Formica Says Meetings Are Coming in Push to Save Sheraton as Full Convention Hotel

CRDA board member says there is now “some movement” toward bringing Atlantic County, the state, Atlantic City and CRDA together as the hotel's owner warns the existing 502-room model isn't financially sustainable

ATLANTIC CITY, N.J. — An effort to find an alternative future for the Sheraton Atlantic City Convention Center Hotel may be gaining momentum, with Casino Reinvestment Development Authority board member Frank Formica saying meetings are being arranged to explore a plan that could preserve the property as a full convention hotel.

Formica, speaking Tuesday morning on The Don Williams Show on News Talk 1400 and 92.3 WOND, said he has been pushing for Atlantic County, Atlantic City, CRDA and state officials to work together on an alternative to the current proposal that would convert approximately half of the 502-room hotel into age-restricted housing.

And after weeks of warnings about the hotel's future, Formica said he is finally seeing progress.

“Yes. Yes. There is some movement now,” Formica said. “There are some meetings that are going to be set up. And I believe that we're going to move in that direction.”

The development comes just days after Atlantic County Executive Dennis Levinson publicly said the county was willing to explore whether it could play a role in preserving the hotel — but complained that nobody involved in the process had approached the county.

Now, Formica says he wants to bring those parties together.

“I have reached out to people that have financed in New Brunswick, people that have financed here,” Formica said. “I reached out to them to ask them if they would be helpful in getting a multi-government interaction, an intergovernment interaction between the state, the CRDA, the city of Atlantic City, and the county to come up with a plan for success to keep that hotel at 500 rooms.”

“And I will continue to persist at that.”

Tuesday morning, Levinson said he still had not been contacted by CRDA or the state since publicly offering Friday to discuss a possible county role.

Formica: Hotel Is ‘Vital’ to Convention Center

The debate over the Sheraton has intensified because of the hotel's unusual relationship with the Atlantic City Convention Center.

The Sheraton has 502 rooms and is directly connected to the Convention Center. Tourism officials and some local leaders argue that its location and room inventory make it an essential part of Atlantic City's ability to compete for major conventions.

Formica went further Tuesday.

“The hotel, as you asked in a question, is not only needed, it is vital to the convention center's infrastructure,” Formica told Williams.

“These aren't my opinions,” he added. “These are actually official reports that have been given by Gary Musich and the Visit AC team.”

Formica said Atlantic City has already lost millions of dollars in potential convention business and could lose substantially more if uncertainty surrounding the hotel continues.

“If that convention center does not have a 500-room hotel, you can expect an economic impact that will affect most people in this county,” Formica said.

He said the impact wouldn't be limited to the Sheraton itself.

“Most of the people that work in hotels, in restaurants, in casinos and other support-service businesses may not realize it, but that convention center has been the lifeblood of Atlantic City since 1929,” Formica said.

“And although casinos have had certainly the most significant impact economically on this area, as they wane, that convention business is still the lifeblood of a service-industry population like we have.”

Why 500 Rooms Matter, According to Formica

Formica said large convention organizers frequently want a substantial block of hotel rooms immediately adjacent to a convention center for exhibitors, organizers and other personnel.

According to Formica, 500 rooms can be a threshold when Atlantic City bids for some major conventions.

“When they bid for larger conventions, 500 rooms is the threshold for Atlantic City Convention Center to be qualified to bid for that convention,” Formica said.

He cited events such as the Pool & Spa Show and Atlantic City Boat Show as examples of the type of business for which nearby rooms are important.

“The organizers and the constabulary of those organizations want that 500 rooms,” Formica said. “So when they got to set up 220 exhibits, the exhibitors, the people that come in, they're right there at that location.”

Visit Atlantic City's current inventory lists the Sheraton with 502 rooms, including 425 convention-committable rooms, and identifies it as connected to the Convention Center.

Owner Says 500-Room Model Doesn't Work

The hotel's ownership sees the economics differently.

LINY Investor LLC is pursuing an approximately $100 million redevelopment that would renovate the aging property while converting part of it into 130 age-restricted apartments and retaining 252 hotel rooms.

Developer Tom Scannapieco has argued that the 502-room convention hotel has struggled financially for years and that there simply isn't enough Convention Center business to make the existing model profitable.

