Guardian Attacks Sweeney-Led State Takeover in Open Letter

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As Atlantic City grapples with the possibility of bankruptcy, Mayor Don Guardian is pushing back against a proposal from Senate President Steve Sweeney to bring in greater oversight with a state takeover. The state takeover would likely see Trenton sell the city’s water utility, and the defunct airport at Bader Field. See Guardian’s full open letter addressing Sweeney’s plan below.

Eighteen months ago, Governor Chris Christie and Senate President Steve Sweeney conducted three summits to help Atlantic City.  At the time of the second summit, Senate President Sweeney sponsored a series of bills that would redirect casino funds from the State directly to the City, lock in future casino property tax payments, and prevent casinos from further blistering tax appeals. Important help indeed and greatly appreciated, but sadly, eighteen months later those much needed and promised funds have still not made their way to Atlantic City.  In conjunction with the Senator’s actions,  City Council and I proposed a financial recovery plan that we believed would lead to fiscal stability. This plan largely went unacknowledged by the State although many of its recommendations were eventually parroted by the State’s own team.

At the conclusion of the third summit, the Governor issued an executive order creating an Emergency Manager. He hired two finance gurus who had assisted fiscally troubled corporations find their way back to financial health through tough decisions, and in some cases, bankruptcy. The Emergency Manager, Kevin Lavin and his special consultant Kevin Orr, had a budget of millions of dollars at their disposal and hired Ernst & Young restructuring accountants, former US Bankruptcy Judge Steckroth and the Skadden Arps law firm law firm, some of which worked on the Detroit bankruptcy.  Their role was to determine how to turn Atlantic City around, negotiate the legacy debt down with the city’s major creditors such as Borgata and file a report setting out a pathway to recovery.  The City took the extraordinary step of welcoming the team as tools in our budget tool kit and did not wait for the report to be completed but met, sometimes on a daily basis, and implemented recommendations of the emergency manager right away. The release of the much anticipated follow up report was delayed for months but acknowledges the unprecedented action of the City in reducing costs.

It is worth noting that as the Governor’s summits were taking place and the emergency manager and his team were hired, Moody’s Investor Service was watching and voicing concern over the retention of what appeared to be bankruptcy specialists. Concern over whether bond holders would receive their payments or be mired in a bankruptcy was a primary issue. As a result, the city’s bond rating went straight down the tubes. However, the city has never missed a payment to its bond holders.

Furthermore, the recommendations of the Emergency Manager that include continued reduction in the City and School budget, additional reduction in staffing for City and School employees, finding new sources of revenue beyond property taxes, having the State of New Jersey provide comparable funding to the City and School District as they have in all the other urban communities in New Jersey, re-direction of casino funds to the City and implementation of regional and shared services where they provided financial savings are all not only acceptable to the City but is the path we have followed for the past two years.  To suggest that the State wants to take over the City so that the City follows the recommendations of the State makes no sense since the City has followed every recommendation of the Emergency Manager that the State appointed.

The City is not mismanaging its finances. The State’s Department of Community Affairs, Division of Local Government Services and Local Finance Board through the State Supervision Act are in control of the City’s finances. Point in fact, the Local Finance Board adopts the City’s budget. During my tenure in office the Local Finance Board has approved each budget. Our last budget was not given to City Council for consideration, it was all done at the State level.   In addition, the City has continued to show good faith by voluntarily entering into an agreement with the State. In other words the State, through a “Memo of Understanding” with the Mayor and City Council has veto power over all hires, fires, salary changes, redevelopment and contracts relating to finance and has placed a State Monitor over the City to ensure compliance with its directives.  In a similar manner, the City has followed the recommendations and directives of the Division of Local Government Services as handed down by its State Monitor.   No other City in the State has this level of supervision over its day to day operation and its finances. In other words, every major decision that the City has made during my administration has been checked, double checked and checked again. We couldn’t mismanage a paper clip without a review.  The wakeup call to those above us is this: A simple one step to solve all the problems created over the past 35 years does not exist.  And more to the point, they most certainly will not be fixed in just two short years.

Bader Field is always for sale.  Let me repeat – Bader Field is for sale right now.  And when we can receive an authentic and reasonable offer, the City will gladly sell it as to eliminate all our debt and reduce our budget resulting ultimately in a considerable reduction in property taxes for our residents.  However, no such credible offer has been made in several years.

The Emergency Manager, working for the Governor, has clearly stated that selling the MUA makes no sense since the water fees will increase so drastically that it will simply be another form of tax.  Rather the Emergency Manager has recommended, as has the City Administration, that the MUA ceases as an authority and becomes a City utility.  The estimated $4 million savings annually would be used to further reduce our tax payers burden.

