Archer&Greiner rc. Mentor oxen Jersey Pemnsybonia ATTORNEYS AT LAW cand New York Bar spackman@archerlaw.com 215-246-3147 Direct One Liberty Place “Thiny-Second Floor 1650 Market Street Philadelphia, PA 19103-7393 (215) 963-3300 Main (215) 963-9999 Pas April 7, 2015 VIA OVERNIGHT MAIL Mayor Donald A. Guardian Frank Gilliam, Council President and Members of the Atlantic City Council c/o Jason Holt, Esquire, City Solicitor Atlantic City Municipal Building 1301 Bacharach Boulevard Atlantic City, NJ 08401 Re: The Ordinance Adopting the Redevelopment Plan for the . Stockton University Atlantic City Campus and Surrounding Area (“Ordinance”) Dear Mr. Holt: As you are aware, we represent Trump Entertainment Resorts, Ine. and its affiliated debtors, including Trump Taj Mahal Associates, LLC (collectively, “Trump Entertainment”), in connection with a certain Ordinance scheduled for second reading and public hearing on April 8, 2015. That Ordinance is entitled, * rdinance Adopting the Redevelopment Plan for the Stockton University Atlantic City Campus and Surrounding Area, City of Atlantic City, New Jersey,” and would adopt the “Redevelopment Plan for the Stockton University Atlantic City Campus and Surrounding Area, to be known as University City’,” prepared by the Aulantic City Di ion of Planning and dated March 18, 2015 (the “Redevelopment Plan”), By way of further objection to the Ordinance and Redevelopment Plan (the original objection dated April 2, 2015 is attached hereto for your reference), it has come to our attention Haaddoniield, NI Philadelphia, PA # Hackensack, NI @ Princeton, NI Flemington, NJ Wilmingion, DE Red Bank, NJ ® New York, NYMayor Donald A. Guardian Frank Gilliam, Council President and Members of the Atlantic City Council c/o Jason Holt, Esq., City Solicitor April 7, 2015 Page 2 that Stockton University (“Stockton”) is seemingly in the process of conveying the subject Showboat property (“Showboat Property”) to Glenn Straub or an entity associated with Mr. Straub, the purchaser of the Revel Casino, Reports are that the sale to Straub has been finalized, Please see the attached Philadelphia Business Journal Article which reflects the sale to Straub and quotes the President of Stockton stating that “{ have worked closely with Atlantic City Mayor Don Guardian, City Council President Frank Gilliam Jr,, and City Council as well as the Casino Reinvestment Development Authority to take the neces wry actions that will insulate us from any successful legal challenges.” Consistent with prior behavior, nobody from Stockton had the courtesy to approach Trump Entertainment regarding the fact that the Showboat Property was once again available for sale notwithstanding the obvious impediments attached to Stockton’s ownership of the Showboat Property. It is distressing to Trump Entertainment to say the least that Stockton’s President is publically stating that he now believes he has insulated Stockton from legal challenge as a result of hi machinations with the City. ‘Trump Entertainment and its primary lender certainly would have an interest in rekindling a dialogue with the City regarding the Showboat Property and what could be done with the Showboat Property and surrounding area in conjunction with operation of the Trump Taj Mahal. ‘Trump Entertainment believes it has amply demonstrated its business commitment to the City over the last year. Trump Entertainment is of the position that the City should certainly ake into account such interest and commitment, and the best use for the Showboat Property,Mayor Donald A. Guardian Frank Gilliam, Council President and Members of the Atlantic City Council c/o Jason Holt, Esq., City Solicitor April 7, 2015 Page 3 which Trump Entertainment believes is a use related to operation of a casino, not student housing immediately adjacent to a casino. ‘Trump Entertainment questions why Stockton did not expose the Showboat Property to ‘the marketplace. Instead, it appears that Stockton has apparently taken the first deal offered which, according to the press, is nothing more than an option to purchase given the conditions on sale related to, among other matters, the recorded Restriction Agreement. Trump Entertainment urges the City to act cautiously here in recognition of the rights of all parties involved and to avoid costly litigation. ‘Trump Entertainment respectfully asks the City to withdraw or table con: leration of the Ordinance pending further dialogue between the patties. put Respectfully samin ee Stephen Mz Packman SMP/me cc: Joseph Dougherty, Esquire (via overnight mail) Paul Fader, Esquire (via overnight mail) M. James Maley, Jr., Esquire (via overnight mail) Paul G. Weiss, Esquire (via overnight mail) 1238596101Archer &Greiner rc ite Stephen M. Packman of Persyvaimia ant ew York Bas Spackmandarcherlaw com 215-246-3147 Direct ATTORNEYS AT One Liberty Place ‘Thiny-Second Floor 1680 Make’ St Philadelphia, P April 2, 2015 VIA FEDERAL EXPRESS Mayor Donald A. Guardian Prank Gilliam, Council President and Members of the Atlantic City Council c/o Jason Holt, Esquire, City Solicitor Atlantic City Municipal Building 1301 Bacharach Boulevard Atlantic City, NJ 08401 Re: The Ordinance Adopting the Redevelopment Plan for the Stockton University Atlantic City Campus and Surrounding Area (“Ordinance”) Dear Mr. Holt Please be advised that we represent Trump Entertainment Resorts, Inc. and its affiliated