Atlantic City's BIG Gamble Hopes lie with Rouse to battle blight


Atlantic City, N.J.--Eileen the Funnel Cake Lady remembers ++ when people wore ties just to walk the Boardwalk. But that was a long time ago, she says, before the classy hotels closed, before the 1964 Democratic convention exposed the city's decline to the world, and before casino gambling.

"The Boardwalk was always a very fancy thing," said the middle-aged vendor, who wouldn't give her last name. "Atlantic City has become a slum. It's been 15 years since the casinos came and they should have done things for the city. They didn't. Businesses left."

So it is where glitz meets grunge by the sea. Eileen's funnel cake stand sits on the Boardwalk in front of Donald Trump's $850 million Taj Mahal casino, yet is only a block from a blighted landscape of bus parking lots and decrepit brick buildings.

The grunge extends throughout this sliver of a city, no wider than the distance from Baltimore's City Hall to Camden Yards. The train station is only four blocks from the Boardwalk, but the best-looking developments in between are gas stations. People take the bus.

This, New Jersey officials have decided, is a job for the Rouse Co. of Columbia. Riding its success in stemming urban rot with projects such as Harborplace, Rouse recently was chosen as master developer for a $520 million project in the corridor between the train station and the Boardwalk.

The goal: to help make Atlantic City more than a casino town, while saving the stagnating gambling palaces. By tinkering with its festival marketplace formula, Rouse plans to give the 30.7 million annual visitors reasons to stay in town longer than the current six-hour average, and to attract family and business visitors who shun Atlantic City now.

New Jersey officials expect Rouse to team up with a major entertainment company -- they drop names like Disney, Sony and Time Warner -- to blend the retail ambience of Harborplace with cutting-edge, virtual-reality entertainment that will remind visitors of Universal Studios or flight simulators.

A hotel next to the Rouse site will serve Atlantic City's new convention center, a 600,000-square-foot colossus -- five times bigger than Baltimore's -- due to open in 1996.

And the whole thing will sit beside a lagoon planned by Baltimore architecture firm RTKL Associates Inc. Visitors could come from the casinos on a new "cross-town boardwalk" built today's Arkansas Avenue.

The development -- worth nearly $2 billion combined with the new train station -- can change Atlantic City's image, says Nicholas R. Amato, executive director of New Jersey's Casino Reinvestment Development Authority. That's what he hopes anyway. And much of his hope is riding on Rouse.


"Rouse is the American Eagle, Norman Rockwell," he said.

Hopes for Ducktown

The question is whether even $2 billion can make this town of 38,000 toddle again. "We all grew up in the neighborhood we want to see again," said Frank Formica. The 41-year-old baker is talking about Ducktown, the old Italian neighborhood that lies a few blocks from the casinos and the Rouse site.

His Ducktown is a neighborhood of small homes and small businesses -- "the last neighborhood of Mom-and-Pop businesses in Atlantic City," he said. Businesses such as Formica's Bakery, or the White House sub shop, whose sign describes it as "world-famous."

Ducktown stayed relatively quiet even as city streets grew tougher -- in part, Mr. Formica points out sheepishly, because Mafia don Nicky Scarfo lived there.

"The area they're proposing to do the entertainment neighborhood is basically devoid of any development," said Mr. Formica, head of the Ducktown Revitalization Association. "But not long ago, Atlantic Avenue was a rival of New York City. Everything has to do with your interpretation of whether the body is still warm."

Atlantic City doesn't want to hear any sermons about developing a balanced economic base. It is what it is: a beach town, and -- since Resorts International opened the first of 12 casinos in 1978 -- a gambling town.

But once, it was such a beach town. Its heyday came around the turn of the century. Its population topped out at about 75,000, and it was a place where stars went on holiday.

The shine had been fading for years when the Democrats came to town in 1964, an event locals talk about as if it were the beginning of the end.

"Complained about Atlantic City: 4 1/2 hours," New York Times columnist Russell Baker wrote in his account of how he spent convention week.

