ATLANTIC CITY — The Department of Community Affairs is preventing the Langford administration from using public money to sue the state over its creation of a Tourism District in Atlantic City, state documents show.
Officials with the DCA, which holds temporary authority over Atlantic City’s hires, promotions and contracts, approved contracts for 18 law firms earlier this month on the condition that none of those firms is used to file a lawsuit “contesting actions of the state of New Jersey or any of its agencies or authorities.”
The conditional approvals, written by Thomas Neff, director of the department’s Division of Local Government Services, come as Mayor Lorenzo Langford threatens to sue the state over its plan to give the Casino Reinvestment Development Authority control over key parts of the city.
The mayor announced late last year that his administration has had discussions with a law firm over a potential federal lawsuit concerning the constitutionality of the state’s reorganization of power in Atlantic City.
“I am prepared to defend our sovereign right to govern ourselves with every fiber in my being,” he said in late December.
DCA spokeswoman Lisa Ryan acknowledged that Neff’s reference to potential litigation against the state was inserted specifically because of the past threats.
“The letters were written, in part, to address our belief that it would not be helpful for Atlantic City to sue the state, CRDA and/or Legislature, or vice versa,” she said. “Should issues arise, there are appropriate ways to work them out without resorting to litigation that is paid for with taxpayer money.”
The Press of Atlantic City obtained the DCA documents through an Open Public Records Act request.
The Tourism District map has been drafted to include the city’s Boardwalk and beaches, the Marina District, Bader Field and most of the properties along Pacific and Atlantic avenues, but the CRDA still has time to alter the borders. Under the plan, signed into law last month by Gov. Chris Christie, the CRDA will control development decisions within the tourism zone and will absorb the Atlantic City Convention & Visitors Authority and the city’s Special Improvement District.
Langford has likened the state intervention to the former policy of apartheid in South Africa, saying the city’s predominantly black neighborhoods are separated from the areas the state is looking to revitalize. However, the mayor has delayed any legal action until the CRDA finalizes the borders of the Tourism District, which is expected to come to a vote April 19.
City Solicitor G. Bruce Ward declined to discuss whether the state’s conditional approval meant a city lawsuit is no longer an option.
“There are a lot of moving parts to this,” he said. “Until things have been clarified, I think it’s too premature to discuss what remedies we have at our disposal.”
Ward said lawsuits could be filed privately by a resident of the city or a concerned organization.
The state imposed temporary controls over the city’s finances in October after the city requested state aid to fill a $9.5 million budget shortfall. The agreement required the city to file request forms to the state for a number of basic government functions, such as approving professional service contracts, hires and promotions.
Records show the state has not formally denied any of the city’s requests. However, Neff refused to approve several legal contracts the city informally proposed during a private meeting Jan. 4, claiming the language was too broad.
“I have concerns about approving any legal contracts that contain broad provisions allowing for open-ended services,” Neff wrote Jan. 25 after listing specific contracts he would approve. “The legal contracts above all contained a level of specificity with respect to services and did not contain broad provisions contained in many other contracts provided to me on Jan. 4, 2011.”
Despite the state’s concerns, City Council approved many of those vague legal contracts during its Jan. 5 meeting, including contracts containing terms such as “general municipal and litigation services,” broad language common in Atlantic City legal agreements. Ward said he later made the necessary adjustments to comply with the state’s request for more specific contract language, and the state later approved it.
Ryan said the state’s push for specificity “was in response to the city’s past practice of paying too much on legal services.”
“We instructed the city to avoid overly broad use of language in approvals, which might suggest that law firms can bill for anything they want,” she said. “We also wanted the law firms to know we will be monitoring their billing practices.”
The Press of Atlantic City recently found that Atlantic City paid out more than $14 million from 2000 through 2009 in contracts with liability law firms, more than most New Jersey municipalities and nearly as much as Newark, a city with eight times as many people as Atlantic City.
The state also has not approved 16 employee-related requests, including hires. The documents have not been approved or denied by the DCA, even though some of those requests were dated in January.
Although the signatures of the mayor and the business administrator date to January, Ryan said the city did not send the requests until late February or early March.
“They are undergoing an ordinary review for due diligence purposes,” she said.
The state’s financial oversight of the city’s finances is not related to the plan to revitalize Atlantic City through increasing the powers of the CRDA. The dual efforts of the state, however, illustrate a heightened interest in the operations of Atlantic City, with many recognizing it as an essential economic engine of a financially strapped state.
State officials’ scrutiny of Atlantic City’s financial management began when the Office of the State Comptroller issued a 45-page audit report last year that outlined more than $23 million in waste.
In January, Langford declared that the city had addressed all of the report’s findings and that his administration was in complete compliance.
Peter McAleer, spokesman for Comptroller Matthew Boxer, said the state is not prepared to agree with that assessment until its auditors return to City Hall for another formal review, expected to start in the spring.
“We will be returning to Atlantic City in the coming months to conduct a follow-up of our audit,” McAleer said. “At that time we will determine whether the city is in compliance with our audit recommendations and the city’s own corrective action plan.”
Contact Michael Clark: