The New Jersey State Senate has passed a bill that would prohibit deed restrictions on publically owned buildings in Atlantic City’s casino zone.
The bill—if f passed by the state Assembly and signed by Governor Chris Christie—would remove two contradictory restrictions on the former Showboat casino which has blocked the site being redeveloped.
However, Caesars Entertainment, which formerly owned the Showboat and applied one of its restrictions when it sold the property, has opposed the bill saying it in unconstitutional and will simply lead to lawsuits.
The Senate passed the bill by a 32-3 vote. It would prohibit deed restrictions on any publicly owned buildings located within the city’s tourism district, including the casinos and beachfront.
The Showboat case spurred the bill after Caesars sold the property to Stockton University with a deed restriction that said the property could not be used as a casino. After the purchase, a covenant from the 1980s was also found to be on the property that the site could only be used as a casino.
That scuttled the school’s plan to use the site as a city campus and also at least one attempt by the school to sell the property. The school currently plans to sell the property to another developer.
The purchase has been an expensive mistake for the school. Officials said they had bought the property with assurances that the competing restrictions could be worked out, but that never happened.
“We’re looking at the public interest here,” said the bill’s sponsor, Senator James Whelan, a former Atlantic City mayor according to the Associated Press. “Stockton made some bad decisions here, but they are a public institution, and the public shouldn’t suffer just because someone there made a bad decision.”
Caesars opposes the bill, saying it is unconstitutional because it takes property without compensation, interferes with private contract rights, and would create many unintended consequences, among them encouraging “bogus straw transactions” to change owners and relieve them from deed restrictions, the AP reported.
The bill now goes to the state Assembly.
