Developer of Hard Rock in A.C. gets casino-license extension

The proposed site of the boutique Hard Rock Hotel and Casino (center) is along the southern end of the Boardwalk and next to the Atlantic Club. DAVID M WARREN / Staff Photographer
The proposed site of the boutique Hard Rock Hotel and Casino (center) is along the southern end of the Boardwalk and next to the Atlantic Club. DAVID M WARREN / Staff Photographer
Posted: March 14, 2012

ATLANTIC CITY - A.C. Gateway L.L.C., which has proposed a "boutique" Hard Rock Hotel and Casino that would become the resort's first under a new state law, Wednesday asked the New Jersey Casino Control Commission for a six-month extension on completing its license application.

The commission voted, 3-0, to grant the extension, with chair Linda Kassekert saying A.C. Gateway had "provided good cause" for it. Had the extension been denied, A.C. Gateway would have had to submit its application and a $1 million bond by Thursday to meet the commission's deadline.

In its petition to the three-member panel, A.C. Gateway said it needed the extra time to obtain the necessary state environmental permits to build along the coast, known as Coastal Area Facilities Review Act (CAFRA) approvals.

The $465 million Hard Rock is proposed for the southern end of the Boardwalk, next to the former Atlantic City Hilton (now called the Atlantic Club) and bordered by Ventnor, Albany, and Hartford Avenues. It would be built on land Shore developer Curtis Bashaw and former gaming executive Wally Barr had staked out for a $1 billion gambling palace before the economy and Atlantic City's gaming revenue soured.

This project is the first test of the new law, signed by Gov. Christie in January 2011, allowing boutique casino hotels with fewer than 500 rooms each to be built in Atlantic City.

In an application for CAFRA approvals filed in June with the state Department of Environmental Protection, A.C. Gateway said the Hard Rock project would be built in two phases. The casino commission had set July 15 of this year for the start of construction of the first phase and July 30, 2014, as its completion date. After the hearing, architect Tom Sykes, of SOSH Architects in Atlantic City, was reluctant to provide new start and completion dates now that the project has received the six-month extension.

Initially, the project would include a 54,800-square-foot gaming hall with a 208-room hotel, a large showroom, restaurants, a Hard Rock museum, and a 2,400-space garage. Phase II would eventually add 27,500 square feet of gaming space, 642 rooms, other amenities, and 600 parking spaces.

After both phases are built, the project will include a Hard Rock Cafe, a 7,185-square-foot spa, a fitness and recreation area with an indoor pool, and an outdoor pool terrace.

State DEP spokesman Larry Hajna said that as of Wednesday, A.C. Gateway had not responded to deficiencies in its CAFRA application that the agency identified in October.

"From our standpoint, the permit-review clock won't start ticking until we have all of the information from them," Hajna said.

Architect Sykes acknowledged there were issues brought forth by the DEP.

"The ball is in our court," he testified Wednesday. "We're moving ahead with trying to get the information that's been requested to get our CAFRA approvals, and from there we will apply with the other agencies."

Those agencies include the Casino Reinvestment Development Authority, which under the newly created tourism district here has the authority to rule on land use and zoning issues, and the Federal Aviation Administration, which must rule on Hard Rock's height and impact, if any, on flight patterns.

A.C. Gateway will own the casino; Hard Rock International, based in Orlando, Fla., will manage it.

The boutique-casino law is a key part of Christie's recovery plan for the ailing resort. The Republican governor last year also created the state-run tourism and entertainment district and signed off on bills to ease casino regulations to entice developers to return.

State Sen. James Whelan (D., Atlantic), a former Atlantic City mayor who sponsored the boutique-casino bill, said, "The reality of the world today is that the Atlantic City market is not as strong as we'd like, and the financial market continues to struggle." Although it's still a lot less than Revel, the $2.4 billion casino set to open in May, it's still $465 million, he said.

"Put those things together, and it will take a little more time," he said. "Some of it is on the DEP side, but if the market was roaring and people were throwing money around, they'd be pushing the DEP to get it done."

Added Whelan: "The bad news is that it's not now; it will be extended. The good news is ... they are continuing to proceed. They are not pulling the plug."

Some have described the proposed Hard Rock and Revel, which sits next to Showboat, as the "two bookends of the Boardwalk." They represent the first new casinos here in nearly a decade. The Borgata, which debuted in summer 2003, was the last to open.

Commission spokesman Dan Heneghan said that although the new law allows for two boutique-casino licenses, only A.C. Gateway has so far applied.

It purchased the land, about 10 acres, in late 2007 for $80 million to build what was then billed as a $1 billion-plus mega-casino tentatively called the Gateway Project.

In summer 2008, partners Bashaw and Barr decided to join Hard Rock in pursuing a scaled-down casino at the Albany Avenue site. Nearly two years later, Hard Rock and New York-based Och-Ziff Real Estate - the managing partner of A.C. Gateway, which owns the property and includes Bashaw as a partner - announced they would "explore" developing a Hard Rock casino contingent on passage of the legislation permitting boutique casino hotels.

In addition to allowing a casino hotel with as few as 200 rooms, the new law also gives developers the option of opening a "staged" casino of not more than 30,000 square feet, with the requirement that it be expanded to 500 rooms within five years of licensing.

Contact Suzette Parmley ?at 215-854-2594 or?sparmley@phillynews.com.

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