A rescue plan for financially strapped Atlantic City passed in the New Jersey legislature has not belied fears that the resort will default on bond payments while it waits for monies allocated by the state to arrive.
Specifically, Moody’s Investors Services issued a report saying the city could default on a $3.4 million bond payment due August 1 since it has yet to receive a $74 million loan from the state, which was part of the rescue plan. However, Atlantic City Mayor Donald Guardian quickly announced that the city will make the payment, even as it is still trying to secure the loan.
“We’re absolutely making the bond payment on Monday,” Guardian told Bloomberg News.
Moody’s had said that the payment could be delayed because of the red tape which has so far held up the city receiving the money from the state loan—a default they said could ultimately lead to a bankruptcy.
Guardian said that the city and state were close to agreeing to terms on the loan, but that the city had the funds to make the bond payment regardless. Guardian said the agreement has taken longer than expected, partly because the loan is being backed by casino-funded marketing funds that were held for the city as part of the rescue package.
New Jersey Governor Chris Christie blamed the city for the delay, saying city officials were trying to negotiate better terms for the loan even though they are in ”no position” to do so.
“They’re marking up the loan agreement,” Christie said at a public appearance.
However, the delay has led to calls by Atlantic City Council President Marty Small for an extension of a state deadline for the resort to file a fiscal management plan. The rescue package gave the city 150 days to devise a financial plan that would deal with the city’s more than $550 million in debt, or the state would move to take over its finances.
Christie said the city has “no chance” of an extension.