debtors, including Trump Taj Mahal Associates, LLC (collectively, “Trump Entertainment”), in connection with a certain Ordinance scheduled for second reading and public hearing on April 8, 2015, That Ordinance is entitled, “Ordinance Adopting the Redevelopment Plan for the Stockton University Atlantic City Campus and Surrounding Area, City of Atlantic City, New Jersey,” and would adopt the “Redevelopment Plan for the Stockton University Atlantic City Campus and Surrounding Area, to be known as ‘University City’,” prepared by the Atlantic City Division of Planning and dated March 18, 2015 (the “Redevelopment Plan”). On behalf of ‘Trump Entertainment, we hereby object to the adoption of the proposed Ordinance and request Haddonfield, Nd ¢ Philadelphia, PA # Hackensack, NJ # Princeton, NI Flemington, NJ # Wilmington, DE ® Reg Bank, NJ © New York, NYMayor Donald A, Guardian Frank Gilliam, Council President and Menibers of the Atlantic City Council c/o Jason Holt, Esq., City Solicitor April 2, 2015 Page 2 that it be tabled prior to public hearing to allow consideration of the serious legal implications referenced in this letter. INegal Action to Further the Common Plan of Caesars Entertainment and Stockton University One of the prime concerns of Trump Entertainment is that the Ordinance and Redevelopment Plan purport to limit the use of the subject Showboat property (the “Showboat Property”) to student housing and related “campus-town” uses, even though such uses are clearly prohibited pursuant to a recorded restriction benefiting Trump Taj Mahal that requires the Showboat Property to be operated as a first-class casino. ‘The referenced restriction, recorded November 17, 1988 (the “Restriction”), is in full force and effect. It is beyond question that the City has no power to modify or eliminate the Restriction. See, e.g., Citizen’s Voices Ass'n. Collings Lakes Civie Ass'n, 396 N.J. Super 432, 436 (App. Div. 2007). The Ordinance will not have the intended effect of circumventing the recorded covenant and eliminating Trump Entertainment’s rights, It will have the effect of drawing the City into this dispute, ‘The Restriction is attached to this letter as part of the “Agreement as to Assumption of Obligations With Respect to Properties,” dated September 21, 1988, and recorded in Deed Book 4795, pages 1-30 (the “Restriction Agreement”). The Restriction Agreement explains the relevant background relative to the Restriction. Resorts International, Ine, (“Resorts”) was the original developer, pursuant to a contract with the Atlantic City Housing Authority, of the designated Uptown Urban Renewal Tract. Resorts (which initially owned only the building but had an option to purchase the land upon project completion) entered into an agreement with theMayor Donald A. Guardian Frank Gilliam, Council President and Members of the Atlantic City Council c/o Jason Holt, Esq., City Solicitor April 2, 2015 Page 3 predecessor of Trump Taj Mahal to convey part of the property in the Uptown Urban Renewal ‘Tract with the requirement that such property be developed for # hotel-casino. Resorts leased a portion of the remaining Uptown Urban Renewal Tract to Atlantic City Showboat, Inc. (“Showboat”), requiring the Showboat Property to be developed and used as a first class hotel- casino, This was in furtherance of the City’s plan to reclaim and redevelop what was known as “Pauline’s Prairie” and was part of an effort to establish a cluster of three casinos at the north end of the Atlantic City Boardwalk. Pursuant to Section 3 of the Restriction Agreement, Showboat did covenant to use the Showboat Property “for the purpose of the operation of a first class hotel- casino and related facilities.” ‘The Restriction Agreement is recorded in title with the Atlantic County Clerk’s Office and is of course fully enforceable against Caesars Entertainment (“Caesars”), its suecessors, assigns, heirs, and legal representatives, including Stockton University (“Stockton”). The Restriction is a covenant which runs with the land. As the City should be aware from various sources including the local press, the Restriction was fully known to Caesars and Stockton (and ‘Stockton’s title insurance carrier which, we understand, refused to insure over the Restriction) prior to closing on the December 2014 sale of the Showboat Property by Caesars to Stockton and Stockton’s payment of the $18,000,000 sale price. Stockton has clearly acknowledged in the press its prior knowledge of the Restriction, Stockton’s President recently stated: “College President Herman Saatkamp says the clause requires the Showboat to always be used as a first-class casino resort. He saysMayor Donald A. Guardian Frank Gilliam, Council President and Members of the Atlantic City Council c/o Jason Holt, Fsq., City Solicitor April 2, 2015 Page 4 Trump Entertainment Resorts is enforeing the covenant” — AC Press, 3/24/1 “Saatkamp said they were aware of the covenant but had b assured that the issue had been resolved with Trump Entert by Caesars Entertainment” = AC Press, 3/26/15. ent Significantly, Caesars recorded a document prior to closing purporting to specifically restrict the ‘Showboat Property to non-casino use (the “Caesars Restriction”), a direct breach of the underlying Restriction and Agreement. Trump Entertainment has the right, and does intend, to fully enforce the Restriction Agreement. As you are aware, the