Atlantic City, New Jersey – With tight credit markets threatening or slowing casino projects here and around the country, the developers of the USD 2 billion Revel casino-hotel are turning to the city for help.
The City Council is scheduled to introduce an ordinance Wednesday night that would allow it to issue USD 56 million worth of bonds to provide money for Revel to redesign and widen access roads to the project.
Revel would be responsible for paying interest on the bonds, whose term and interest rate have not yet been determined, said Lloyd Levenson, an attorney for Revel.
„There is no downside at all for the city in this,“ he said. „The city issues the bonds, and that’s where it ends.“
Councilman Bruce Ward estimated the bonds could carry an interest rate as low as 4.5 or 5 percent – about half the going rate in commercial credit markets – and have a 30-year term. He also said the city’s participation in roadway financing shows potential lenders that Atlantic City is a good place to invest.
„The lenders should be enthused to see this,“ Ward said. „This is a signal that this is a city that knows how to collaborate on a public-private partnership.“
A final vote on the bonding arrangement will be held in two weeks. The work also includes drainage improvements.
The city would be able to place a lien on the property and recover the land should Revel default on the bonds.
The ocean-themed casino-hotel is being built at the northernmost end of the Boardwalk, next to the Showboat Hotel Casino.
The first phase of the project calls for a single tower with 1,800 to 1,900 rooms. When a second tower is built, that number would rise to 3,800 to 3,900 rooms.
It will offer 150,000 square feet of casino space, and 500,000 square feet of dining, retail and entertainment space, including Atlantic City’s first casino wedding chapel.
It’s on track to open in late 2010.
„Things have not slowed up one iota, and we don’t expect them to slow up,“ Levenson said. „The wheels are moving.“
Another mega-casino project, by Pinnacle Entertainment on the site of the former Sands Hotel Casino, may be delayed or even scrapped if credit markets do not improve within the next year or two, the company has said.