Selling Gardner’s Basin for development cannot lawfully occur.  Here’s why.  A very, very long time ago, City officials accepted Federal funds to help keep the park green in perpetuity through the Green Acres Program and so consequently, through past legal constraints, it can never be fully developed.

Glaringly not listed in the Emergency Manager’s report are the City assets that we are already selling: including Boardwalk property owned by the City and Garden Pier.  What the report did not include is the State steadfastly owning more than 600 parcels of land and not paying property taxes or a Payment-In-Lieu-of-Taxes on them and its budget impact.  The report does not mention the State owning Boardwalk Hall and the Atlantic City Convention Center and not paying property taxes or a Payment-In-Lieu-of-Taxes on them.  The report conspicuously fails to point out that the Atlantic County Executive Offices and Court House, which are both located in the heart of downtown Atlantic City, are not paying property taxes or a Payment-In-Lieu-of-Taxes on them either.  Yet, Atlantic County is still poised to reap a 2 ½ % increase from the casino PILOT bill than the Atlantic County Tax Accessor has determined as the fair amount for the City to pay the county.

Public safety has always been a point of contention when it comes to contracts.  The very serious cuts in the Atlantic City Fire Department that were recommended were completed in 2015 through the new collective bargaining agreement and SAFER grant and meet all the recommendations provided by the State.  One on the outside should take a minute to see what meaningful reductions were made here, compared to where we were just two years ago. We made cuts to the Atlantic City Police Department  of $5 million dollars during a time period where their existing collective bargaining agreement was in place, while experiencing historic drops in crime.  Cuts in circumstances like that are unheard of.  And even as the report was made public on Friday, January 15th, members of the PBA and City Administration were working hard to negotiate a new agreement to meet the State’s recommendations.  A County-wide urban police department will not save money and more importantly may erode public safety.  The proposed dispatch center the County is planning will cost Atlantic City alone $500,000 more than the city pays now for services already provided.  We have already made definitive progress within the confines of all options available to us.

So why have the plans not worked out yet since the residents elected me Mayor of Atlantic City?  Time and fairness.  More time is needed as we continue to bring new businesses into our City that will both pay more taxes and create more jobs.  It has taken too much time to receive the promised funding from the State and redirection of casino funds that we need.  If we are honest, the CMPTRA aid that Atlantic City receives from the State should be closer to $70 million dollars instead of over just $10 million a year.  Had the CMPTRA aid been equal to the cities in other urban areas, we would not be in the financial trouble we are in today. Rather than providing the increase in CMPTRA that the emergency managers’ report provides, the State unashamedly told the city to delay $40 million dollars in payments to the State health and pension plans.  Now the Monday morning quarterbacks can call that smoke and mirrors, but we simply followed the State’s recommendations.

Why would certain elected officials representing various electorates in Atlantic County exclude the Mayor of Atlantic City from the meeting with the Governor’s advisors at the Governor’s mansion just weeks prior to a draft announcement of a State takeover?  Why would the State now want to strip the civil rights of a municipality by stripping its elected officials of the authority entrusted to them by the local residents who Democratically elected them?  The last time I checked, our forefathers fought a brutal revolutionary war to break free of tyranny from afar for these very same reasons.  And more recently, our beloved Dr. Martin Luther King lead the fight for individual civil rights.  What do both these powerful movements of freedom have in common?  Both were about the right to self-govern.  However, this basic right is getting closer and closer to being trampled on this year.  Do not think it cannot happen in your hometown.

Finally, it has been stated that Trenton officials are fatigued with Atlantic City.  Well, I am 61 years old and rarely work less than 80 hours weekly.  I am not fatigued.  Atlantic City has sent more than $21 billion dollars to help all residents of our great State in the past 30 years without a fair rate of return on our money and we are not fatigued.  Kindly reimburse that money and do not ask for anymore if you are so fatigued.  If some elected leaders are too fatigued to help New Jersey residents in Atlantic City, then do not block those who have the energy and stamina to accept their true role of representing all New Jersey citizens.  Our City comes to the table every morning in a cooperative spirit to work with the State and Federal government leaders, as well as the public and private sector leaders.  As long as I am Mayor of Atlantic City, we will continue to work with those legislators who have the strength and endurance to do what’s right for New Jersey and who want to help improve the quality of life for the citizens of Atlantic City.

Guardian Attacks Sweeney-Led State Takeover in Open Letter