ATLANTIC CITY, N.J. (CBSNewYork/AP) — Trying to dig Atlantic City out of “an enormous hole,” New Jersey Gov. Chris Christie on Thursday 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 but still-unspecified 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.
But neither would say whether a Detroit-style bankruptcy filing is in store for Atlantic City, calling such talk premature.
“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.”
Christie’s executive order tasks Lavin with preparing a plan within 60 days 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.”
It gives the manager the power to negotiate with anyone affected by those changes and says that “all state and city agencies and employees must cooperate.”
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 Atlantic City Mayor Don 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.”
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 groaning under the weight of a $260 million budget, and the local tax rate has doubled since 2010.
Guardian agreed the city needs to trim budgets and eliminate jobs, saying he has already begun doing so in his first year in office. He said he needs to see exactly what powers the two men will have before commenting in detail on their appointment. But City Council President Frank Gilliam had no such reticence, calling the appointments unnecessary.
“Anytime they usurp our power, we have a problem with that,” he said.
The two men 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.
Other proposals include creation of a public-private development corporation to bring new business and residents to the city; and diversion of casino investment taxes now used for redevelopment projects to help pay down Atlantic City’s municipal debt.
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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