A New Jersey redevelopment agency has given preliminary approval to a $5.6 million payment to billionaire investor Carl Icahn to help pay for the demolition of part of Atlantic City's former Trump Plaza casino.
The Casino Reinvestment Development Authority on Tuesday determined that a request by Icahn to use funds from state-mandated casino investment alternative taxes toward the $13.2 million demolition cost would qualify for assistance, pending a final determination.
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A lawyer for Icahn said one of two hotel towers and a bridge would be razed. Authority officials say the demolition will make way for new development at the heart of the resort city, although no specific proposals have been offered.
"You're taking down a building seen as a potential impediment for future development," said attorney Nick Talvacchia.
At issue is the so-called investment alternative tax, a 1.25 percent levy that all Atlantic City casinos must pay in addition to their 8 percent state tax on gambling revenue. The funds were intended to fund redevelopment projects in Atlantic City, but for decades they were used on projects throughout the state.
A change in state law last year mandated that these funds go to Atlantic City to help pay down its massive debt. But funds paid by the casinos before the change are still eligible to be used for projects deemed beneficial to the city.
Trump Plaza, opened by now-President Donald Trump in 1984 and shut down in 2014, sits on prime Boardwalk land at the end of the Atlantic City Expressway, the city's main entranceway. As a casino owner, Trump marketed the casinos as being at "The center of it all."
Robert Mulcahy III, chairman of the state agency, said the request is worthwhile because it could help facilitate millions of dollars in new development while removing an unproductive eyesore.
"We all feel the demolition of this tower is in the best interest of Atlantic City," he said. "It's part of the gateway into the city. That land could be very valuable."
Mayor Don Guardian lost a re-election bid this month after a first term in which five casinos shut down, including Trump Plaza. A member of the agency's 17-person board, he voted against the refund to Icahn, as did Caesars Entertainment executive Kevin Ortzman.
"I agree this project needs to come down," said the mayor, who leaves office in January. "But why are they asking us for $5.6 million? You're already responsible for the project closing and the loss of jobs and the suffering the city has gone through."
Trump Plaza closed in September 2014, while its parent company, Trump Entertainment Resorts, was still owned by successors to Donald Trump. Icahn acquired the company out of bankruptcy in February 2016 and closed the Trump Taj Majal eight months later.
Icahn had no immediate comment on the decision or the mayor's comments.
The agency still has to hold a hearing to examine benefits of the request and decide on whether to ultimately grant it.
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