city residents a say on the matter.

"That's my question. Why are so many people on the high levels conspiring to keep people from voting on these issues?" he said. "If this is such a great deal, why not have people vote on it?"

Revel was the only one of four major casino projects proposed in the last three years for Atlantic City that got off the ground. The others, including a $5 billion casino resort by MGM Mirage Inc. next to the Borgata, was shelved about a year and a half ago as the economy weakened and lending markets dried up.

Last January, Kevin DeSanctis, chief executive officer of Revel Entertainment L.L.C., announced that all interior work -- including all restaurants and retail shops -- in the Revel Casino was being suspended until the financial markets improved and the remaining financing was secured.

Gambling revenue for Atlantic City's 11 casinos has been in free fall for the last three years because of the weak economy and growing regional slots competition from Pennsylvania.

DeSanctis said in October that the company was still seeking $1 billion, roughly half of its price tag, in financing to complete the project. Both DeSanctis and Morgan Stanley declined to comment yesterday on the controversial tax breaks.

Revel is the first project to apply for New Jersey's tax-reimbursement program under provisions of a broad-ranging state economic-stimulus bill Gov. Jon S. Corzine signed into law last year.

One provision of the economic-stimulus act allows developers whose proposals meet certain criteria to receive up to 75 percent of the tax revenue created by their projects for up to 20 years.

Sen. Jim Whelan (D., Atlantic), a cosponsor of the bill, said during yesterday's committee hearing that "to get development occurring today in Atlantic City, we need public-private partnerships."

Despite the unanimous vote in the Senate committee, critics say taxpayers should not subsidize casino construction at a time when the state faces a budget gap of more than $8 billion next fiscal year.

"If the state has money for this bailout, the state should be cutting taxes for all businesses, not just Morgan Stanley's casino project, Revel," said Steve Lonegan, state director of the conservative Americans for Prosperity.

Lonegan said that "under no circumstance should New Jersey's overburdened taxpayers be taxed even more to bail out another big bank debacle."

There is speculation that Local 54 -- whose own membership has shrunk by about 1,000 members in the last year due to layoffs brought on by declining Atlantic City casino revenue -- is fighting to block the tax breaks because Revel has refused to commit to hiring union workers. Revel has denied the claim, and so has McDevitt.

But the vitriol between the two sides hasn't abated.

On Dec. 30, the Atlantic City Council approved Revel's application to seek state funds for its projects. Two weeks later, Local 54 delivered 1,700 signatures to force a referendum vote to overturn the decision. A city clerk rejected the petition Jan. 20.

"We think it's bad business when you put $300 million on the line," McDevitt said. "If Morgan Stanley doesn't want to fund its own casino project, then why should taxpayers of New Jersey fund it?"

Contact staff writer Suzette Parmley at 215-854-2594 or [email protected].

-----

To see more of The Philadelphia Inquirer, or to subscribe to the newspaper, go to http://www.philly.com/inquirer.

Copyright (c) 2010, The Philadelphia Inquirer

Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NYSE:MS,