Atlantic City is slated to receive a $74 million bridge loan from New Jersey to avoid an August 1 bond default after the City Council Thursday voted to accept the state's repayment terms.
Mayor Donald Guardian said in a statement Thursday that the loan allows the city to make its Friday payroll payment and $3.4 million in debt service owed Monday. The state agreed to issue the cash-strapped city a loan in May as part of a rescue package to avoid an immediate default, but Guardian expressed concerns about the agreement Thursday.
"Our concern simply reflects that we continue to be good stewards of Atlantic City resources and 'not throw the baby out with the bath water,'" said Guardian in his statement. "We anticipate that the bridge loan agreement with the state will be completed in short order and the funding required by the act will be put in place to cover operational expenses of the city."
Atlantic City owes $18.6 million in debt service payments for the rest of the year including $9.4 million due in November and $7.3 million for December, according to Moody's Investors Service. The city is required under the recovery legislation to form an acceptable five-year financial plan by early November, or the state's Local Finance Board will be empowered to alter municipal contracts and debt over a five-year period. Guardian said Thursday the 2016 budget scheduled to be presented to the City Council in August is $23 million less than the current spending plan.
"A five year projection for City budgets from 2017 through 2021 is currently being prepared under the terms of the Recovery Plan," said Guardian. "The City plans to have a draft of the plan completed by late fall and the final document presented to the Commissioner of the Department of Community Affairs prior to the deadline."