By Kate King
A yearslong power struggle between Trenton and Atlantic City is
expected to come to a head this week as both sides reveal plans for
saving the New Jersey gambling hub from bankruptcy.
Atlantic City officials are hoping their plan to sell the city's
former airport, offer early-retirement incentives to public workers
and implement other cost-cutting measures will stave off state
intervention. Gov. Chris Christie and many state legislators have
said a state takeover is the best way to solve the city's financial
crisis.
"A lot of people think that we're wasting our time, that no
matter what we turn in the state is going reject it," said Atlantic
City Council President Marty Small, a Democrat. "Every ounce of
energy and effort that we've put into this since January is to
avoid a state takeover."
A spokesman for Mr. Christie, a Republican, referred requests
for comment to the state Department of Community Affairs, which
will review Atlantic City's proposal. A spokeswoman for the
department said, "We emphatically and categorically reject any
implication that a decision regarding the city's plan has been
predetermined."
Atlantic City's casino industry has crumbled over the past
decade, decimating the local tax base and leaving a $100 million
deficit in the municipal budget. In May, the Democratically
controlled Legislature passed bills, later signed by the governor,
that gave the city an unspecified bailout and 150 days to develop a
plan to balance its budget. The bailout came in July, when Atlantic
City officials signed a $73 million loan agreement with the
state.
While Atlantic City has revealed several key details of the
five-year recovery plan, it is expected Monday to formally submit
it to the state. Mr. Christie's administration then will have five
days to decide whether to accept it or move forward with a
takeover.
State Sen. Jim Whelan, a Democrat who represents Atlantic City
and supported a state takeover, said state officials are
"professionals" who will review the city's plan fairly. "If it
achieves the goals, which is to provide a path to fiscal stability
for the city, then it will presumably be embraced," said Mr.
Whelan, who was Atlantic City's mayor from 1990 to 2001.
The showdown comes as Atlantic City faces a Nov. 1 deadline to
make a $9 million debt payment. The city's mayor, Don Guardian, a
Republican, said the city will make the payment.
The centerpiece of the city's plan is a proposal to sell Bader
Field, a 142-acre tract of city-owned land that once served as the
municipal airport. The local water utility has agreed to borrow
$110 million to buy the land, with the proceeds of the sale going
toward paying down the city's $500 million in debt, Mr. Guardian
said.
The water utility, which operates as an independent government
authority funded by ratepayers, is one of the city's most valuable
assets. State officials have urged the city to monetize it, either
through selling it, or by boosting revenue by having the city or
county run it and implement budget cuts and rate increases.
Atlantic City residents and officials have long suspected the
state wants to sell off the utility, which they fear would lead to
lower water quality and higher residential rates. Mr. Guardian said
the proposed land sale is a "poison pill" designed to protect the
water utility from privatization. Potential buyers, he said,
wouldn't want to be saddled with $110 million in debt.
He said the water utility could use Bader Field for special
events, to develop wind and solar energy or sell it to
developers.
The proposed deal passed a preliminary vote Wednesday by the
City Council but needs final approval from the state. The water
utility's board unanimously voted to buy the land, its executive
director said.
Mr. Christie's administration hasn't commented on the proposed
land deal. Sen. Paul Sarlo, a Democrat who represents portions of
Bergen County, called it a "financial shell game" that wouldn't
solve the city's underlying problems.
Moody's Investors Service released a statement Sept. 29
questioning whether the utility, which has a junk-level credit
rating, would be able to borrow the money needed to purchase Bader
Field. The credit-rating company also expressed doubt that the
land, which received a top bid of $50 million at a city auction
this summer, is worth more than $100 million.
Assemblyman Chris Brown of Atlantic County, a Republican who has
opposed state intervention in Atlantic City, said he wants to make
sure the proposal isn't a "gimmick," but understands residents'
concerns about protecting their water utility.
Atlantic City also has offered early-retirement incentives to
trim its budget. Mr. Guardian said 190 city workers have applied
for the buyouts.
Betty Lewis, who has worked for the city's planning department
for 31 years and is president of the local NAACP chapter, said
morale is low among workers at City Hall. The city's nine public
unions have been on a monthly pay schedule since March, when the
city didn't have enough cash to make payroll and the workers voted
to spread out their pay periods to avoid a government shutdown.
"Everybody's just scared," Ms. Lewis said.
The mayor said he hopes to resume a biweekly pay schedule in
January.
Write to Kate King at Kate.King@wsj.com
(END) Dow Jones Newswires
October 23, 2016 17:29 ET (21:29 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.