More questions, but few answers, about Stockton's Showboat purchase

TRENTON - New Jersey legislators had little success Thursday clearing the cloud of questions surrounding Stockton University's December purchase of the Showboat casino.

At Thursday's higher education budget hearing, lawmakers had hoped to interview outgoing Stockton president Herman J. Saatkamp Jr. about how the purchase got tripped up over a 1988 covenant that would block the property from being converted into a college campus.

But Saatkamp went on immediate medical leave Tuesday and was not available to testify. Stockton sent acting president Harvey Kesselman instead. Kesselman, Stockton's provost and a longtime administrator, was unable to answer most of the questions lobbed his way.

Who knew about the covenant? When was it discovered? What had attorneys advised?

Kesselman didn't personally know about the covenant; he couldn't speak to its discovery; he wasn't in the room when the decisions were made.

Lawmakers did what they could, asking Kesselman about the purchase and Stockton's plans for the future. They also criticized Saatkamp for how he handled the sale.

Sen. Paul Sarlo (D., Bergen) said he thought the $18 million purchase violated a law requiring review by the state comptroller of any purchase over $10 million.

He asked Kesselman whether he thought the troubled Showboat purchase would have been stopped by the comptroller's office.

"I would think that's part of - that's one of the reasons that statute exists," Kesselman said.

Sarlo, who said he thought the comptroller's office would have flagged the issue of clear title, told reporters he had commissioned a legal opinion from the nonpartisan Office of Legal Services.

State colleges and universities are supposed to give the comptroller 30 days to review and approve of contracts above $10 million, said spokesman Pete McAleer. Normally, that review would be fairly narrow in scope: "We check to see whether the procurement process complies with procurement law. It really doesn't go farther than that," McAleer said.

Stockton went ahead with the Showboat purchase without comptroller review. The comptroller's office has since requested and received a copy of the contract. The comptroller's office can expand its review to issues beyond procurement law.

State Sen. James Whelan (D., Atlantic), a former Atlantic City mayor, blamed Saatkamp for buying a property without knowing whether the university would be clear to proceed.

"Nobody knows who made the mistake, right?" asked State Sen. Jeff Van Drew (D., Cape May).

"With all due respect, president Saatkamp's the one who signed it," Whelan responded. "Who does that?"

Van Drew wanted to know what the attorneys had told Saatkamp. There is a distinction, he said, between Saatkamp being advised to sign the agreement and going along with it, and being advised not to sign it and ignoring the advice.

What is clear: Saatkamp did sign the agreement to buy the Showboat property from Caesars Entertainment. Trump Entertainment Resorts, the parent company of Trump Taj Mahal, was not approached about waiving the 1988 covenant until Dec. 11, the day before closing, Whelan said.

Trump has said it is enforcing the covenant because it does not want to risk underage students, based in the former Showboat property, sneaking into the Trump Taj Mahal casino next door and trying to gamble. And even if it had wanted to waive the covenant, the company said, Trump was in bankruptcy and would have required creditors and bankruptcy court to sign off.

"President Saatkamp signed the agreement of sale at closing without clear title," said Whelan, who is not on the budget committee but sat in because of Kesselman's appearance. "Why he did that, you'll have to ask him."

Saatkamp, who joined Stockton in 2003, announced last week that he would step down later this year. That decision came amid a faculty and staff vote of no confidence that saw a majority denounce Saatkamp's leadership.

On Tuesday, Saatkamp said he was taking an immediate medical leave. He remains the president of Stockton, while Kesselman, the provost and a 35-year administrator at Stockton, was named acting president.

Without Saatkamp to answer questions, Kesselman could do little more than speculate and speak to his own knowledge of the Showboat deal.

As Saatkamp's second-in-command, Kesselman said he was not briefed on the details of the Showboat acquisition. Instead, he said, senior administrators discussed what academic programs could be moved to Atlantic City.

"No, I wasn't aware of what happened at closing," Kesselman said, as Sarlo peppered him with questions about the purchase.

Kesselman said he was "not aware" of the covenant. "I can't speak for president Saatkamp."

Showboat's future remains unclear. Stockton has entered an agreement with Florida developer Glenn Straub to sell the site for $26 million, an amount that covers the purchase and maintenance costs, with a 90-day escape clause to allow the university to try to resolve the legal issues surrounding the covenant.

As it waits, Stockton spends about $400,000 a month to maintain the site, school officials said.

Kesselman said that he supported the sale of the property and that Stockton would continue to try to build a campus elsewhere in Atlantic City if the Showboat issues cannot be worked out.

The Atlantic City Council told Trump Entertainment Resorts on Thursday that it had 24 hours to begin working toward resolution, the Atlantic City Press reported.

Atlantic City Mayor Don Guardian said outside the hearing that Stockton and Trump had not been in negotiations.

"The Showboat is a valuable piece of property to Stockton," Guardian said. "It seemed like a perfect fit."