Energy Company Threatens to Turn Revel into $2.4B Fungus Tower
The future of the closed Revel casino, Atlantic City’s $2.4 billion boondoggle, continues to be up in the air. Not long after a judge placed the sale to Glenn Straub on hold, the power plant that continues to serve Revel says it will shut off heat, water and electricity at 5 p.m. on Thursday.
Although it’s closed, the building still needs power to prevent the elements from ravaging Revel. “If you shut down the electric utilities to the building, you’re going to get an instant build-up of heat and humidity inside the building [in hot weather], both of which are terrible for finishes, equipment, and everything else that’s inside that building,” Greg Lucado, director of construction-management programs at Philadelphia University, told the Inquirer. “You’ve got a very high humidity environment,” Drexel construction management professor Douglas Carne told the Press of Atlantic City. “That will be almost impossible to control without air handlers operating.” He noted that this would make fungus a factor.
In court filings, a judge wrote that there is no other way for Revel to get power than through ACR’s plant.
Other businesses could be harmed, too; many remain locked out of the property with their equipment inside. Earlier, several owners asked a judge to outline a process to get their equipment if power were shut off.
Revel spent around $42 million to build the power plant then, crunched for cash, handed it over to ACR Energy Partners. Building a power plant can save money in the long run, but Revel was open less than three years. Revel’s owners blamed the deal with ACR, which required a $1.5 million monthly payment, in part for its bankruptcy. But things didn’t work out for ACR, either: It was expected to pick up other nearby customers if Revel spurred a boom in the surrounding area. That didn’t happen, and Revel is ACR’s only customer.
That $1.5 million monthly payment has been a hold-up in Revel’s sale. It’s why Brookfield pulled out of the deal in December; backup bidder Glenn Straub had issues with the payments; court filings say he plans to cancel the energy deal with ACR if the sale goes through. ACR failed in its attempt to block the sale to Straub last month, which led to the new shutdown threat.
The owners of Revel say ACR’s move would violate a court order, and are asking a judge to fine ACR $10 million — plus $1 million for every day it does not supply power, heat and water to the building. “The only apparent motivation behind the ACR Parties’ brazen conduct here is a last-ditch effort to generate negotiating leverage,” Revel argued. Then again, Straub now says he may walk away if the deal isn’t completed by February 9th.
Follow @dhm on Twitter.