Trump Entertainment entities are debtors in a bankruptcy proceeding, and the Board and management of Trump Entertainment have a duty to ereditors to protect and maintain the valuable rights and assets of Trump Entertainment, including the rights under the Restriction Agreement, If the City adopts the Ordinance, Trump Entertainment's position is that the City will be engaging in a knowing and intentional course of conduet in conjunction with Stockton and ‘aesars, and perhaps others, with the intent of attempting to deprive Trump Entertainment of the benefit of the Restriction and specifically the right to ire that adjacent property continues in hotel-casino use, Accordingly, the City, Stockton, and Caesars (and perhaps others) will be subject to the doctrine of unclean hands. Moreover, we view these attempts, if successful, as supporting potential claims by Trump Entertainment for, among others, breach of contract, unlawful taking, tortious interference, and civil conspiracyMayor Donald A. Guardian Frank Gilliam, Council President and Members of the Atlantic City Council c/o Jason Holt, Esq., City Solicitor April 2, 2015 Page 5 ‘That said, Trump Entertainment believes that any reviewing court would invalidate the Caesars Restriction. The City cannot legally relieve Caesars and Stockton of their contractual responsibilities to use the Showboat Property in the manner required by the Restriction and consistent with the C surrounding uses Master Plan and the RSC zoning of the site, Any such aetion by the City would be nothing more than aiding and abetting Caesars and Stockton in their attempt to evade the Restriction and deprive ‘ump Entert pment of fts property and other rights. Trump ny and all responsible parties liable for Trump Entertainment may seek to hold losses and damages. Violations of Municipal Land Use Law, Local Redevelopment and Housing Law and Taking of Property ‘The Ordinance and Redevelopment Plan are also objectionable because they violate both the Municipal Land Use Law and the Local Redevelopment and Housing Law. The Ordinance would violate the Municipal Land Use Law, N.I.S.A. § 40:55D-62, as it would constitute spot zoning. Spot zoning has been defined by the courts as the rezoning of a lot or parcel of land to benefit an owner for a use incompatible with surrounding uses and which does not further the comprehensive zoning plan of the municipality. The Ordinance at issue provides a classic example of spot zoning because, inter alia: (@) The Ordinance is being adopted to benefit Stockton as the new owner of the Showboat Property and Caesars which agreed prior to its bankruptey to indemnify Stockton; andMayor Donald A. Guardian Frank Gilliam, Council President and Members of the Atlantic City Council c/o Fason Holt, Esq., City Solicitor April 2, 2015 Page 6 (b) University campus and student housing uses are, quite obviously, incompatible with the surrounding hotel-casino uses (please see the attached editorial); and (c) Placing the Showboat Property in a “campus-town district” is thoroughly inconsistent with the City’s September 2008 Master Plan, which recommends that particular use for another area within the City. ‘The proposed Ordinance also would violate the Local Redevelopment and Housing Law. NALS.A, § 40A:12A-1, specifically, but not limited to, the requirement of that law that any Redevelopment Plan be substantially consistent with the municipal master plan or designed to effectuate that master plan. See, NS.A. § 40A:12A-7(d). Due to the substantial inconsistency between the September 2008 Master Plan recommendation for the campus-town district and the Ordinance locating that district on the Showboat Property, the proposed Ordinance is substantially inconsistent with the 2008 Master Plan and thus violates the local Redevelopment and Housing Law. The proposed Ordinance does more than simply allow a new use ~ university housing and services ~ it also prohibits the immediate prior use, the use for which the property is best suited and the use required pursuant to the Restriction and the applicable Urban Renewal Plan. Indeed, for years the City has argued in tax appeals that casino hotel use in the casino zoned area is the highest and best use of such property. By failing to list hotel-casinos as a permitted use under Section 8A of the Redevelopment Plan, and by listing it as a prohibited use under ‘ection 8B of the Redevelopment Plan, the Ordinance would, among other things, deprive TrumpMayor Donald A. Guardian Frank Gilliam, Couneil President and Members of the Atlantic City Council c/o Jason Holt, Esq., City Solicitor April 2, 2015, Page 7 Entertainment of its contractual property rights, tortiously interfere with those rights and constitute an attempted taking without just compensation in violation of the State and Federal Constitutions. Trump Entertainment hereby specifically reserves all claims, rights and remedies against all parties, This letter is without waiver of such claims, rights and remedies. Request For Relief ‘Trump eespectfully requests that the City withdraw the Ordinance and consider all of the ramifications of the action it has been asked to take, as Respectfully Submitted, Stephen M. 0 SMP/me ec: Joseph Dougherty, Fsquire (via overnight mail) Paul Fader, Esquire (via overnight mail) M, James Maley, Jr., Esquire (via overnight mail) Paul G. Weiss, Esquire (via overnight mail) Lapasostvt