The Agony of Don Guardian: 14 Hours with the Man Fighting the Takeover

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Atlantic City mayor Don Guardian is attempting to stave off a state takeover of his city. Can Northern Democrats help him on the way?

The sun hadn’t risen yet when Don Guardian began his day at the Atlantic City public works yard. The mayor was facing the latest in a series of increasingly dire fiscal deadlines, and had just days to make a decision whether to make an $1.8 million interest payment on municipal bonds. If he and his advisors decided that shoring up day-to-day spending on the police and fire department and public infrastructure trumped their obligations to creditors, the city would be the first in New Jersey to default on its loans since the Great Depression.

At six o’clock that April morning, Guardian spoke to workers with the Beach and Boardwalk Division, all dressed for the unseasonable chill. He assured them the city would be able to take its approaching Summer season in stride despite deep budget cuts. Several yards away, the city’s new crop of temporary police officers — a separate, lower-paid division who work limited weekly shifts during the shore town’s busiest time of year — were lining up for their first days of one-the-job training.

That Thursday would be their second-to-last workday before Guardian made the decision not to default on those 2012 bonds, leaving the city’s May 6 payroll payment of $7 million up in the air. Guardian said in his press conference Monday morning that he doesn’t anticipate any problems making that payment.

On Monday morning, sources predicted that Guardian would announce a full payment of that $1.8 million sum — roughly the same amount of cash on hand that the city has had any given time in recent months. The city is now close to $550 million in debt, with a budget deficit over $100 million. It now owes more than $170 million to the Borgata alone. The only question now is whether the city will face a municipal bankruptcy, an aggressive state takeover of its finances, or both.

The benighted gaming capital has seen its ratable base dive from $20.5 billion in 2010 to roughly $6.6 billion today. Guardian’s task of shrinking the city’s budget and avoiding a state takeover of his city has been the leading story in New Jersey politics for months, and Governor Chris Christie’s go-to exemplar of public-sector excess.

His election in 2013 was a surprise to everyone — including himself. Despite the city’s run of bad luck the unlikely white, gay Republican mayor of a majority-black and historically Democratic tourist town may yet pull out another close victory when he goes back on the ballot in 2017. The West New York native is the first to admit that Atlantic City, which is under contract to pay out nearly $6 million in unused sick leave alone to public employees retiring this year, needs to economize even more than it already has. But those cuts, he said that morning, should be made to new contracts during collective bargaining negotiations.

“That was from collective bargaining agreements that were done 20, 25 years ago and things like that,” he would tell me later that day. “I can’t fix what’s in the past. I’ve got to honor those contractual agreements.”

Guardian famously likened the state takeover plan sponsored by Senate President Steve Sweeney (D-3), with Christie’s support, to a “fascist dictatorship.” That bill would have the state oversee unilateral changes to union contracts, mandate the “monetization” of the city’s water authority, and at long last pass a payment in lieu of taxes agreement between the city and its remaining casinos. The PILOT would would be a major step toward filling the city’s budget shortfall with funds it has lost to costly casino tax appeals since the downturn of the last decade.

Four of the city’s twelve casinos closed the year Guardian took office, taking 8,000 jobs with them. With three more currently in bankruptcy court and Atlantic City holding the title for the highest foreclosure rate in the country, the resort town is running out of ways to delay catastrophe.

He may have never anticipated the full scale of the city’s financial free-fall when he took office, but the mayor is undaunted. Guardian has confronted widespread deprivation and political dysfunction since his days working in Nigeria with Atlantic City’s rotary club during the second Bush administration. Standing next to the city’s stock of lumber for continuous repairs to its boardwalk, the mayor recalled recruiting 100 people to administer polio vaccinations in that country after previous aid workers had been killed.

“The villages were really remote. No water. No sewers. No electricity,” he said. “Along the roads, you had electronic billboards. This was ten years ago. They were all electronic when we didn’t have them yet, but there was no electricity for the people. It was just the billboards that were advertising things like computers and HVAC systems and things. And they’re all living in huts.”

