Atlantic City bankruptcy possible as Christie names manager

ATLANTIC CITY, N.J. (AP) — In naming an emergency manager for Atlantic City on Thursday, New Jersey Gov. Chris Christie left the door open for the seaside gambling resort to file for bankruptcy if it can’t get its finances under control.

The Republican governor and likely presidential candidate appointed a corporate turnaround specialist as the city’s emergency manager, and tabbed the man who led Detroit through its municipal bankruptcy as his assistant.

Corporate finance consultant Kevin Lavin will have broad powers over Atlantic City’s finances and operations. Kevyn Orr, who helped lead Detroit through a financial crisis, will serve as special counsel to Lavin. Christie issued an executive order appointing the men, and requiring state and local agencies and workers to cooperate with them.

Neither man would say whether a Detroit-style bankruptcy filing is in store for Atlantic City, calling such talk premature. But the emergency order Christie issued gives Lavin the power “to place the finances of Atlantic City in stable condition on a long-term basis by any and all lawful means, including the restructuring of municipal operations and the adjustment of the debts of Atlantic City pursuant to law.”

“This is urgent; the trend lines for the city are not good,” Orr said after being introduced at the third summit meeting Christie convened on ways to help the struggling seaside gambling resort. “The situation is not going to change.”

Pressed on a possible bankruptcy filing, Orr said, “We are going to be very candid with that discussion. That will be something we will decide in due course.”

Atlantic City lost four of its 12 casinos last year, and three others are in bankruptcy. The governor said the city’s 40,000 residents are struggling to pay taxes needed to support its $260 million budget, and the local tax rate has doubled since 2010.

Mayor Don Guardian, who said he views the manager as an additional tool to help the city, noted that he has already begun painful budgeting that he likened to a root canal. The city is cutting $40 million from its budget over the next three years, and eliminating 250 to 300 jobs this year.

City Council President Frank Gilliam called the appointments unnecessary, but said he both sides should work together.

“Anytime they usurp our power, we have a problem with that,” he said.

Lavin said his biggest task will be getting the many stakeholders in Atlantic City — which include its eight casinos, local and state officials, residents and others — to agree on necessary solutions. He and Orr promised to work with Guardian and the City Council, and rejected claims they were engaged in “a takeover” of the city.

Christie said Atlantic City still is not on the right track and needs help with its finances and management.

“I can’t wait any longer,” Christie said. “We need to take more aggressive action. We are digging out of an enormous hole.”

The appointees, who are already calling themselves “the two Kevins,” would not say what their salaries are or how long their appointments would last. They said they still don’t know where they will work each day.

Since the last summit on Nov. 12, Democratic and Republican state officials have advanced differing aid proposals. Democrats led by state Senate President Steve Sweeney want to let casinos make payments in lieu of taxes — called the PILOT plan —and help reduce the city’s debt.

Republican Assemblyman Chris Brown opposes the casino program, arguing all Atlantic County property owners should get a tax freeze.

The idea of the PILOT plan is to give the casinos cost certainty while eliminating costly and unpredictable tax appeals that have deprived Atlantic City’s treasury of tens of millions of dollars in recent years.

Christie said he is not rejecting any ideas for now, but prioritized the emergency appointments as those that would accomplish the most in the shortest amount of time.

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Wayne Parry can be reached at http://twitter.com/WayneParryAC

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