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Boraie Empire: NB Developer Secures $30M Government Loan, Cheap Public Land For Atlantic City Project

EXCLUSIVE: New Brunswick's Own Boraie Development Paid Bargain Price For Land Owned by AC Housing Authority
Boraie Land
Assessed at $18.5M, eight acres of vacant land 1/4 mi. from the AC boardwalk were sold for just $1M to Boraie Development. Google Maps

ATLANTIC CITY, NJ—Despite a recent political shakeup in this unique city, a developer from New Brunswick still seems poised to move forward with a plan to develop prime real estate that, until recently, belonged to the public.

On December 13, Boraie Development secured eight acres of vacant land from the Atlantic City Housing Authority for a fraction of its assessed value.

Boraie bought the two four-acre parcels, located just a quarter-mile from the city's Boardwalk, for less than eighteen times what the local government's tax assessor says the land is worth.

By contrast, Boraie recently paid the New Brunswick Parking Authority $750,000 for a highly-utilized .12- acre parking lot that had recently been assessed at $109,700.

While state law requires cities and towns to put public lands up for auction before they are sold, other public entities like local housing and parking authorities are allowed to make deals on their own without a public bidding process.

At the vacant Atlantic City site, known as "Pauline's Prarie," the company has pledged to build "The Beach at South Inlet," a 250-unit luxury apartment complex "with amenities such as a doorman, on-site parking and swimming pool."

Sam Boraie, a Vice President at Boraie Development claimed a smaller assessment when contacted by NBToday: "The land was originally assessed as CASINO USE, and has sat vacant for the past fifty years," Boraie wrote.

Boraie pointed out that his firm will "bear additional financial responsibility for environmental clean-up and all planning costs associated with the parcel and the development."

Boraie said the land purchased by his firm was assessed at $6,063,900.

But the city's tax assessor disputes his assessment, saying that $18.5 million is the appropriate figure.

"The assessments were changed erroneously," said Atlantic City's Tax Assessor Novelette Robinson.

"That assessment should not have been changed," she continued.  "The assessment will be changed back to $18 million."

Robinson said the previous mayoral administration had engaged in "a lot of discussion last year in the spring and summer," when asked what led up to the properties' assessments being cut by more than two-thirds.

In the final days of the administration of Mayor Lorenzo Langford, the authority sold the two pieces of prime real estate to Boraie Development for just $1 million.

"The Housing Authority board approved that because it was working with the city to advance redevelopment on the site," the agency's Acting Director of Redevelopment Ira Fonorow told New Brunswick Today.

Langford had called the Boraie project "a shining example of urban community development at its best."

According to Langford, Boraie is "well-known for building successful inner-city projects...  that enhance entire communities."

"They bring to Atlantic City the knowledge, expertise and capital necessary to create a new, vibrant community."

But, according to the developer's track record, much of Boraie's capital comes from the government in one way or another.

Last month, Boraie Development was approved for a $30 million government loan from the state's Casino Reinvestment Development Authority (CRDA), despite a questionable track record of failure to deliver on promises made to local and state governments in the past.

"The CRDA is providing financial assistance in the form of construction and take-out lending not to exceed $30 million," reads an authority press release issued the day after the approval.

"This Board action signals a kick-start to revitalization in the South Inlet," said CRDA Board Chariman Jim Kehoe.

The release pointed out that the board had made a "preliminary determination of project approval" in December, and then granted Boraie "project approval and a fund reservation," last month.

In between the two approvals, one major change took place in City Hall.

Last November's election sent a Republican into the Atlantic City Mayor's office for the first time in 23 years.

The December 2013 land deal started and finished under the administration of Langford, who was defeated in November and replaced in January by new Mayor Donald Guardian.

But Guardian recently appeared on a "private panel" at a February 28 redevelopment conference last month with Waseem Boraie.  Like his brother, Waseem is also a Vice President with the development firm.

Mayor Guardian and the City Council's members did not respond to emailed questions about the project.

In January, the new mayor was quoted by the Philadelphia Inquirer as saying, "We need to make Atlantic City a place where developers want to build."

According to published reports, the first phase of the plan will include 250-unit apartment complex with wood floors, stainless steel appliances and granite counter tops with an enclosed pavilion and pool.

Representatives of the company say that construction will create 350 temporary jobs beginning later this year, and that they intend to develop the second parcel of land into a supermarket, movie theatre, and parking garage.