When he faces public scrutiny for the potentially statewide economic fallout of Atlantic City’s default during his reelection campaign, Guardian’s affinity for contradiction and appetite for toil will be put to the test. As Christie’s fellow Republican and pro-union foil, he will be be a strange proposition for Republican organizations outside of his adopted hometown. But for a man with a job few would want, the takeover has turned him into the figurehead for a cause many lawmakers across the aisle are willing to take up.

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Guardian with City Council President Marty Small at a city planning meeting

Wearing his trademark bowtie and delivering a near-constant barrage of facts and figures in a marble-mouthed New-York-Metro accent, Guardian laid out one small example of how poorly Atlantic City’s patchwork of private investment schemes lends itself to simple belt-tightening. When it came time to replace and standardize the city’s streetlights, the legacy of a 25-year casino boom presented unexpected challenges.

“They buy something really cool, from some guy in Italy that stops making them,” Guardian said. “And now it’s turned over to the city and bulbs are like $400. It’s like, the light only cost $400! How can they have a $400 bulb now?

“We don’t know who owns what,” he continued. “It is so much bigger than we ever anticipated. It seemed like such a simple thing.”

As heir to the arcane debts, obligations and public-private partnerships that connect Atlantic City’s industrial hub to its municipal budget, Guardian would have had his work cut out for him during the best of times. As things stand, he is the first mayor forced to admit that the rococo, plot-by-plot variety of the tourism district was never intended for the city’s sole stewardship. With casinos’ contributions to the city’s tax base now part and parcel with the PILOT and two competing takeover bills, the money to address pressing issues like those streetlights, new public housing and the city’s underfunded schools is caught in limbo as the legislature hashes out a compromise.

Lately, Guardian’s days often run past the twelve-hour mark. From testifying against the takeover in Trenton to judging a late-night Vietnamese spin-off of the Atlantic City’s Miss America Pageant to making his daily rounds with the press, he tells me his schedule is typically full from sunrise to sunset, Sunday to Friday. Ever since Sweeney’s original takeover bill saw a challenge from the lower house, Guardian has had to maintain that hummingbird’s pace to help secure 41 votes for the rival bill from Assembly Speaker Vince Prieto (D-32). The Assembly bill would offer the city two more years of benchmarks and a five-person committee made up of elected officials from the city and appointees of the governor. That bill is expected to go to a vote this Thursday.

Guardian’s Assembly counterpart Chris Brown (R-2) has been one of the the Prieto bill’s fiercest proponents, and recently came on as a co-sponsor. Brown and a clutch of Northern Democrats have come out against the bill for its bellicose approach to tearing up union contracts, and for its disenfranchising voters (Senators Nia Gill (D-34) and Ronald Rice (D-28) of the black caucus have joined the state NAACP in condemning the Sweeney bill). Prieto had 38 expected votes as of that Thursday morning.

On the way from the public works yard to the mayor’s interview with local news station WOND, Guardian’s chief of staff Chris Filiciello had the radio tuned to host Don Williams to hear what the mayor would be walking into. Williams was speaking freely about the takeover effort, and pointing to insurance executive George Norcross III’s support for Sweeney’s bill.

One of the most powerful unelected officials in the state and head of South Jersey’s influential Democratic machine, Norcross has family ties to the New Jersey American Water — the company most likely to purchase the city’s water authority if the state moved to privatize. He also has financial ties to a Washington, DC super PAC that recently funded pro-takeover radio attack ads against Brown.

“To put all that power in the hands of one person… who would that be?” Williams asked over the air. “Do the governor and Sweeney have somebody? Well let’s just cut to the chase, huh? Let’s just put George Norcross in there. He’ll be that man.” 