Scannapieco recently said Visit Atlantic City is doing an increasingly effective job attracting events, but maintained that the Convention Center does not generate the type or volume of business necessary to support a profitable 500-room headquarters hotel.

The proposed redevelopment depends on approximately $79 million in state Aspire tax credits, according to the developer.

Without a solution, the hotel's future remains uncertain, with prospective employee layoffs looming later this year.

That creates the fundamental disagreement now confronting local officials: whether the Sheraton can realistically survive as a full convention hotel — and, if it can't survive on its own, whether a public-private financing arrangement can make that model work.

Formica Clarifies CRDA's Previous Vote

Formica also used Tuesday's interview to address what he considers a significant misconception surrounding the proposed senior-housing conversion.

He said CRDA did not make a policy decision endorsing the reduction of the Sheraton from approximately 500 hotel rooms to roughly half that number.

“It was mistakenly reported that the CRDA gave the approval to turn this into half subsidized housing,” Formica said. “That is not accurate.”

According to Formica, Atlantic City approved the redevelopment plan allowing the proposed housing use.

When the application subsequently came before CRDA, Formica said board members were advised that their role in the land-use proceeding was to determine whether the application complied with applicable legal and technical requirements — not to decide whether converting hotel rooms into residences was good convention policy.

“We were limited to voting on whether the application met the letter of the law, according to the land use act,” Formica said.

“That's all we voted on.”

Formica then made his position explicit.

“Whatever happens with this hotel, I want to make it clear that the board of the CRDA never approved cutting the hotel in half for senior housing.”

An Earlier Attempt to Find an Alternative

Formica said CRDA leadership recognized the potential convention-business problem months ago.

“Before it got to this point, in the beginning of the summer, the chairman and the executive director appealed to the governor's representatives that sit on our board to give us a chance to come up with an alternative to the senior housing,” Formica said.

According to Formica, the effort did not receive the necessary authorization or interest at that time.

“And they were not given the authority or interest at this point,” he said, “which is why I decided that I would bring this to the light of day.”

Formica stressed that he isn't claiming to have a completed rescue package.

“I'm no savior. I'm no fix-everything guy,” he said. “But I do like to get people informed of the facts so that people that have the authority and position to make it better are aware of it.”

Levinson Opens the County Door

One potentially important piece fell into place when Levinson recently said Atlantic County would participate in discussions.

Levinson said no one from the state, CRDA or convention authority had approached him about county involvement, despite the county's previous role in complicated economic-development financing.

“Give us a shot,” Levinson said. “Sit down with us and let's see what we can work out.”

The county executive stopped well short of promising county money.

He said Atlantic County has borrowing capacity but would require guarantees, safeguards and cooperation from the state before putting taxpayer funds at risk.

“I don't know that we can solve the problem there,” Levinson said, “but we can sure have a dialogue.”

Both Levinson and Formica have pointed to Atlantic County's previous involvement in financing projects involving Boscov's and Stockton University as examples of the county using its financing capabilities in unconventional economic-development situations.

Formica believes that experience could be useful now.

“There are people smart who have done a lot of things to finance cleverly — public, private, intergovernmental,” Formica said.

‘If That Convention Center Hotel Closes’

No rescue agreement has been announced.

There is no publicly disclosed financing package, no commitment of county funds and no indication yet of precisely what combination of public and private money would be necessary to preserve the Sheraton as a full convention hotel.

The meetings Formica referenced could represent the beginning of that process rather than its conclusion.

But his comments Tuesday represent a change from last week, when he was publicly calling for government agencies to begin working together and Levinson was saying nobody had asked Atlantic County to participate.

Formica now says conversations are moving in that direction.

For him, the stakes are clear.

“If that convention center hotel closes,” Formica said, “that would be devastation.”

His goal, he said, remains finding another financial structure that allows the property to survive without sacrificing the room inventory he believes Atlantic City's convention industry needs.

“I have reached out,” Formica said, “to come up with a plan for success to keep that hotel at 500 rooms.”

And this time, he says, meetings are coming.

Frank Formica spoke Tuesday on The Don Williams Show on News Talk 1400 and 92.3 WOND. The Don Williams Show airs Monday through Friday from 6 to 10 a.m.