The board approved an Economic Redevelopment and Growth grant for Harrah’s Atlantic City, worth up to $24.1 million over 20 years, to support the $144.6 million, 243,000-square foot conference and meeting facility proposed for the city’s Marina District.
The project is awaiting approval from the Casino Reinvestment Development Authority. If approved, construction would begin in mid-2013 and be completed by late 2014. The center would create 140 permanent jobs and approximately 340 temporary construction jobs.
Timothy Lizura, EDA’s president and chief operating officer, said officials initially had some concerns about the project.
“We had a lot of conversation in the incentives committee over concern that this would cannibalize the existing convention center,” he said.
But Lizura said those concerns were allayed by two studies — one by Harrah’s, another by CRDA — that suggest the center would be additive, not competitive to the market. Lizura said the new center would be smaller in size compared to the convention center, but provide larger spaces than some of the meeting rooms available in the city’s casino hotels.
“So it’s really filling that niche,” he said. “It’s not too big, not too small.”
The developer also anticipates help from CRDA, in addition to taking out $54 million in debt to finance the project. According to an EDA memorandum, Harrah’s expects to pay an interest rate of about 15 percent on the debt, to be paid back over an eight-year period. When the interest rate estimate was noted by board member Elliot M. Kossofsky, Lizura said the high rate was likely due to lender uncertainty about the Atlantic City gaming market.
However, in calculating its award, the EDA instead assumed the debt would be secured at 13 percent and repaid over 15 years. Those figures were based on the financing secured by a different EDA project in the city.
The board also approved a Grow New Jersey award worth $26.9 million over 10 years for Deep Foods Inc. The Union Township-based firm makes Indian-food products, and is considering whether to expand at its current site or move to a facility in Pennsylvania.
The EDA said the money would retain 275 current jobs and help create 175 new jobs.
“So they are in front of us today to change the economics so that it becomes viable for them to make this investment here in Union … rather than closing up shop and relocating everything to Easton, Pennsylvania,” Lizura said.
Meanwhile, the board also moved to save some 716 jobs at United Parcel Service. The delivery firm is seeking to close a data processing and system application facility in Paramus that currently employs 929 workers. The company is looking to relocate the workers to New York or Georgia, but the EDA hopes to persuade the company to instead move the workers to Woodland Park. To accomplish that, the board today approved a $6.4 million Business Retention and Relocation Assistance Grant and a $429,000 sales and use tax exemption.
In addition to the major incentive programs, the authority also approved its first new program designed to aid Hurricane Sandy victims. The $2 million “loan to lender” program would provide loans to community development financial institutions, which in turn would make microloans to small businesses hurt by the storm.
EDA CEO Michele Brown said her agency has expertise in funding medium- and large-sized businesses, but not small businesses. She said program will enable the EDA to get money to those who need it by leveraging the local expertise of the community development institutions. She also said the low-interest loans also can be deployed more efficiently.
“These small loans will be made in quicker turnaround time than we can, and for businesses impacted by the storm, they will be required to submit less, in terms of loan documentation,” she said.
After approving of the program, the board also made its first award under the program, approving a $500,000 loan to New Jersey Community Capital, in New Brunswick, which is in the process of raising $1 million for its “Rebuild New Jersey” small-business loan program.