It was difficult to tell how sarcastic Williams was being (Under the Sweeney bill, that one person would be the director of the Local Finance Board, or the director’s designee). As the station cut to commercial and the car sped through neighboring Egg Harbor Township, Filiciello laughed as if to throw up his hands. Guardian kept his eyes on the dial. When we passed an abandoned Travelodge motel, he lamented that the property is not equipped for dining and lies outside the city limits anyway.

The priority for the day, Filiciello told me — between three city planning meetings, a meet-and-greet with city workers’ children, a quick wedding at city hall, and a TV interview before rotary that evening — would be drumming up votes for Prieto’s bill at a luncheon with Lieutenant Governor Kim Guadagno at the Borgata.

Guardian, his staff and private investors discuss plans to create a pedestrian community space on Tennessee Avenue

Guardian, his staff and private investors discuss plans to create a community walkway on Tennessee Avenue

Later, Guardian was talking urban renewal at his weekly meeting with Elizabeth Terenik, director of the city’s planning and development department. As the two discussed new bike lanes, a fully vertical ‘Polercoaster’ and a searchable public database of foreclosed properties, the mayor introduced some much-needed levity. Terenik lit on the question of whom to target when Atlantic City markets its newly dirt-cheap real estate. When she mentioned the family-sized homes that surround what Guardian hopes will become a condo-heavy beachfront, he laughed.

“That’s what you’d want to stabilize the neighborhood, instead of letting all the gays come in and have the money and gentrifying everything for everyone else,” he said, giggling. “Good Christians reading the bible, or gay people. We’ll see.”

“Well, whatever works!” Terenik said.

Headlines and editorial boards may draw comparisons to Detroit and Flint, MI today, but Asbury Park will be the closest parallel if Guardian gets his way. Philadelphia, that other Mid-Atlantic city where you have likely fallen through an open manhole if the road has risen to meet you, serves as his inspiration for drawing well-heeled thirty-somethings to luxury rental units. But the execution of those ambitious plans depend on his reelection in 2017, and on his ability to create a coalition out of his Democratic supporters in the North and a few choice Southern Republicans.

There is a good chance Guardian’s opponent that year will be City Council President Marty Small, his closest ally in the fight for the Prieto bill. With their fiery public appearances, Guardian will be forging ahead against a black Democrat as an open and enthusiastic critic of the most powerful Republican in the state. Though that leaves him with little to lose among the Atlantic City electorate, Guardian’s potential folk-hero status could present a problem when he goes looking for fundraising support from Republican leaders. Asked about the possibility of running against each other, Small and the mayor are mutually cordial.

George Gilmore, chairman of the powerful Ocean County GOP, offered late fundraising support to the mayor’s first campaign and could do so again. Gilmore could also prove to be instrumental in pushing Prieto’s plan through — and buying Guardian enough time until Christie is out of office — if he argues the mayor’s case to the county’s eight Republican Assembly members. If he doesn’t, it could be a sign that Guardian won’t be able to count on that that support again. As of this writing Brown, Erik Peterson (R-23) and four other Republicans are expected to come down in favor of Prieto’s bill.

Dennis Levinson, Atlantic County Executive and the area’s most influential Republican, has been harsh in his criticism of Guardian’s spending and vocal in his support of Christie and Sweeney’s takeover proposal. The language of the Senate bill would give the county its long-sought after 13.5 percent cut of revenues from PILOT. Levinson was standing alongside Christie when the governor said he would not meet with Guardian to discuss the Prieto bill because there was “no purpose in meeting with a liar.”

Guardian’s high-profile campaign against the takeover will undoubtedly be the foundation on which he builds his case for a second term, whether a compromise turns out to favor Prieto or Sweeney. In the same room at city hall where Terenik reviewed the complex network of public grants and private investment that have kept construction possible during the budget crisis, I asked Guardian about the month since Prieto unveiled his bill during the brief reprieve.

