ACR Energy Partners and the Revel Casino's new owners, Polo North, came to a long-awaited agreement in a months-long lawsuit over electricity costs. The deal should open the door to Revel Casino's reopening sometime in 2016.
According to NJ.com, U.S. District Court Judge Jerome Simandle helped arrange a deal between the three main interested parties: Polo North, ACR Energy, and Bank of New York Mellon.
Casino Operators Who Want a 30-Year Lease
Glenn Straub, president of Polo North, said under terms of the new deal, the property would seek casino operators interested in signing a 30-year lease. He said nothing as grand as the old Revel Casino would open for gambling and the new operations would be more limited.
Part of the problem of the original Revel Casino was its pretensions. Its developers spent $2.4 billion to install a Las Vegas style resort in Atlantic City, a city which has a more working class mentality. While the opulence of the building was a wonder to behold, the owners were saddled with so much debt, they could not run a viable business. One architect said the Revel Building was the prettiest skyscraper on the American East Coast, but the casino was operating at a loss from day one. In 29 months, its owners filed for bankruptcy twice.
When the final deal is signed December 15, the two sides in the lawsuit will work together to pay the building's debt. Polo North agreed to pay $30 million into an escrow account to be paid to "settle power plant bondholder debt" for ACR. ACR Energy Partners agreed to pay the remaining $15 million into the same account. This money will be used to pay debts associated with operating the huge skyscraper.
Glenn Straub Buys Utility Plant
Once this is done, the utility plant will belong to Glenn Straub. A cogeneration plant located inside ACR's central utility plant is going to belong to the ACR Energy Partners. The company will disconnect and remove the equipment. The boilers are going to be operated by DCO.
Future utilities are going to be provided by Atlantic City Electric and South Jersey Gas. Glenn Straub is expected to set up accounts with both companies this week. The agreement ends months of litigation between the two parties. ACR Energy wanted to be the sole provider of electricity to the Revel Casino building. The power coop also wanted Glenn Straub to pay off the debts incurred in building the plant in the first place, because the coop teetered on foreclosure.
ACR Energy Lawsuit
Glenn Straub did not want such a one-sided bargain, so he was willing to fight the power coop in court for several months. He won a better deal that way and should be able to get cheaper electricity and other utilities, which could make the new Revel Casino a success. The previous Revel Group and other potential buyers had complained of the prohibitive energy costs of $3 million a month. In exchange for paying ACR Energy's debts, Glenn Straub collected the power plant and ends up with a sustainable arrangement.
The path ahead is not entirely clear, though. Glenn Straub still has lawsuits to settle with the tenants of the previous incarnation of Revel. As soon as Straub bought the property, lawsuits were filed to resolve the contract status, because Glenn Straub wanted to tear up existing leases. Those suits will need to be settled one way or another before the casino opens.
Frank Gilliam's Zoning Scheme
Meanwhile, Atlantic City Council president Frank Gilliam took action against Revel's interests, recently. Gilliam named a re-developer for the neighborhood surrounding the Revel complex. The ultimate result is, if Revel Casino does no re-open soon, the building could be condemned.
The decision by Frank Gilliam drew scorn from Stuart Moskovitz, the opinionated lawyer who works for Glenn Straub. Moskovitz, who was often quoted during the original bankruptcy auction battles in the fall of 2014, said to the Associated Press, "If they try to do that, they're going to destroy Atlantic City, when you have someone that has put his money up, and they're playing games."
Tenant Legal Issues Still in Dispute
Several more resolutions have to happen before Revel Casino is reopened, but it is likely to happen in the coming months. Too many people have too much to gain by the gaming complex's reopening for it to fail. If the building opened for business, it would mean hundreds, if not thousands, of jobs for Atlantic City.
