|By Jon Tamari and Suzette Parmley, The
Philadelphia InquirerMcClatchy-Tribune Regional News
Mar. 24, 2010--The planned Revel casino in Atlantic City, whose developers are seeking $300 million in state tax breaks, would be built with a "significant" amount of materials from China and could get its final piece of financing from there as well, the project's chief executive told The Inquirer in an interview.
Kevin DeSanctis, the project's CEO, said it was common for major casino projects to buy materials from China. DeSanctis also said he was negotiating with Chinese banks for the final $1 billion of financing needed to get the stalled project completed.
The mega-casino already has faced criticism from labor unions who have battled Revel over hiring and from fiscal conservatives critical of giving a tax break to a casino backed by investment giant Morgan Stanley.
Steven Lonegan, the New Jersey state director of Americans for Prosperity, said confirmation of Chinese investments and purchases from overseas made the potential state tax break "more of a disgrace."
"Not only are we subsidizing Morgan Stanley," Lonegan said, "we are subsidizing the Chinese government."
DeSanctis defended his plans.
"There is no question that we are going to buy materials from China," DeSanctis said. "We don't know how much. The reality is -- with most projects of this size -- it is fairly common to purchase significant amounts of material from China, whether it's stone or millwork."
The $2 billion project, whose undulating glass shell surrounds an incomplete interior on the Atlantic City Boardwalk next to Showboat, is working with the China State Construction Engineering Corp., a building company owned by the Chinese government. China State has a 51 percent stake in the construction management team overseeing the completion of the project.
"We may purchase a bit more from others, but it's not unusual," DeSanctis said.
He later added, "Any project of this scale likely they would be making purchases from China -- for pricing and volume work."
Gaming experts confirmed that it was common for American gambling companies to seek materials from China.
For instance, the $8 billion CityCenter casino resort by MGM Mirage Inc., which debuted in December on the Las Vegas Strip, used steel and glass from China.
"It's true," said MGM Mirage Inc. spokesman Alan Feldman. "Many components are less expensive and available in quantity in China."
However, no state aid was offered to help complete CityCenter, MGM spokesman Gordon Absher said this week. The company received property- and sales-tax reductions through a sustainable-construction program.
MGM said that it was a green-building incentive that was "not offered as a means to assist struggling projects to completion."
Revel has applied for a $300 million Economic Redevelopment Growth Grant from the state Economic Development Authority (EDA). The program, a form of tax-increment financing, gives developers a refund up to 75 percent of some of the new tax revenue a project generates over 20 years.
In addition, the project is seeking $50 million in tax abatements from Atlantic City.
A bill that would undercut some local opposition to the state tax breaks received final legislative approval Monday and is awaiting Gov. Christie's signature, though he has not said whether he would approve it. Even if the measure is signed, the EDA still has to decide on the $300 million grant.
Revel and its backers argue that the incentives will help create jobs and new revenue for the state. At the same time, they say, the project does not need the grants to fill its financing gap. Opponents have criticized giving a tax break to a plan backed by a massive investment bank that recently paid out bonuses of $14.4 billion.
The casino project would generate 5,500 permanent jobs and 2,600 construction jobs, according to Revel's grant application, and would boost state and local tax revenue by $134 million a year. If completed, the casino would represent the first significant investment in Atlantic City in years and is the only one of four major projects announced in 2007 that has begun construction.
DeSanctis said the casino would get tax refunds only after the project was complete and generating new taxes. Such grants, however, are often used to help attract investors as the project tries to line up financing to reach the finish line.
"It is not gap funding. It's an incentive for people to develop in difficult economic times," DeSanctis said.
He disputed characterizations of the program as a "subsidy."
"I don't understand why anybody wouldn't want the deal," he said, noting that the grant program is open to all businesses. "The state takes absolutely no risk if the project does not get completed."
Sen. Raymond Lesniak (D., Union), who sponsored the bill that would effectively diminish some opposition to the project, said this, when told of purchases and finances from China: "So what?"
"Guess what, the people who are going to be working at the place are good old New Jersey workers and union workers," Lesniak said, adding, "We have an international economy.
"You want to turn down hundreds of millions of dollars that this project is going to bring to the state because they're buying materials from China?" he asked. "Nothing could be more dumb and idiotic."
Lesniak's bill would change the EDA grant program so that it no longer required approval from municipal officials. He said other programs didn't have that requirement. Unite Here Local 54, an Atlantic City casino workers' union, had hoped to block the state grant with a local referendum against the application. That avenue would be shut if Christie were to sign the measure.
The union has feuded with Revel, which has not made a commitment to hire its members exclusively.
"It doesn't make any sense. You have this bill written to take away the rights of people so Morgan Stanley does not have to invest $300 million in a casino," said Bob McDevitt, president of Local 54, which represents about 14,000 casino and hotel workers in Atlantic City. "They have the money to do this. Why should taxpayers pay for it?"
McDevitt also took issue with Revel's seeking its final $1 billion in needed financing from Chinese banks.
"What they [Chinese] have is a dictatorship -- and a state-owned bank of a government that has had issues with human rights. There is a lot of other places I would rather get my money from," McDevitt said.
Sen. Michael Doherty (R., Warren) was one of only two senators to vote against the revisions that would block the local referendum. He said the private market, not state grants, should determine whether the project goes forward.
"If the market is saying don't do this," Doherty said, then why is the state subsidizing this?" ------
Contact staff writer Jonathan Tamari at 609-989-9016 or firstname.lastname@example.org.
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