Though he appeared at the same podium where Sweeney and Christie announced the takeover back in January, Guardian has since said that he was not told the full details of the Senate bill when he appeared in Trenton that day. Christie, who attended a secret meeting at the governor’s mansion along with Sweeney, Levinson, Norcross, former Atlantic City mayor and now Senator Jim Whelan (D-2), and Assemblyman Vince Mazzeo (D-2), has said that Guardian knew the terms of the takeover agreement.

On that seeming change of heart, Guardian and Filiciello said that Guardian had been in touch with Prieto to negotiate for more time before he ever publicly agreed to what Sweeney and Christie dubbed a “partnership” with Atlantic City.

“The Prieto bill is what we thought everyone was in agreement on,” he said. “And that’s why we were shocked to see the other one.”

Guardian took the opportunity to make his case for the Prieto bill, which would have a five-person panel made up of city officials and members of the governor’s administration make the decisions. He questioned the state’s record in Atlantic City since Christie first appointed an emergency manager in 2010, a step that did not lead to reduced city spending.

“You had all these experts from the state come in, and they haven’t fixed it. You know, we’ve been cooperative for two years, so don’t beat us up. You sent an emergency manager, you sent in Ernst and Young, we have a monitor, we’re making these cuts but you want to see $50 million worth of cuts, $75 million. It’s just not possible,” Guardian said. “Help us restructure the debt. Help us settle with the Borgata.”

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Guadagno addresses the New Jersey Conference of Mayors

 “Just in case you become acting governor one of these days, I’ve got this PILOT bill I’d love for you to sign,” Guardian said as he introduced Guadagno at the New Jersey Conference of Mayors luncheon. “I can make all the jokes I want just as long as I make the bond payment on Monday, right?”

Though Guardian has been at war with Christie in the press, he and the lieutenant governor shared an easy rapport that day. One of the top contenders for the Republican nomination in 2017’s gubernatorial race, Guadagno took the helm during Christie’s long absences on the presidential campaign trail.

If it was a bitter pill to speak at the Borgata, the mayor didn’t let it show. If speaking at a lunch where the afternoon’s chicken fillet was paid for in part by New Jersey American Water, he didn’t let that show either. Guardian kissed the Lieutenant Governor on the cheek and gamely chuckled at her jokes as she delivered her keynote speech to a heavily Democratic crowd. Guadagno congratulated the room on the state’s reduced unemployment rate and offered her personal cellphone number to a skeptical crowd.

Luncheon-goers immediately set to texting Guadagno over their dessert plates. When at the end of her remarks Guadagno cried victoriously that she was “going back to Trenton,” applause was sluggish.

Guardian and Caruso

Guardian and Caruso

Guardian had been deep in conversation with Bill Caruso, the former executive director of the Assembly Majority Office and a man who has the ear of precisely the Northern Democrats Guardian needs to give the Prieto bill a fighting chance. Christie has called the dust-up between Prieto and Sweeney an attempt on the Speaker’s part to damage Sweeney politically in his primary campaign against Jersey City mayor Steve Fulop, Prieto’s fellow Hudson Democrat. Though Fulop courted Atlantic City voters with a tour of the tourism district last month, that visit quickly backfired when he expressed doubts about allowing a new casino in Jersey City.

One of the defining issues in the 2017 gubernatorial race will be that new casino, and its cousin in the Meadowlands. Sweeney fought hard against Prieto to cut a deal more favorable to Atlantic City and its existing casino operators when the legislature weighed sending a ballot question to voters earlier this year. Guardian and Brown’s Northern foes in the push for new casinos and a further dilution of Atlantic City’s one-time monopoly have quickly turned into some of their most valuable allies. The Senate bill would allow for casinos to opt out of the PILOT program if North Jersey casinos open, while Prieto’s bill has no such exemption. Expansion supporters like Assemblyman Ralph Caputo (D-28) have called that Senate amendment a mistake.

Few ventured into the adjoining exhibition hall where South Jersey Gas, the Board of Public Utilities and others had booths set up to pitch cost-saving plans and products. After shaking hands the long way down the stage, Guardian made a bee-line for his Comcast Newsmakers interview on the exhibition floor.

