New Jersey’s Stockton University President Herman Saatkamp has stepped down while under fire for the school’s attempt to buy the former Showboat casino in Atlantic City and turn it into an “island campus” for the school—a move that is suspended in legal limbo due to an objection by a neighboring casino.
That purchase became even more controversial as it was disclosed late last week that the school made the initial $18 million purchase of the casino without getting a review of the sale by the New Jersey State Comptroller’s Office. The comptroller’s office is required to review purchases over $10 million by any public entity.
The comptroller does not make policy decisions on the purchases or sales, but reviews the documents to make sure they comply with applicable laws, rules and regulations.
Meanwhile the university’s Executive Vice President and Provost Harvey Kesselman began serving as acting president and almost immediately had to appear before the state Budget Committee in place of Saatkamp to explain the sale.
He told the committee the school will work hard to resolve the Showboat situation. Kesselman said the university is still interested in an Atlantic City campus, but called the Showboat deal “a mistake.”
“This certainly hurts us,” said Kesselman. “Our goal is to get out from under this as quickly as possible. This was a Stockton mistake. We will own it and we will correct it.”
Kesselman, however, did say that without the legal problems, the Showboat site would have worked well as a city campus, but now feels the school’s best strategy may be to sell the property.
State officials, however, are clearly upset about how the sale was conducted.
“They broke the law,” said State Senator Paul Sarlo, D-Wood-Ridge, and chair of the committee, referring to the lack of a comptroller’s review.
Sarlo has asked the state Office of Legislative Services to research what penalties the school could face over the violation. Meanwhile, Kesselman said Stockton is losing more than $400,000 a month during the legal battle over the sale.
“We need a plan quickly. We need to stop the bleeding,” Sarlo said at the hearing. “We do know that public money has been spent that wasn’t in best interests of students at Stockton University. We still have a long way to go to get to the bottom of this.”
School to Create Task Forces
The university’s Board of Trustees has also announced that three task forces will be formed at the school. One will focus on the school’s Atlantic City initiatives, including the Showboat sale; one will explore shared governance at the school and the third will search for an interim president. The task forces will include representation from the trustees, administration, faculty and staff.
The president search task force is needed as Kesselman is scheduled to leave the school July 1 to become president of the University of South Maine.
Still, Kesselman quickly issued memos to faculty and staff announcing the goals of the task forces, which include: “Developing proposals regarding fiscally responsible academic opportunities in Atlantic City,” according to the Press of Atlantic City.
Kesselman told the Press that the task forces will address the issues surrounding the Showboat sale. He said while he cannot discuss details, everyone is working together “to bring the Island Campus to an appropriate resolution that focuses on ensuring that students are not in any way harmed.”
“There are many, many, many individuals doing what they can to bring this to a resolution that is fair to all,” he told the paper.
Saatkamp had overseen Stockton’s $18 million purchase of the closed Showboat casino with plans to turn the property into an Atlantic City campus for the school—something the university has long been trying to establish.
However, that plan was derailed when the neighboring Trump Taj Mahal casino invoked a legal covenant with the casino’s former owner—Caesars Entertainment—that dated to 1988 and held that the property always be used as a “first class” casino. Saatkamp maintains that the sale agreement with Caesars said that the issue between Caesars and Trump had been settled.
But Trump Entertainment said it had not been settled at all and objected to having a college campus adjacent to its casino saying underage students would try to gamble and drink at their property.
The university appeared ready to fight the covenant, but then suddenly announced it had sold the Showboat to Florida-developer Glenn Straub—who has just purchased the closed Revel casino in the city—for $26 million.
Under that purchase, Straub was to lease back part of the Showboat to the school, but that again violates the previous covenant between Caesars and Trump Entertainment. The deal with Straub has not been finalized—Stockton does not have clear title to the building—and also would have to be reviewed by the state comptroller’s office, which it has not been according to state officials.
Saatkamp Steps Down
The whole situation has caused an uproar in the university community—including protests over how capital expenditures are governed at the school—and seems to have ultimately cost Saatkamp his job.
A recent vote by Stockton’s faculty showed that more than 80 percent supported some level of condemnation against Saatkamp, and nearly one-third approved of a resolution calling for his resignation, according to the Press.
The faculty has also asked for two representatives on the University’s board of trustees.
Saatkamp’s handling of the deal has also brought severe criticism from local politicians.
“Saatkamp signed the paper and accepted indemnification from a bankrupt company. Who does that?” asked Democratic State Senator James Whelan, a former mayor of Atlantic City, at the budget committee hearing. “President Saatkamp signed the agreement of sale at the closing without clear title. Why he did that we’ll have to ask him.”
Whelan was referring to Caesars Entertainment’s recent bankruptcy filing, which was imminent at the time of the Showboat sale.
Meanwhile, Saatkamp, 72, has said he resigned for family and health reasons and stepped down much earlier than expected. Saatkamp said he had planned to stay on at least through the summer to give the university time to plan for an interim president.
“It has become increasingly evident recently that I need to deal with these health issues more immediately,” he said. “It saddens me to have to leave so abruptly.”
Saatkamp then did not appear before the budget committee and Kesselman did in his place. Several members of the committee said they would still like Saatkamp to appear if his health allows.
Atlantic City Intervenes
In a related matter, the Atlantic City Council gave Trump Entertainment Resorts an ultimatum late last week to work towards a solution over the covenant issue at Showboat.
Council has delayed voting on a redevelopment plan for the area that would name Stockton as the developer of Showboat as the issue has been hashed out. The redevelopment plan would also prohibit a casino at the site.
But council said that after listening to the same arguments over and over, they want Trump Entertainment to work out a deal to allow Stockton to develop the site now.
Council gave Trump Entertainment 24 hours to schedule a meeting and begin working with the school. If not, council expects to approve the redevelopment plan at its next meeting May 6.
Trump attorneys, however, warned that council may be setting itself up for its own costly legal battle by passing the redevelopment proposal and continued to push for another use for the Showboat and a new location for the school’s campus.
