Bloomberg News

Taxpayer Storm Shield Protects Casinos as Poor Take on Water

November 05, 2012

Taxpayer Storm Shield Protects Casinos as Poor Take on Water

Sand blows on the beach ahead of Hurricane Sandy on October 28, 2012 in Atlantic City, New Jersey. Photographer: Mario Tama/Getty Images

As superstorm Sandy flooded Atlantic City, New Jersey, one area was shielded from damage by dunes constructed at taxpayer expense: casinos and other beachfront businesses and homes.

Nearby, another set of residents didn’t get government-paid storm defense. In one of the city’s poorest neighborhoods, water from Absecon Inlet filled the streets, knocking down doors, sloshing into bedrooms, destroying furniture and leaving residents wondering if they would drown.

  • Special Report: Hurricane Sandy

What unfolded in this East Coast resort city of 40,000, the second-largest U.S. gambling market behind Las Vegas, shows how government decisions helped businesses escape almost unscathed and open just days after the storm, while people living paycheck to paycheck suffered.

“The government has protected their cash cow, the casinos, at the expense of the people,” said Edsel Coates, 57, whose home near the inlet flooded and roof caved in. “The casinos are receiving preferential treatment and there’s neglect of the average Atlantic City resident.”

Decisions about which projects are completed -- and where - - get made based on availability of funding, public support and the type of erosion that occurred in the past, said Larry Hajna, a spokesman for the state environmental department.

‘Endless Pool’

“We don’t have an endless pool of money to just do the entire coast at once,” he said.

Atlantic City, whose streets are memorialized in the board game Monopoly, is home to 12 casinos that help attract 30 million visitors annually, according to the New Jersey Division of Travel and Tourism. Gambling revenue in the city reached $3.3 billion in 2011, down 37 percent from a peak of $5.2 billion in 2006, the same year Pennsylvania’s first slots parlor opened, according to state data.

Atlantic City’s casinos have been central to Republican Governor Chris Christie’s economic revival strategy since he took office in January 2010. Christie’s plan includes a $20 million “Do AC” marketing campaign, tax breaks for developers and state oversight of policing and cleanup.

New Jersey’s oceanfront communities were among the hardest hit by the Oct. 29 storm, which mangled boardwalks and leveled vacation homes along the state’s 127-mile (204-kilometer) coastline.

City Poverty

At least 24 people died in New Jersey, according to the state police. In Atlantic City, part of a barrier island, one person perished in the storm, from a heart attack, police said.

About three quarters of Atlantic City suffered flooding, said Dennis Brooks, the fire chief. About 25 percent of the city’s residents live in poverty, according to the U.S. Census, compared with about 9.1 percent statewide.

Areas with minimal damage are along a 5.1-mile stretch of beach where contractors this year finished an $18 million replenishment program with funding from federal, state and local governments.

The state said in a March news release that the project would protect “vital tourist communities from the effects of extreme weather.” It included the reconstruction of beaches and dunes.

Along the protected area, the Trump Taj Mahal, Showboat and other casinos survived the largest tropical system in the Atlantic in part because of the program, which also included $22 million worth of additional sand in 2004, said Stephen Rochette, spokesman for the U.S. Army Corps of Engineers, which oversaw the work.

Inlet Neighborhood

One of the neighborhoods hardest hit is near the inlet, which leads from the Atlantic, along the edge of the city, said Brooks.

Some of the city’s poorest residents, many of whom are black or Hispanic, live in the neighborhood near the inlet, said Linda Steele, president of the Atlantic City chapter of the National Association for the Advancement of Colored People. The neighborhood also includes vacant lots and more expensive housing.

To protect that area from storm damage, the Corps called in 1996 for building about 1,600 feet of bulkhead in two sections along the inlet, which would tie into existing ones.

The new bulkhead wasn’t constructed as part of the beach project because of a lack of money and because the state didn’t have real estate easements from landowners, said Rochette.

Seeking Easements

Hajna, the spokesman for the state environment department, said the Army Corps specified only this summer what easements were required. The state secured a pledge for easements from Atlantic City and was working on easements with three private landowners when Sandy struck, he said.

