A state loan of million to Atlantic City—part of a package of rescue bills passed by the New Jersey Legislature—is being heavily backed by the city’s remaining assets, including its Municipal Utilities Authority.
The loan is needed to keep the city out of bankruptcy as it continues to grapple with a shrinking casino base and a better than $500 million debt.
But New Jersey Governor Chris Christie has required that the city put up all of its remaining assets to back the loan. That includes the MUA and other assets like its former municipal airport Bader Field.
“I want it secured by every asset they have, so that if they don’t pay it, I get to take the assets, sell them and pay you the taxpayer back,” Christie said at a recent appearance. “My job is to protect the interest of the people who are giving them that $74 million, and that’s all the people in the rest of the state.”
The Atlantic City Council will begin the process of dissolving the city’s Municipal Utilities Authority in the fall, which would give the city control of the MUA’s assets and revenue. State lawmakers have long pushed for the city to sell and privatize the water authority to help pay down the city’s debts, but city officials have wanted to keep the MUA since it is self-sustaining and to protect lower water rates for residents.
City officials are confident, however, that the resort will not default on the state loan. They say the city will use casino-funded marketing funds—totaling about $60 million—and other monies that are being directed to the city under the rescue plan to pay the debt. The city has been given until November 3 to devise a fiscal plan for the city to restore it to fiscal solvency. If that plan is not approved by the state, however, it will move to take over the city’s finances.
Atlantic City Mayor Donald Guardian has said that the state’s terms for the loan—which was negotiated through the state Department of Community Affairs—were “overreaching,” and pointed out that if the funds from the rescue package had been given to the city by now, it wouldn’t need the loan at all.
“We have been creative and steadfast in our resolve to maintain the city’s fiscal integrity,” Guardian told Philly.com. “More recently we had to work with the state to attempt to lessen the restrictions on a proposed loan agreement that the city regarded as extremely overreaching.”
But Christie has criticized the city for trying to negotiate better terms for the loan.
“I’m the steward for your money, so I’ve set out requirements for the loan which I am authorized to do by the Legislature,” Christie said at his press conference. “They sent it back all marked up. ‘We want to change this. We want to change this.’ Excuse me? You’re asking for $74 million to stay alive, you should just say, ‘Where do I sign? Thank you, sir.’ Like a bank, exactly right. You mark up your loan documents with the bank? I never did.”
