Tuesday, May 27, 2014

"Redevelopment" in Atlantic City

Below is a picture of Atlantic City, NJ.  As you can see, its biggest developments are 12 casino/hotels along the city's boardwalk.

There was hope when gambling was introduced in Atlantic City that the city's decline, which began in the 1950s, would turn around.

So far this has not happened.  The casinos send 8 percent of their gross revenues to the state of New Jersey and another 1.25 percent to the Community Reinvestment Development Authority (CRDA), a state agency that disburses the funds for public and private projects in Atlantic City and elsewhere in the state.

Unfortunately, the casinos are in decline.  Revenues dropped from $3.3 billion in 2011 to $2.9 billion in 2012 and likely have continued downward from there.  

Casino employment, which peaked at 43,000 in 2006, had dropped to 33,000 by 2013.  Most casino workers live outside the city, which had an unemployment rate of 17.8 percent in 2013.  The rate of violent crime, which averages 3.1 per 1,000 people statewide, is 19.2 per 1,000 in Atlantic City.

Under the circumstances, it has been difficult to get many of the city's 30 million annual visitors out of the casinos or away from the city's historic boardwalk and into the rest of the city.

In 2013, CRDA presided over the demolition of 45 buildings in Atlantic City, presumably because the buildings were blighted.  

The authority has not revealed a master plan for improvement of the city.

Here is a building on Oriental Avenue in Atlantic City, not far from the Revel casino.  Revel was built for $2.4 billion in 2012 and went into bankruptcy the next year.  Now CRDA says it needs to acquire a large number of properties near Revel for an unspecified redevelopment of the area.

The Oriental Avenue building is owned by a man who inherited it from his parents, who bought it in 1969.  He uses the first floor as a piano studio and the office for his piano-tuning business, and he rents the upper floors as apartments.

The building looks to be in good repair and well maintained.

CRDA has been trying since 2012 to acquire the building by eminent domain.

The man is fighting.  Last week in court, his lawyer said, "There's no plan.  There's no particular thing for which this property is being taken."   He called the proposed eminent domain process "condemn first, decide what to do with the property later."

The lawyer for New Jersey said,  "This state has recognized that the economic engine of casinos is vital to the success of the state of New Jersey.  That's the public purpose here."

In 2007, the New Jersey Supreme Court ruled that before a city (or, presumably, the CRDA) can seize private property for other private development, it must show "substantial evidence" that the targeted property is blighted.

I don't know what will happen in this case.  The individual property doesn't look blighted to me, but, arguably, much of Atlantic City is.

Plus, the state is arguing that it wants the building site for a public purpose, not a private one. Personally,  I doubt the CRDA will use the property for a library or a school.

(There have been rumors that CRDA actions have been influenced by politically connected Jerseyans.  Given the state's history, such rumors are to be expected.  Who knows what is going on in this situation?)

The state's argument that seizing the Oriental Avenue property for the public purpose of helping the "economic engine of casinos" must ring hollow to local residents.  After 30 years of funding project after project, CRDA seems not to have had much effect at all on the sad dynamics of Atlantic City.

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