Lawmakers Make Further Changes to Atlantic City Takeover Plans

Lawmakers in the state of New Jersey have announced a fresh set of changes to the terms of the agreement announced in January by which the state takes over the troubled finances of Atlantic City. Now referred to as an intervention plan rather than a takeover, it calls for cooperation between the city and state to work together towards reviving the city.

The bill in effect replaces the earlier agreement but still retains comprehensive authority over the city’s financial affairs. Its authority, among other things, extends to renegotiating debt, disposing of city assets, recalling contracts and even filing for bankruptcy.

In a statement, Steve Sweeney, State Senate President said,

The intervention plan will enable the state and the city to work together to accomplish what Atlantic City can’t do on its own. The city’s fiscal crisis is severe and immediate. It owes bondholders more than $500 million, has more than $150 million in debts for tax appeals, and has no ability to get financing from the bond market. The state has to take a more direct role with more effective solutions

The wide-ranging scope of the bill indicates that the city administration has very little power.

There has been no comment from the city’s mayor Don Guardian. He has however earlier stated that he would accept the state’s help and take any corrective measures required.

The agreement has now incorporated a number of measures suggested by the Gov. Chris Christie. It has identified the city’s municipal water utility as key asset to be leveraged in the revival plan. A provision in the bill states that unless the city proposes a plan to monetize the asset within a years’ time, the state takes over decisions regarding its use.

In addition, a measure that was vetoed out by Gov. Christie earlier has been included. Under this measure, Atlantic City’s casinos would be asked to make payments instead of taxes in exchange for choosing not to appeal their property taxes. After the collapse of the city’s economy, casinos in the city have successfully appealed their property taxes in courts, claiming that they are worth now less than before due to a depressed market. Atlantic City’s casino revenue has fallen to $2.56 billion in 2015 from $5.2 billion in 2006. The bill also intends to use casino payments which were earlier earmarked for development projects in Atlantic City towards reducing the city’s debt.

Adrian Sterne

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