|By Jean Mikle, Asbury Park Press,
N.J.McClatchy-Tribune Regional News
Apr. 6, 2010--The president of Atlantic City's largest casino workers union said Morgan Stanley's decision to pull out of the $2 billion Revel casino project is another sign that the state should not grant $300 million in tax breaks to help complete the partially built casino.
"If Morgan Stanley is bailing and they're going to sell this thing (at a loss)..., this is absolutely not the right time to be giving any of these tax breaks," said Bob McDevitt, president of Unite Here Local 54. "All the smart money is pulling out and this is the time we're going to put our money in?"
The union has strongly opposed Revel's application for a grant from the state Economic Development Authority that would allow the company to pay about 25 percent of its state sales and room taxes over 20 years. Building and construction workers unions in South Jersey support the 2,000-room project.
The tax breaks could help make Revel more attractive to potential investors and make cash available for Revel to pay off its debt, company officials have said.
Morgan Stanley announced last week that it was withdrawing from the Revel project after investing about $1.2 billion in the unfinished mega-casino, located in Atlantic City's South Inlet section.
In a filing with the U.S. Securities and Exchange Commission, the company, which owned more than 94 percent of the casino, said it anticipates the sale will result "in a substantial loss" of its investment. Morgan Stanley did not give a reason for its decision to sell its stake in Revel.
Revel officials insisted that the company will still receive the financing it needs to finish a casino project. Work on the interior of the structure was halted in January 2009 to await additional financing, although exterior work has continued.
Revel spokesman Joseph N. Jaffoni said the company is still in discussions with potential lenders to secure additional financing that will allow it to complete the interior of the luxury casino-resort.
"Once final financing is secured, we estimate it will take 20 months to complete and open the facility," Jaffoni said.
Before Morgan Stanley announced it was abandoning the project, Revel officials appeared close to reaching a deal with the Export-Import Bank of China for $1 billion in additional financing.
In its state grant application, Revel says the hotel-casino will create 5,500 permanent jobs and generate $134 million annually in state and local taxes and fees, not including state income and payroll taxes.
Another 2,600 construction workers will be employed on site while the casino is completed; 750 people are working there now.
Revel supporters argue that the casino project, which would include a spa, 5,500-seat event center, 150,000 square feet of casino space and 19 restaurants, is a destination resort that Atlantic City needs to remain competitive in an increasingly crowded gaming market.
Detractors say Revel's opening could force three existing casinos -- Resorts, Trump Marina and the Atlantic City Hilton -- to shut down, costing as many jobs as Revel will provide.
Revel has also sought a $56 million municipal bond to help with road improvements around the project, and has applied for a five-year property tax abatement from Atlantic City that would save the company $50 million.
Opposition to the tax breaks has joined the casino workers union with an unlikely alliance that includes The Sierra Club and two conservative advocacy groups, Americans for Prosperity, and Liberty and Prosperity.
Gov. Chris Christie has said he was "skeptical" about the need for Revel's tax break application. Christie spokesman Michael Drewniak said Monday that the governor's office had no comment on Morgan Stanley's decision to withdraw from the Revel project.
Drewniak also said that Christie has not yet acted on a bill before him that would ban referendums on local redevelopment ordinances.
The bill was in response to Unite Here members' attempts to have a city ordinance authorizing the tax incentive plan revoked through a public referendum.
The Revel site has been plagued with problems.
In June 2008, three company executives died in a plane crash in Minnesota. Last month, a severe nor'easter storm broke 130 glass panels on the building's exterior and a construction crane on the site toppled over. Then a welder dismantling the collapsed crane started a smoky fire on the site that did little damage, according to Revel officials.
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