Lawmakers in the state of New Jersey have been trying for months now to figure out a way to assist Atlantic City, as the former booming gambling town has been struggling to remain afloat, almost in bankruptcy. What was once described as a possible takeover of Atlantic City is now being called an ‘intervention’. Legislators announced yesterday that they have come to a cooperative working agreement with the city to try and get the financial situation under control.
The measure created by lawmakers would give the state of New Jersey most of the authority over the finances of Atlantic City. This would include the right to renegotiate debt as well as break contracts, sell off any assets of the city, dissolve boards or agencies, and the option to file for bankruptcy.
Language of the bill states that the Local Finance Board of New Jersey will have exclusive discretion to assume, reallocate to and vest in the Director of any city function, powers, privileges and immunities of the governing body of the city for a five year time frame. Steve Sweeney, the State Senate President, described the bill as an ‘intervention’ instead of a takeover as the process had been previously called.
Sweeney, who will most likely be running for governor of the state next year, stated that the plan for intervention will allow the state and city to work together to accomplish what Atlantic City has not been able to do on its own. The fiscal crisis of the city is ‘severe and immediate’. Bondholders are owed over $500 million and tax appeal debts are at more than $150 million, with no option to receive financing from the bond market. Property values are down and the foreclosure rate is the highest in the US, with unemployment higher than during the recession. The state has determined to take a direct role to provide more effective solutions.
The measure did leave some responsibility to the officials of Atlantic City. The Mayor, Don Guardian, has yet to respond to the ‘intervention’ but in January did comment that he was reluctant to take help from the state and that his office had already made cuts that were painful and was prepared to do more.
Also included in the bill is to take over the municipal water utility, a coveted asset of the city. The city has one year to determine how to ‘monetize’ the water utility. By that time the state can choose to act to use the asset to generate funds needed for the city.
The new measure will replace an earlier bill drafted when the takeover was first discussed back in January. Changes were made to this measure as suggested by state Governor Chris Christie. This plan will last for five years instead of the original fifteen year time frame.