“The storm hit before that project could be built,” said Hanja, who declined to respond directly to the criticism that the government didn’t do enough to help low-income residents. “I’m going to leave it at that.”

The wall will be built to a height that probably would have withstood Sandy’s surge, said William England, Atlantic City’s engineer, in an interview.

“It would have had a very positive effect in mitigating any damage,” England said. “Would it have been the cure-all and prevented all the damage? I don’t think so.”

Funding was approved this year for a 1,100-foot section of bulkhead, said Rochette. It will rise about 16 feet above sea level and include a new walkway on top of it, England said. There currently is no protection from the tide in most of that stretch, England said.

Bulkhead Plans

The new wall and rebuilding of the walkway is expected to cost $10 million to $25 million, according to a description of the project posted on a U.S. government website.

Atlantic City Mayor Lorenzo Langford declined to discuss why the bulkhead wasn’t built sooner. Instead, he described how a project similar to the one along the beach couldn’t have been built along the inlet, which has little beach.

“There was nothing that you could have done,” Langford said. “You can’t go on the ocean, in the water, and build the dunes in the water. You find me $400 million and I’ll do that.”

Officials said a bulkhead that includes steel, concrete and stone will be constructed.

“Having a seawall there versus having nothing certainly would have been more helpful,” said Thomas Meehan, director of project implementation and management for the Atlantic City- based Casino Reinvestment Development Authority, a state- authorized economic development group.

Overlooking Needs

The delay on the seawall shows government officials overlooking the needs of the poor while giving priority to gambling resorts, Steele said.

“The neglect is coming back to bite us,” Steele said. “The first people to feel the impact are the little guys at the bottom, because the fat cats can take their stock options and go to the next town.”

The casinos didn’t ask for the beach restoration project, said Tony Rodio, president of the Casino Association of New Jersey. The Atlantic City-based group advocates for casinos. He also said damage to homes near the inlet would have been more severe without the beach project.

Construction of a bulkhead will come too late for those who suffered in Sandy.

Houses, businesses, cars and furniture were destroyed after water overflowed from the inlet.

Wet Mattresses

In the days after Sandy hit, those who live blocks from the inlet pulled wet mattresses and carpets out of their homes and apartments, and stacked broken lamps, sofas and dressers on the streets.

Along a strip of three-story red brick row houses, flood waters destroyed doors and damaged interiors. Electrical fixtures dangled from the ceiling.

More expensive housing also was damaged, including duplexes with vinyl siding, with first-floor garage doors that buckled from rushing water. The flooding smashed cars into each other.

Among the businesses damaged was All Star Liquors, next to the inlet. A foot of water and muck filled the store. Bottles crashed to the floor. The store suffered tens of thousands of dollars in losses, said Vishee Mandahar, 26, whose family owns the business.

He said the government didn’t want to “waste their time” building protection for a low-income neighborhood.

‘Shady’ Approach

“That’s what it all comes down to,” Mandahar said. “That’s what the government does. I don’t know what the right word would be. Shady?”

Residents said they feared for their lives when water rushed through the neighborhood. Yolanda French was in her home with her two daughters, 21-year-old Porsha and 17-year-old Sydney.

“I’ve never in my life seen water like that,” she said. “We were so scared. We thought we were going to drown.”

The beach projects started in 2004 with 7.1 million cubic yards of sand poured in front of Atlantic City and neighboring Ventnor, according to Army Corps documents. Engineers returned this summer to plant dune and beach grasses and dump another 1.5 million cubic yards of sand, state documents show.

The Corps had recommended that the beach project extend into Margate and Longport, both south of Atlantic City. Those towns chose not to participate, Rochette said.

Damage was more severe to neighborhoods along the beaches in those areas, with siding ripped off houses and broken windows.

In Atlantic City today, music played and slot machines whirred.

To contact the reporters on this story: Michael C. Bender in Tallahassee at mbender10@bloomberg.net; Chris Strohm in Atlantic City, New Jersey at cstrohm1@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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