New Jersey’s Local Finance Board is expected to decide this Wednesday whether to extend its oversight of Atlantic City’s finances for a third straight year, officials said.
The board is also scheduled to vote Wednesday on Atlantic City’s proposed $103 million bond to offset the effects of tax-appeal cases settled this year, according to the agenda.
New Jersey first began monitoring the city’s financial operations in the fall of 2010. That oversight was extended last year, but with fewer restrictions that restored some of the city’s financial autonomy.
Now, the city is once again facing a financial crisis that requires the state’s approval to solve. Last week, Council voted on the first of two authorizations to borrow $103 million to cover massive tax appeals generated property owners—mainly casinos—who’ve lowered their property tax assessments through appeals.
The city’s second vote on the matter is scheduled for Sept. 26.
More than 60 towns have sought permission for tax appeal-relief bonding since 2011, state records show.
But for Atlantic City, this is the third time in as many years that tax appeals — driven by the slumping multibillion-dollar casino industry — have created such a scenario.
That may lead the state to continue its oversight.
“It’s my understanding that the DCA has wide discretion to impose all kinds of conditions on the extension of any kind of assistance whatsoever, at least that’s the way they feel,” said laywer George Frino, who heads the city’s legal team focused on fighting tax appeals.
Intended to last a year, the original deal was struck in October 2010. City Hall swapped some financial autonomy for permission to exceed the 2 percent state limit on annual tax increases by nearly $10 million. Ultimately, the state agreed to a $2.2 million cap waiver and $8.7 million bond to help pay off casino tax appeals.
Two years later, the situation has worsened and state oversight continued.
The city agreed to tax appeal settlements providing rebates totaling $35 million in 2011 and $108 million in 2012.
Now, some officials are predicting they’ll owe $40 million after Revel, Tropicana and Borgata conclude their cases next year.
To make those payments, the municipality bonded $35 million in 2011.
Since 2010, appeals have lowered the citywide ratable base nearly $4.5 billion. Casino property value decreases account for most of that. The casino industry’s annual revenus was down to $3.3 billion last year from $5.2 billion in 2006.
“Being a one-industry town, we've been crippled by that, more or less,” City Councilman Frank Gilliam. “Based on the financial situation we've been in, we've handled things pretty solidly. We ... (are)doing the best we can with what little support we have from … the state.”
The original financial oversight agreement came together eight months after the State Commission on Investigations released a report detailing more than $23 million in wasteful spending by Atlantic City government, based on longstanding fiscal practices.
The investigation that revealed them occurred before Mayor Lorenzo Langford’s current term. But it’s Langford and his Cabinet whose spending decisions have been subject to state review during most of their time in power.
As the first year of supervision drew to a close last fall, the city agreed to extended oversight that restored some of the financial autonomy. It is unclear if the proposed third year’s stipulations would revert to the stricter, original terms or continue to grow more relaxed.
DCA Spokeswoman Lisa Ryan declined to provide more details until the Local Finance Board convenes Wednesday.
Langford and Business Administrator Ron Cash did not return calls or emails.
City Director of Revenue & Finance Michael Stinson said he has not been involved in discussions about the possible extension. Third Ward City Councilman Steven Moore, who heads the governing body’s Revenue & Finance Committee, said he didn’t know about it until Monday afternoon.
“I’m not pleased. But I have to see what it means,” said Moore, who declined further comment until he could get more information.
The board will consider Atlantic City’s proposed bond and oversight extension at its next meeting Wednesday morning in Trenton. City Council meets at 5 p.m. that evening.
City Council voted 5-0 last week for the first of two authorizations needed for those bonds. The second vote is scheduled for Sept. 26.
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