Atlantic City – In November 2006, the Sands Casino Hotel closed its doors to make way for incoming Pinnacle Entertainment Inc.
At the time, Pinnacle Chairman Dan Lee said the developer would not rush into building its USD 1.5 billion to USD 2 billion megaresort, hoping to avoid the construction mistakes and cost overruns plaguing its casino in St. Louis.
But few thought at the end of 2008 the company would still be taking its time.
A slumping U.S. economy and a global credit crisis altered the company’s plans to build, but the Sands‘ demolition has left a huge hole in the city’s line of towering Boardwalk casinos, once filled with jobs and business, albeit foundering.
The project’s uncertainty, accompanied by a now-stagnant eyesore, is building frustration among city officials, who now are looking for ways to push development.
Councilman Dennis Mason said Sunday he and his colleagues are considering establishing a redevelopment agreement with Pinnacle to impose construction deadlines.
„They had an operating casino running. They buy it, crush it and take all the jobs away. Now they can’t build,“ Mason said with frustration. „That thing could still be up and operating.“
Mason acknowledged the resort lacks the authority to force the developer into such an agreement, but hinted there are ways of cementing the deal. He declined to elaborate.
„I would imagine they would be against it, but we need to hold their feet to the fire here,“ he said.
Officials with Pinnacle could not be reached for comment Sunday, but the company recently reaffirmed its plans to build.
Dan Lee, the company’s chairman, emphasized the money Pinnacle already invested in the land when he spoke to members of the Casino Control Commission late last month.
„We’re in this thing for USD 400 million. We’re not just going to sit on it. Something needs to be developed there,“ Lee told the commission.
Lee added: „It could be any time for breaking ground, from the first part of next year to a year and a half from now.“
And while the government’s recent move to bail out mortgage giants Fannie Mae and Freddie Mac was thought to help buoy the overall economy, experts predict it could be two years before the credit market stabilizes.
Although some might imagine neighboring casinos relishing one less competitor in the resort, Pinnacle’s potential business rivals are among those eagerly awaiting the construction.
„We have always maintained that we’re always better off with more casino business around us,“ said Alyce Parker, spokeswoman for Harrah’s Entertainment Inc., which owns Bally’s Atlantic City, Caesars Atlantic City, Harrah’s Resort and Showboat Casino-Hotel. „It attracts more to the area and helps everyone in the end.“
State Sen. Jim Whelan, D-Atlantic, thinks the delays might not be as detrimental as some make it out to be. He noted that Revel Entertainment Group’s USD 2 billion casino project still is expected to be finished in 2010.
„In a perfect world, you’d prefer not to have these projects opening up at the same time,“ said Whelan, who also chairs the state’s Wagering, Tourism & Historic Preservation committee. Ideally, „Revel would open up, two years later Pinnacle would open up and two years later have MGM open up.“
Whelan said above all else, what is built at the old Sands site is more important then when it is built.
„Ultimately, what’s important is that somebody builds a top notch facility,“ Whelan said. „We have to constantly reinvent ourselves. That was the demise of the city in the 70s. It tried to sell the same product.“
Pinnacle officials have stressed their project’s delays have not stopped their efforts to continue with the preconstruction process, including an eminent domain effort.
The developer aggressively has sought several properties around the site to expand its reach. But the delays raise concerns about whether business owners should be protected from a developer uncertain to develop.
The adjacent properties targeted for eminent domain still are being considered by a City Council torn between two perceptions of the owners.
Some see them as examples plight of the small business owner, such as 70-year-old Stewart Weiss, who has owned and operated the Atlantic City News Agency, a magazine shop that also sells adult books, for more than 30 years.
„He built it up from nothing,“ said Weiss‘ son Curtis. „He never screwed anybody out of anything.“
Weiss‘ business recently was spared from consideration.
But there is also the perception of the owners as money-hungry holdouts. According to Pinnacle Atlantic City CEO Kim Townsend, that description fits about 99 percent of the targeted property holders.
„These speculators holding their land strictly for their own personal gain, they should be bowled over,“ City Councilman Bruce Ward said.
While the idea of eminent domain makes Councilman Steven Moore cringe, plans to strip the land from the owners without being certain about construction baffle him.
„It would give me a little more pause for thought if they were certain to build,“ Councilman Steve Moore said. „But they’re not.“
Though Pinnacle has remained assertive in its plan to stretch the property’s reach, the company showed pause in its plan to expand to the Boardwalk. Officials gave a one-year lease extension last week to some Boardwalk businesses originally scheduled for demolition this fall.
Pinnacle officials say they were given one last season to capitalize on the city’s peak summer tourist trade, but the extension underscores the project’s uncertainty.