A new Atlantic City rescue bill proposed Wednesday would give New Jersey increased power over the city's finances in an effort to avoid bankruptcy.
The intervention bill entitled the "Municipal Stabilization and Recovery Act" would empower the state to renegotiate Atlantic City's outstanding debt and municipal contracts for up to five years. The legislation is aimed at allowing Atlantic City to regain its access to the bond market while also achieving cost savings through reorganized government operations, consolidating agencies and engaging in shared services. The state would also have an ability to leverage city assets to gain needed revenue.
"The intervention plan will enable the state and the city to work together to accomplish what Atlantic City can't do on its own," said State Senate President Steve Sweeney, D-Gloucester, who introduced the bill with Senators Kevin O'Toole, D-Wayne, and Paul Sarlo, D-Wood-Ridge. "The city's fiscal crisis is severe and immediate."
Under the proposed legislation, Atlantic City would have one year to find a way to monetize its water authority before the state can act to use the assets to generate needed funds. The city would retain its decision-making authority unless the state's Local Finance Board acts to take control.
Atlantic City is in danger of running out of cash flow by early April absent state assistance, according to a Jan. 21 report from former emergency manager Kevin Lavin. The city owes the Borgata casino $170 million in tax appeals and missed a $62.5 million payment owed on Dec. 19.
"If the city is allowed to go into bankruptcy all the decisions would be imposed by a bankruptcy judge," said Senator Sarlo. "This plan gives the city and the state a voice and a role in making the decisions that will impact the lives of the residents and the future of Atlantic City. This is a far better process than bankruptcy."
A companion bill was also introduced that would enable casinos to make payment in lieu of taxes payments in an effort to end costly tax appeals.
Gov. Chris Christie rejected a financial relief package last month that would have enabled the city's eight remaining casinos to enter into a PILOT program for 15 years and aggregately pay $120 million annually in that period instead of a traditional property tax. The amended bill shortens the PILOT period from 15 years to 10 and also would require casinos make additional payments based on their share of total gaming revenue that would be used for paying down the city's more than $400 million in outstanding debt.
