Casinos Fail to Revive Atlantic City

IN Las Vegas, they built a city to support the casinos. But in Atlantic City, they did it the other way around: They built the casinos to support a city. Now, Atlantic City is learning a hard lesson: that a statue cannot be larger than its pedestal. ``We tried to construct this massive industry on a structural base that's too small for it - too small in its talent pool, too small in its vision,'' says state Assemblyman Alan Karcher.

For a decade now, casino gaming has drawn hordes (currently more than 30 million bettors a year) to this seaside city of 38,000. And that has been good news for a struggling resort that years ago lost its pull on beachgoers to low-cost air fares that made beaches everywhere accessible.

Repeated efforts to woo, including the long-lived Miss America Pageant, have never been able to bring in the bucks the way gambling has. But Atlantic City has increasingly drawn attention for another reason: the gaping disparity between the bustling casino-hotels and the surrounding city, which for all of the billions dropped into its slots and at its tables, resembles a lot of other tattered East Coast cities with its urban blight, shrinking local population, housing shortage, and government corruption.

While Las Vegas - with a larger population but smaller gaming revenue - is a middle-income town, 75 percent of Atlantic City's population is impoverished. Although the state's 1976 gaming law called for rebuilding the city as a ``great tourist attraction,'' visitors don't come for ambience. To venture outside the glitzy hotels is to encounter the crumbling, seedy boardwalk, or to head a few short blocks to the aging downtown or ramshackle, residential neighborhoods.

Many argue that gambling was the only option for Atlantic City, which had been on the verge of bankruptcy. So when gaming was approved, residents rejoiced. And as promised, the casinos, which brought in $2.7 billion from bettors in the last year, boosted employment. They now provide 10,000 of Atlantic City's 18,000 jobs.

Residents also got a lot of negatives - including traffic and fumes from an endless stream of gamblers' buses, and a surge in crime to the state's highest level. Other than that, says Tom Carver, president of the Casino Association of New Jersey, ``Nothing developed here - nothing. People who have been here the longest have received the least benefit, like a lot of people in the Northeast who society left behind, and tragically they're mostly black.''

Another fact of life that has remained unchanged is the town's propensity for official graft. In late July, Mayor James Usry (R) was arrested on corruption charges, along with 13 other present or former high city officials and prominent businessmen. That makes Mr. Usry the fourth of the city's last six mayors to be arrested for misconduct.

Although Usry's immediate predecessor is currently serving time for bribery, residents express particular shock about Usry, a well-respected former principal who ran for mayor on a reformist, ``clean up government'' platform.

The casinos themselves appear uninvolved in the scandal - the state of New Jersey maintains a near-fanatic vigilance against casino-related impropriety. ``There are [enforcement] people inside the casinos literally falling all over each other,'' Mr. Karcher says. ``There is no way you're going to shake down or extort from the casinos themselves. [But] what's not off-limits is the whole process of sanitary inspectors, zoning boards, and planning boards. It's the small entrepreneurs [they're] targeting.''

Even before the arrests, Usry's administration was regarded as unsophisticated and inept. In that regard, it fit the town's longtime image. ``Atlantic City is just a hick town, basically,'' says Roger Gros, managing editor of Casino Journal, a local paper covering gaming. Now there are widespread calls for the town to be run by experienced managers who can better deal with the complex issues gaming has raised.

Former Gov. Brendan Byrne, under whom gambling was approved, has said that his single biggest regret is that he didn't make Atlantic City a state enclave. New Jersey's stake in the city's affairs is considerable, and includes the 8 percent of the gross gaming dollars which the state takes for programs supporting the elderly and disabled.

The city itself depends almost solely on property taxes; casinos pay over 60 percent of the $130 million Atlantic City collects annually. Others, including Karcher, advocate incorporating Atlantic City into a single, 250,000-person countywide unit. Proponents say this would speed long-discussed improvements on the small local airport and the construction of a new convention center.

But Mr. Gros says outside politicians have expressed a reluctance to take power away from the racially polarized city, especially at a time when the black majority has finally attained political control.

Jack Keith, who runs Gardner's Basin, a park in an impoverished section of the city, is a homegrown, idealistic community leader of the sort Atlantic City desperately needs. He disdains the idea of giving up local power, and thinks comparisons of city officials with casino executives are unfair. ``At the highest levels of [the US] government are people who can't stand toe to toe with leaders of business,'' Mr. Keith says.

Instead, he blames the shortage of skilled managers on middle-class flight. ``[We're] left with a few people hanging on to this town,'' Keith says. ``A lot of our biggest critics used to live here, but they didn't want to live next door to black folks.'' Instead, they live in the surrounding, well-appointed suburbs, which have boomed thanks to gambling.

On paper, Atlantic City appears better off than it is. The richest city in terms of real estate per capita, it has more than $6 billion worth of assessed property. However, much of that land is being held by speculators who are waiting for new casinos or other development to buy them out. Consequently, inflated land prices have made it impossible to build anything but casinos or deeply subsidized housing.

In 1986, eight years after gambling arrived, the state finally conceded that the promised revitalization had not occurred, and that the housing shortage continued unabated. It created a Casino Reinvestment Development Authority (CRDA), which is coordinating a $500 million housing program funded by casino investments.

Harrah's Casino has just broken ground on 395 town houses. Noel Eisenstat, CRDA's executive director, says the project, which stresses home ownership rather than rentals, will draw middle-income residents back to the city. The casinos' limited ability to contribute may be due to their own financial problems, although these are more of their own making. Many incurred heavy debt several years ago in order to either beat back or fund takeover attempts. As a result, only five of the 12 casinos showed a profit in 1988. But the stronger casinos are expected to emerge well into the black before long.

Murray Raphel, a local business leader and vice-chairman of the CRDA, says the casinos have met their original obligations: to create new construction and jobs. But he says that's not enough to address Atlantic City's problems.

``Morally, I'd like to see more of a commitment,'' Mr. Raphel says. ``They're the only valid talent pool in the city.'' Although casino executives are barred from running for office or contributing to campaigns, Raphel believes that they should serve on local boards and committees.

Based on Atlantic City's experience, Mr. Eisenstat advises other localities seeking a comparable ``cure-all'' to proceed with caution, and to be explicit about expectations. ``It's got to be very carefully planned out,'' he says. ``Gaming didn't make certain social problems go away, and it's an expensive experiment.''