Atlantic City Emergency Manager Kevin Lavin released a 60-day interim report Tuesday that does not mention bankruptcy but suggested a bond restructuring as one method to help the city's finances.
Lavin urged "shared sacrifice" to restore the struggling seaside city to long-term stability.
Options Lavin suggested for bondholders include extending maturities, exploring refinancing opportunities that may reduce interest rates, and rearranging the amortization schedule for bonds.
Lavin, a corporate restructuring attorney from FTI Consulting who was appointed on Jan. 22 by New Jersey Gov. Chris Christie in January to oversee Atlantic City's finances and daily finances, said in the report a plan is being finalized to cut city expenses by $10 million in 2015.
The emergency manager will also be appointing mediators to work with key stakeholders such as union leadership and casino representatives to work toward solutions for the city's financial position and limited resources. He is proposing negotiating with city stakeholders from April 1 to June 30 and aim for "fiscal stability" at some point after this 90-day period.
"Absent an urgent, material realignment of revenues and expenses, this crisis will rapidly deepen and will threaten the City's ability to deliver and maintain essential government services impacting the health, safety and welfare of its residents," said Lavin in the report. "The City simply cannot stand on its own."
In addition to the appointment of Lavin, Christie also tapped Kevyn Orr, who was Detroit's emergency manager during its recent Chapter 9 bankruptcy process, as a part-time consultant to assist with the Atlantic City turnaround efforts. The executive order signed by Christie prompted a six-notch credit downgrade from Moody's Investors Service to Caa1 because of the potential for debt restructuring.
Other groups that could share in the sacrifices, according to Lavin's report, are employees as the city reduces headcount, casinos that might be asked for payments in lieu of taxes, and the state government, which would be asked for more financial support.
Atlantic City's current projected budget gap is $101 million and absent significant change, its cumulative deficit will climb to $393 in five years, according to Lavin's report.
State Assemblyman Vincent Mazzeo, D-Atlantic, who has proposed a bill to help Atlantic City shore up its tax base, criticized Lavin's report saying it lacked specific solutions.
"What we needed from the emergency manager was solutions, but this report is starkly lacking in innovative ideas to solve the problems," said Mazzeo in a statement. "Considering the time and expense involved, the people of Atlantic City and Atlantic County certainly expected more than from the governor's emergency manager than general concepts."
