Why Atlantic City is Optimistic About Approval of Recovery Plan
PHILADELPHIA - Fresh from pitching a rescue plan for his city to New Jersey's Department of Community Affairs, Atlantic City Mayor Donald Guardian said he is optimistic that its turnaround efforts will be accepted and a state takeover averted.
Guardian told attendees at The Bond Buyer's Mid-Atlantic Municipal Market conference that Tuesday's two-hour presentation with DCA Commissioner Charles Richman and Local Government Services Director Tim Cunningham in Trenton received a positive response. The DCA now has until Nov. 1 to decide whether to accept the plan or impose a state intervention for five years that would empower it to alter the city's outstanding debt and municipal contracts.
"When we went up today and made our presentation we were really happy to see a very cooperative spirit," said Guardian. "We certainly used the best practices of Philadelphia and Pittsburgh and Miami and every other municipality that was distressed in the past but had some success in coming back."
The rescue plan hinges largely on selling Atlantic City's old municipal airport property, Bader Field, to its independently-operated Municipal Utilities Authority for $110 million with proceeds used to pay off outstanding casino debt.
Guardian said the city would also address its massive debt situation through $105 million that would be raised by the issuance of tax-exempt bonds through New Jersey's Municipal Qualified Bond Act. The plan also cuts 100 full-time workers by the end of the five years and slashes the city's annual budget to $207 million from its $262 million level in 2015.
Guardian said that around 90% of the city's $240 million in bond debt is tied to casino tax appeals. He said no action will be taken on the bonded debt from 12 different bond issues since some of it begins to retire in 2017 and 2018.
Joining Guardian at the Bond Buyer conference were City Council President Marty Small, City Councilman Kaleem Shabazz and Mike Nadol from the city's financial advisor, PFM Group, who all echoed the mayor's hopeful feeling that the state will approve the plan. Shabazz said he is "cautiously optimistic."
DCA spokeswoman Tammori Petty did not comment on the tone of the meeting only saying that "a review is underway."
The recovery plan documents submitted Tuesday includes mention of a settlement with the Borgata Casino Hotel & Spa in which the city pays the business $103 million of the $150 million in tax refunds the casino is owed. Joe Corbo, the Borgata's vice president & general counsel, released a statement Tuesday saying it has not agreed to any settlement offer but remains open to negotiations once the city reaches consensus with the state.
Guardian stressed before the presentation that it would not be in the state's best interest to take over Atlantic City given its roughly $100 million budget deficit. He said if the state rejects the plan the city will appeal in court.
"I can't see how the state would want to come in and make us a ward of the state," said Guardian. "They have asked us to come up with a plan to balance the budget and not have any new taxes and to have continued reduction in state aid and we are doing all that in this plan so we find it very hard to believe they wouldn't want to embrace it."