Atlantic City Avoids Repaying New Jersey Loan But Loses Aidby and
Distressed gaming hub won’t get $11 million remainder
City failed to meet conditions of $73 million lifeline
Atlantic City won’t have to immediately repay New Jersey $62 million it borrowed after it broke the state’s conditions for the loan, but it won’t get the remainder that had been pledged.
The distressed gaming hub failed to approve actions needed to dissolve its water authority, as required by the state as collateral for the $73 million loan package that helped pull it from the brink of bankruptcy.
New Jersey could have demanded full payment of the amount already advanced after notifying the city of the breach on Tuesday, but chose not to, said Tammori Petty, a spokeswoman for the Department of Community Affairs, which oversees the seaside resort.
"We will not, however, provide any additional advances under the loan, and state aid will be withheld as necessary to ensure that the loan is fully collateralized," Petty said in an e-mail Wednesday.
The loss of the remainder of the loan and the specter of even less cash assistance make it more difficult for Atlantic City officials to stabilize municipal finances. The city, which has been headed toward insolvency since a third of its casinos closed in 2014, has until Nov. 3 to develop a five-year fiscal blueprint and avoid a state takeover.
"I want to thank the DCA for giving us a much-needed reprieve regarding the MUA and for giving us the necessary time to put together our 150 day plan,” Mayor Don Guardian said in a statement. “Once we submit the plan and begin implementing it, we believe we will start on the path of economic revitalization of Atlantic City for many years to come."
The state could sell its assets and void or change labor contracts through expansive powers awarded by the legislation intended to prevent the city’s collapse.