There may be some good news on the horizon for Stockton University in Atlantic City.
Legislation that would remove land covenants from publicly owned property in the Atlantic City Tourism District was announced Monday by Democrats State Sen. James Whelan and Assemblyman Vincent Mazzeo.
Last August the former Showboat Hotel and Casino was purchased by Stockton University from Caesars Entertainment to be used as a satellite city campus that would expand the campus to the Tourism District.
In an attempt to reduce competition, the Showboat was closed last year even though it was still turning a profit within the Atlantic City casino market. It was later sold to the university for $18 million.
However, a 1988 land covenant involving Caesars mandates that the property can only be used as a first class casino and hotel, which conflicts with the deed restriction placed by Caesars when Stockton bought the property that says the property can be used for anything except a casino.
The university did not get the 1988 covenant resolved before buying the Showboat, and Taj Mahal owner Trump Entertainment Resorts refused to waive it, fearing that they would be the subject of lawsuits and fines due to underage college students sneaking in to gamble and drink.
The two vying covenants make the property worthless because it cannot be sold, meanwhile Stockton is saddled with a hefty $400,000 a month maintaining the site while it sits dormant. Stockton would be able to sell the property if the proposed legislation nullifies its legal status and clears conflicts over the land.
Glenn Straub, a Florida developer and new owner of the Revel casino, was interested in purchasing the property even considering the current issues, and conditionally agreed to purchase the Showboat giving the university time to attempt to solve its legal issues.
The deal would have been finalized this month. However, one day before the $26 million deal was due to go through, Straub sued Stockton alleging the school had not done enough to resolve its legal woes.
Stockton’s goal is still to sell the Showboat, and a judge ruled last week that the school can try to find another buyer after the deal with Straub wasn’t completed.
Although the legislation will be considered Thursday by the Senate’s State Government, Wagering, Tourism and Historic Preservation Committees, even if the bill is introduced by Senator Whelan this week, Assemblyman Mazzeo will not be able to until the Fall.