"The '64 Democratic convention told the story to the whole world about how bad Atlantic City was," said Pierre Hollingsworth, president of the local chapter of the National Association for the Advancement of Colored People.

Casino gambling OK'd

By 1976, New Jersey voters approved casinos, which were touted as an economic development tool. How well they have worked -- and why -- is a matter of some debate. The bottom line is that suburban Atlantic County moved ahead but Atlantic City was left behind.

Atlantic City's median household income was only half the New Jersey median by 1989. Unemployment in the city was 16.4 percent last year. Only about a quarter of casino workers live in town. Atlantic City's population fell 5.5 percent during the 1980s, while the county grew 15.6 percent.

The city lacks basic amenities of urban life -- it has no movie theaters or a supermarket, though the casino reinvestment authority has stepped in to subsidize construction of a food store.

Casino gambling, quite simply, was oversold.

"You can get jobs like that," said the authority's Dennis E. Lower, snapping his fingers. "It creates a good wage, taxes, an enormous number of secondary businesses. But it's not a panacea."

Many problems blocked the path from casino-building to urban development. New Jersey's initial plan to regulate gambling charged casinos with reinvesting in the city, Mr. Amato said, without accounting for the fact that casino executives knew little about development.

In the meantime -- before the authority was created in 1986 to focus redevelopment work -- casinos did little. And by putting restaurants and entertainment in their windowless gambling areas, they kept tourists from moving through the city and spreading money around.

Casinos say redevelopment slowed because the CRDA didn't get its act together until Mr. Amato arrived after the 1990 elections.

"The problem with Atlantic City is infrastructure, small business and economic development," said John Spina, chief operating officer of Merv Griffin's Resorts International hotel. "All the money went to housing. If you don't build a base for economic development . . . you're not going to succeed."

Perhaps most of all, fierce land speculation stopped development in its tracks.

"People from Podunk, Iowa, were buying into real estate investment trusts," said Mr. Lower. "Part of the reason nothing has happened is that [land prices] are still too high. Where else could you go in the Northeast where property looks like this and is going for $10 to $100 a square foot?"

When land costs that much, nothing built on it is going to make money in Atlantic City. Except, perhaps, a casino. And lately, they haven't been booming either.

Casino revenues have grown at only 4 percent a year since 1988 and, said Mr. Spina, less than 2 percent this year -- not enough to cover rising costs. Meanwhile, the city's visitor count has been falling since 1988.

The stagnation could worsen as competition builds -- casino gambling exists in some form in more than a dozen states, compared to only Nevada and New Jersey a decade ago.

Casino taxes may help

Even so, the casinos throw off tax money that is being used to subsidize projects like Rouse's in the name of redevelopment. The Corridor Project includes about $220 million from the authority. The other projects are also to be heavily subsidized.

But the lesson of the overselling of the casinos has been learned. No one expects the Rouse project alone to transform Atlantic City.

Mr. Hollingsworth hopes it will provide a chance for local entrepreneurs, including minority entrepreneurs, to build businesses. Mr. Formica hopes it will help Ducktown business owners push through a Little Italy-style redevelopment plan. And Rouse Executive Vice President Douglas A. McGregor hopes it will change some attitudes.

"Perceptions change based on results," Mr. McGregor said. He's not worried that the neighborhood will doom the deal: no Boston bank would finance Rouse's breakthrough Faneuil Hall market, he said, because of its neighborhood. "You don't find an urban redevelopment zone on 5th Avenue.

"This is not massive, sweeping," he added. "This a

block-by-block effort."

That's fine with Atlantic City. People there don't trust siren songs anyway.

"After the hype for casino gambling, you can't tell people in Atlantic City there's pie in the sky," Mr. Hollingsworth said. "It's not pie in the sky when you die. It's something sound on the ground while you're still around."

At the same time, Mr. Amato said, the project had better work. "There ain't no Plan B."


Features: Entertainment, stores, crosstown boardwalk and non-casino hotel with 600-1,000 rooms. Hotel is a joint venture of doubletree and caesars.

Cost: $520 million

Size: Four square blocks

* Estimated completion: 1996

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