In a rare spirit of cooperation between New Jersey and Atlantic City, the state’s Department of Community Affairs has given the city a break on its loan obligations to the state.
The DCA said it will not demand the city pay back a $73 million state loan even though the city is technically in breach of the loan.
Tammori Petty, a spokeswoman for the DCA told Philly.com that the state has “elected not to accelerate the repayment terms,” due “to our continued working relationship with the City.”
The state loan was designed to keep the city operating while it works on a financial plan to restore the city to fiscal solvency. The city faces about $500 million in debt it currently cannot pay back.
As part of the loan agreement, the city was to dissolve its independent Municipal Utilities Authority, so the water utility could be used as collateral for the loan. The Atlantic City Council, however, refused to vote to dissolve the authority, putting the loan in jeopardy.
The city has until Nov. 5 to come up with the plan under a rescue bill passed in Trenton for the city. If the state rejects the plan, it will move to take over the city’s finances.
Atlantic City Mayor Donald Guardian had asked the state for a reprieve from the loan breach.
“I want to thank the DCA for giving us a much-needed reprieve regarding the MUA and for giving us the necessary time to put together our 150-day plan,” he said in a press statement. “Once we submit the plan and begin implementing it, we believe we will start on the path of economic revitalization of Atlantic City for many years to come.”
Atlantic City also has a $9 million bond payment due Nov. 1, which it now seems it will be able to meet.
Petty told Philly.com that the state “will continue to work with the City to allow officials to take appropriate actions.”
