NEW PARTNERSHIP FORGED TO UNDERTAKE SIGNIFICANT REVITALIZATION PROJECTS IN ATLANTIC CITY
MOU Between EDA and CRDA Supports Christie Administration’s Plan to Redevelop Significant Part of Atlantic City’s South Inlet
TRENTON, N.J. (June 12, 2012) – Building on the Christie Administration’s commitment to revitalizing Atlantic City, the New Jersey Economic Development Authority (EDA) today approved a Memorandum of Understanding (MOU) between the Authority and the Casino Reinvestment Development Authority (CRDA) that provides up to $50 million in financing for projects in the Southwest Inlet. The non-binding MOU authorizes the EDA to borrow a maximum of $50 million in special obligation loans from a lender to be identified through a competitive process. The CRDA is expected to take action on the MOU at its June 19 meeting.
“These funds are designed to advance significant, new development projects and recreational amenities in Atlantic City’s Southwest Inlet, which is one of the most beautiful and viable waterfront locations on the East Coast,” said Lt. Governor Kim Guadagno. “With the implementation of this MOU, the CRDA can begin work on improving the Atlantic City Inlet area adjacent to Revel Atlantic City and facilitating infrastructure improvements and development of new housing and retail projects.”
The CRDA has asked the EDA to borrow the maximum of $50 million in a special obligation loan from an approved lender in the form of two notes issued approximately 12 to 24 months apart and to advance the proceeds of the loan to the CRDA.
Once a lender is selected, the EDA will negotiate terms of the financing commitment. The EDA members must then approve both the lender and terms of the loan. Request for Proposals will be made available July 9 on the EDA website at www.njeda.gov.
On May 15th, CRDA authorized a Preliminary Determination of Project Eligibility for the South Inlet Mixed Use Development Project involving portions of five city blocks in the South Inlet. The blocks are bordered by Connecticut, Rhode Island, Oriental and Pacific Avenues and encompass the Absecon Lighthouse and Park. The Preliminary Determination is a process to allow for planning and future expenditure of funds.
“We are pleased to be partnering with EDA to move the South Inlet project forward. This project is critical to the revitalization of Atlantic City as outlined in the Tourism District Master Plan,” said CRDA Executive Director John Palmieri. “The swift actions of the EDA to provide a funding source are indicative of the support Gov. Christie pledged when the Tourism District was created.”
EDA Chief Executive Officer Caren Franzini noted that in addition to these funds, CRDA will utilize future Revel-based revenues to proceed with approved redevelopment projects in the Atlantic City Inlet area. The proposed loan structure is a first step to facilitate this activity by using the EDA loan proceeds to acquire, demolish and improve sites in the area adjacent to Revel identified for redevelopment.
As prescribed in the MOU, repayment for the loan will include the full amount of the Revel Entertainment-Retail District Sales Tax Rebate and future sales of properties. CRDA will provide first mortgages on project sites acquired to the EDA to secure the bank loan and provide debt service coverage of payments on the loan.
These investments follow the EDA Board’s February 2011 award of an Economic Redevelopment and Growth grant (ERG) of $261,364,000 to Revel Atlantic City.
In addition to paying $5 million in annual revenue district payments to CRDA, Revel is also committed to expend the ERG payments for new development projects and recreational amenities in the Southwest Inlet, in accordance with the City’s Inlet Revitalization Plan. Proceeds of the ERG payments will be timed after the revenue payments and after the public infrastructure for these sites is complete with the $50 million in proposed loan.
The Christie Administration has taken unprecedented measures to revitalize Atlantic City including stabilizing the city’s finances and creating jobs through new business investment, authorizing the creation of the Atlantic City Tourism District, providing for the reform and modernization of New Jersey’s casino regulatory structure and paving the way for new investments in Atlantic City by providing for the issuance of two new casino licenses for facilities with a lower minimum bedroom requirement of 200 rooms rather than the 500 previously mandated.
A copy of the MOU is attached.
To learn more about opportunities for business growth throughout New Jersey, visit the state’s business portal at www.NewJerseyBusiness.gov.