The Press of Atlantic City reports today that the City is trying to speed up the process of getting bids for the development of Bader Field, a 140 acre parcel of prime waterfront property worth an estimated $1 billion. Ordinarily, we would applaud the efforts of the city to quickly sell this parcel for development, as it will hopefully result in a major development that will bring thousands of jobs and tourists to the city as well as new infrastructure and amenities. But, as they say in life, timing is everything.
The country's current housing woes have been front page news for months. The credit crisis has banks reeling and the availability of debt and equity capital for new development is scarce, if it can be obtained at all. We have already seen Pinnacle halt development of a planned 1.5 billion casino in Atlantic City due to the credit crisis. Revel, too is having difficulty obtaining financing for its project and has asked the City for assistance in securing $56 million in debt for its $2 billion development. Just last week, Boyd Gaming - which co-owns the successful Borgata casino in Atlantic City - announced that it was suspending construction of The Echelon, a $4.8 billion casino project already under construction in Las Vegas due to the weak market. The stocks values of gaming companies have plummeted in recent months, with some falling by more than 70%, and they remain near their 52 week lows. Gaming revenue in both Atlantic City and Las Vegas has fallen compared to last year as distressed consumers cut back on discretionary spending.
In sum, there could hardly be a worse time to expedite requests for proposals for the acqusition and development of Bader Field. Under the current economic conditions, a quick sale of this prized parcel will attract little interest and those firms with the resources to bid will undoubtedly submit low ball offers which fail to recognize the long term value of this property. The result will be the loss of hundreds of millions of dollars to the city, its taxpayers, and residents.
There is no pressing reason why the City should not and cannot delay the RFP process for 6-18 months until the economy and capital markets have stabilized or recovered and that is exactly what the City should do.
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