Anti-blight funds go to casinos

Atlantic City sites get 20% of money intended for poor

January 28, 2007|By New York Times News Service

Seven years after New Jersey legalized gambling in 1977, state lawmakers created an agency called the Casino Reinvestment Development Authority to redirect some casino revenue to blighted areas in Atlantic City and across the state.

But the agency, contending that the gambling industry's success is a critical component of the state's economic health, has handed about $400 million back to the casinos, a sum that accounts for more than 20 percent of the money it has committed since its inception.

That approach continued as gambling competition from other states intensified, Atlantic City's chief legislative proponent, state Sen. William L. Gormley, expanded his political power, and the state eliminated the office of the public advocate, which had criticized the agency's move to distribute money to the casinos.

The authority has financed construction of 13,000 hotel rooms in the city, 800 of them planned for a tower under construction at the Trump Taj Mahal. The agency spent $3.7 million to build an Imax theater at the Tropicana Casino & Resort, where its grants also helped finance three floors of elegant stores, restaurants and a spa. An additional $26 million went to help build the House of Blues and to spruce up the facade at Showboat.

The agency has also pitched in for "parking lot beautification" at Showboat and road signs for Resorts and the Taj Mahal. And in 2005 it put $4.5 million toward express weekend train service between Manhattan and Atlantic City, to be provided by a partnership involving the Borgata, Caesars and Harrah's, in conjunction with New Jersey Transit.

"That CRDA money is being used to grow the industry, protect the financial well-being of the state of New Jersey and keep the development of Atlantic City rolling forward," said Thomas D. Carver, executive director of the reinvestment authority. "The growth of the industry, and the addition of more rooms, relates directly to the continued development of Atlantic City as a resort destination, not just for gaming but for entertainment and other attractions as well."

But David Sciarra, who helped to write the legislation that created the reinvestment authority while working as a deputy public advocate, said that giving the money to the casinos "really goes against the very purpose of CRDA."

"It was not set up to finance industry-related projects because the industry clearly has the resources to do that on its own," said Sciarra, who runs a nonprofit group in Newark to help disadvantaged students. "This is a betrayal of the very promise that was made to the citizens: that the casinos would have a social responsibility to invest a small percentage of their revenue through the CRDA to help make sure residents, especially the poor, had better housing and neighborhoods."

The reinvestment authority, established by the state legislature in 1984, takes in money based on the casinos' gambling revenues. The casinos, required to pay 8 percent of their gross to the state's Casino Revenue Fund -- which pays for programs to help the elderly and people with disabilities -- can choose to put an additional 2.5 percent in that pot or to pay 1.25 percent to the reinvestment agency. Virtually all have chosen the reinvestment route.

The reinvestment authority has doled out $1.8 billion since starting operations.

In its initial years, the authority focused largely on developing affordable multifamily housing in the dilapidated Inlet section of Atlantic City, spending an estimated $130 million on the effort.

But in the past dozen years, a string of changes to the law that were championed by Gormley, the gaming industry's leading backer in Trenton, and some steps taken by the development authority have directed hundreds of millions of dollars back to the casinos to expand operations.

The reshaping of the agency's mission has come as a result of a number of factors, not least the increasing influence commanded by Gormley, a skilled and maverick legislator who has pinned the rejuvenation of Atlantic City to the vitality of its casinos.

Then there is the political and economic might of the gambling industry, whose $5.2 billion in revenue last year generated $417.5 million in state taxes.

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