Guardian has allowed that delaying the takeover until Christie is out of office would be a shrewd political move on Prieto’s part. When the Speaker’s bill cleared committee, he said diplomatically that all the leading candidates of either party “are going to be very favorable to working with municipalities, and i think they would be very supportive.”

“What’s good for Atlantic City is good for the state,” he added at the time.

Allegiances to the Hudson and Camden County Democrats do not make a perfect through line when tallying up which members support which takeover bill. Even now, as Prieto’s bill is expected to go to a vote before the end of the week and Christie is reportedly calling members of the Republican caucus in a panic, many legislators of either party are still undecided. Assemblymen John Wisniewski (D-19), Wayne DeAngelo (D-14), Jerry Green (D-22) and those Republicans from Gilmore’s sphere of influence were still up in the air as of this writing.

With the Southern delegation and the procession expansion contingent’s willingness to Sweeney and Norcross crucial to the Prieto bill’s success, Guardian acknowledged that the casino amendment and the gubernatorial race that will top the ticket when he goes up for reelection could affect the outcome in the Assembly.

“Clearly, AC is kind of a pawn in what’s going on,” he said. “I’m not familiar enough. I’m too new as an elected official.”

Guardian answering questions at a public meeting of the Chelsea Neighborhood Association

Guardian answering questions at a public meeting of the Chelsea Neighborhood Association

Though Guardian eventually cleared the hurdle of the weekend’s bond payment, there are still miles to go until Atlantic City sees the kinds of late nights that fueled its crazed heyday in the eighties and nineties. Local Finance Board Director Tim Cunningham wrote to Guardian in March to warn of the consequences of default. Though it has been several weeks since Christie has repeated his threat of forbidding the city to declare bankruptcy, even that last resort would have massive consequences for AC and the state as a whole.

“Defaulting on outstanding debt will have long-term and practically irrevocable deleterious impacts on the city,” Cunningham said in his letter. “In addition, the city will be required to publicly disclose the non-payment default, which would trigger reverberations throughout the public finance community and prevent the city from accessing the capital markets for a longer period of time than is even currently envisioned.”

That Friday the Casino Association of New Jersey, which represents Atlantic City’s remaining casinos, issued a statement calling for Prieto to post his bill. If he doesn’t have those 41 votes and the measure fails, the group said, Sweeney’s bill should go to the Assembly.

“We are all now on the edge of the abyss, and this impasse must end,” the statement read.

The city now needs to muster up $7 million dollars before the second week of May to keep up payroll. And the worst case scenario of Prieto and Sweeney failing to reach a compromise is still a distinct possibility. Even if Prieto’s bill passes this week, Christie could easily veto it just as he did the PILOT package earlier this year.

By eight o’clock that Thursday night, Guardian had dark circles under his eyes and his demeanor had become looser but no less genial. He had just come from an event at Golden Nugget, where he quietly nursed a beer in a cramped glass overlook before reassuring his fellow rotarians that he would be doing everything he could to avoid default. At his final engagement that day, a public forum with the Chelsea Neighborhood Association at the Sovereign Avenue School, he fielded questions on how the city plans to stay afloat without further intervention from the state.

When one man brought up the choice between the Senate and Assembly bills, he expressed doubt that the Prieto bill’s proposed five-person committee would be able to come to consensus on the hard choices ahead. The mayor’s comic timing was impressive as he lowered his eyes, held up his index finger and invoked the alternative: “one dictator.”

After nearly an hour of questioning from the crowd, Guardian sat down at one of the cafeteria tables and allowed himself to hunch over for the first time that day. The next speakers, employees from the Chelsea hotel, got up to assure the crowd that the hotel is indeed open. And with that, the mayor’s day was finally over.  The Agony of Don Guardian: 14 Hours with the Man Fighting the Takeover