Among those involved with the development firm is retired basketball player Shaquille O'Neal, who took the unusual step of endorsing Gov. Chris Christie's re-election last fall.

Christie's administration has come under fire for approving $4.8 million in Hurricane Sandy disaster relief funds to support another luxury rental complex being erected by Boraie in New Brunswick, an area that was not heavily damaged in the superstorm.

A series of New Brunswick Today articles exposed the developer's questionable track record for delivering on promises made to state and local governments, including similar pledges to the ones tied to securing the Sandy funds.

As we reported, the developer was forced to revisit agreements made with the New Brunswick Parking Authority and the state's Housing and Mortgage Finance Agency when its first major project, a 23-story highrise in downtown New Brunswick, failed to make good on promises of public parking and affordable housing.

A New Brunswick Today investigation revealed that four consecutive gubernatorial administrations gave favorable treatment to the developer as they repeatedly failed to meet affordable housing requirements they had agreed to in order to secure a $15 million loan from the state government in 2005.

The New Brunswick project, dubbed "Somerset Mews," had been in the works for years before the Hurricane, but the $4.8 million was quietly approved and officials held a strange groundbreaking ceremony that no members of the press attended on September 23.

It wasn't until four months later that NBC New York revealed the politically-connected developer had been awarded Sandy funds, on the heels of accusations by Hoboken's mayor had alleged just the opposite occurred in her town: that Christie administration officials threatened to withhold the recovery money if she did not approve a large-scale private development project.

Meanwhile, the Boraie project was on the minds of public relations employees at the Casino Redevelopment Authority when New Brunswick Today began asking questions about the Atlantic City proposal in February.

"I believe this is something you mentioned to the team last week or maybe two weeks ago," wrote Katrina Cheung, a CRDA worker forwarding a request from this reporter to the agency's chief spokesperson Kim Butler. Accidentally, Cheung included New Brunswick Today on the forward.

Like most state agencies, the CRDA has gone silent when it comes to requests for information about deals with Boraie Development, ever since New Brunswick Today continued asking questions about the developer's track record, and ultimately forced the Department of Community Affairs to admit they had misrepresented Boraie's credentials in a press release.

Prior to the high-profile attention on Boraie's most recent project, the CRDA also touted the reputation of the company it would eventually approve for a loan.

“We’re familiar with the Boraie company, and they’ve got a good reputation,” said CRDA spokesperson Kim Butler told the AC Press in a May 2013 article. “We’re excited about any new development that happens for the city and especially in the Tourism District.”

According to published reports, the CRDA loan will be funded by sales tax revenue generated just a few hundred feet away in the Revel casino, a new and expensive development project that received massive financial assistance from the Christie administration before going bankrupt within its first year of operation.

The CRDA approved the $30 million loan on March 18, but the project is not without its skeptics, including some board members who questioned whether the proposed one and two-bedroom luxury rental units will be viable in Atlantic City.

As printed in the Press of Atlantic City:

Plans for the Boraie project weren’t without reservation. Some CRDA board members expressed concern over demand for the project. Eighty percent of the units are expected to be rented at market rate of between $1,000 and $1,300 a month. The other 20 percent of the units would be rented at an affordable housing rate for those who make 60 percent of the median income.

Board member Howard Kyle, Atlantic County’s chief of staff, said he had concerns based on the city’s poor history with rental properties. Atlantic County Freeholder Chairman Frank Formica also questioned interest in the units saying that at least some of the renters would have to come from within other units in the city.

“With all due respect, there are not people flocking to Atlantic City,” Formica said.

Another board member, Matthew Levinson, chairman of the Casino Control Commission, said he wanted the CRDA to receive a copy of a market study on the project that would be completed by bank lenders.

Boraie said the study would be provided but stressed his confidence in the project adding, “If I need a market study to tell me there’s a market, I’m in the wrong business.”

New Jersey Division of Gaming Enforcement Director David Rebuck asked if the developer planned to remain in Atlantic City as owner and manager of the complex, to which Boraie replied that the company would not come to Atlantic City unless it planned to be in the resort long term.

“I’ll look for that condition when we negotiate,” Rebuck said.

The CRDA has not responded to multiple phone calls and emails with questions about the Boraie project.

"This is what we need to attract people back to Atlantic City," Waseem Boraie told the AC Press. "Based on our research, if there was a product geared toward the young in Atlantic City, they would live here."