The Sheraton Atlantic City Hotel, which is connected to the Atlantic City Convention Center, could close later this year if its owners do not secure state funding for a planned redevelopment that would convert part of the hotel into senior apartments.
The hotel’s owners are seeking tax credits through New Jersey’s Aspire Program to help finance the approximately $100 million project. The proposal would convert 130 of the hotel’s 502 rooms into apartments while modernizing 252 additional rooms, some of which have not been renovated in about 30 years.
The Casino Reinvestment Development Authority (CRDA) approved a land-use request for the redevelopment in March, along with a 30-year PILOT agreement from Atlantic City Council, allowing the project to move forward. The plan still depends on securing financing through the state program, which is administered by the New Jersey Economic Development Authority (NJEDA).
The Aspire Program provides aid to fill in financial gaps for commercial, mixed use and residential real estate development. In Atlantic City, it supplies support for projects valued at up to $120 million, with subsidies capped at 85% of the costs.
LINY Investor LLC, an affiliate of Philadelphia-based Scannapieco Development Corporation, owns the hotel. Although the company has not been promised state funding, it remains hopeful the tax credits will be awarded in time to prevent the hotel from closing, Tom Scannapieco, a principal of LINY Investor and the president of Scannapieco Development Corporation, told Shore Local.
Marriott, which operates the Sheraton under a lease agreement with the property owner, and Scannapieco expect the hotel to close Dec. 15 without state assistance.
The possible closure comes as the hotel has already begun preparing for layoffs. NJ.com reported in July that 99 hotel employees were expected to be laid off by Oct. 1. Another 91 layoffs were announced earlier this month in a notice filed with the New Jersey Department of Labor.
“Our foremost concern is the hotel’s staff. Many have been with this property for more than 20 years, and they’ve kept this hotel highly rated through a difficult stretch,” Scannapieco said. “A closure would affect them directly, and it would affect the Convention Center’s ability to attract and service events, and the local economy around the property.”
The redevelopment proposal has drawn opposition from representatives of Atlantic City’s casino and tourism industries, who have raised concerns about reducing the number of hotel rooms available near the convention center.
Gary Musich, president of Visit Atlantic City, told NJ.com that keeping the Sheraton operating as a full-service hotel is important to the city’s convention business. The organization has argued that convention attendees, exhibitors and sponsors benefit from having a large hotel connected directly to the convention center.
The Sheraton was built in 1997 as part of Atlantic City’s broader redevelopment efforts and was designed to provide lodging for convention center visitors. An enclosed skywalk over Michigan Avenue connects the hotel to the convention center.
Under the proposed redevelopment, the property would receive more than just renovated hotel rooms.
Scannapieco said the apartments will include a new gym, golf simulator, indoor pool, hot tub and other amenities that are “top of market.”
“Senior housing feels a bit misleading — these are units designed for adults who want to be at the shore and in the mix full time, not tucked away from it,” he said. “An easy second home with real amenities attached, for people who don’t want the upkeep of a house but don’t want to feel like they’re visiting either — reflective of the way Atlantic is shifting from a place considered an event-based destination to a gateway to all the Shore has to offer.”
According to the land use application, the plan also includes the expansion of existing exterior amenities, a pedestrian canopy within the porte-cochere area and modified signage. The Tun Tavern Brewery and Restaurant will remain.
The Scannapieco Company previously said declining hotel revenue contributed to the need for renovations.
If financing is secured, the hotel should be fully renovated and open within 14 months, with the intention of keeping a minimum of 250 rooms open during construction.
