State Authorizes Takeover Of Atlantic City

A New Jersey state official will have power over certain operations in Atlantic City for the next five years after the Local Finance Board 5-0 in favor of a state takeover of Atlantic City on Wednesday, according to published reports.

That official will either be Local Government Services Director Tim Cunningham or someone he chooses, according to The Press of Atlantic City. Cunningham is the chairman of the Local Finance Board, and recused himself from the vote.

Atlantic City Mayor Don Guardian testified during the hearing on Wednesday, saying the city shouldn’t be a “ward of the state,” according to the report. Solicitor Anthony Swan told the board it should only use powers to fix the city’s finances.

Powers the official would have include the ability to sell the city’s assets, break union contractors, hire and fire workers and reverse decisions of city council, according to nj.com.

Guardian previously said he would challenge the decision legally if it were approved, but on Wednesday said city officials would meet with the state first, according to the report.

"Despite the possibility of debt restructuring, Moody’s views the state takeover as credit positive because the state certainly has the ability to make Atlantic City’s forthcoming debt payments on December 1 and 15, and it was questionable whether the city could make those payments without financial assistance," Moody's said in a statement issued Wednesday afternoon. "Atlantic City will become the first city to be taken over by the state since Camden in 2002, and we will watch developments closely to determine how they will impact the city and the city’s Municipal Utilities Authority. The city has previously stated that it would appeal a state takeover. It is not yet clear how this might impact the timing of a takeover or the payment of debt service."

Five casinos have closed since 2014, and Atlantic City is $500 million in debt.

But as NorthJersey.com points out, New Jersey's state takeovers don't ensure success. The state took over Camden in 2002 and ended in 2010. The result was new medical facilities, but the city's residents who had been struggling continued to struggle.

On Tuesday, voters across the state defeated a referendum that would have permitted casinos to be built in North Jersey. The referendum in part, proposed pumping revenue made from the casinos back into Atlantic City, to compensate for money lost to casinos in Pennsylvania and New York. Many voted against the referendum because the details were unclear and they believed it would actually harm Atlantic City even more.

Patch file photo