ATLANTIC CITY — The city’s deadline to comply with terms of a $73 million state loan came and went Monday with no action from the state.
The cash-strapped city had until Monday to adopt an ordinance initiating dissolution of the Municipal Utility Authority, the valuable water system used as collateral for the loan.
City Council failed to approve the authority-related measures last month, putting the city at risk of defaulting on the loan.
But a state spokeswoman said Monday that she didn’t have information on what the state plans to do. And a spokesman for Mayor Don Guardian said he hadn’t heard from the state on the loan violation.
The state can now demand immediate repayment of the $62 million loaned thus far, seize the city’s collateral or withhold state aid, according to the agreement’s terms.
City officials tried to prevent the state from doing that last week.
City and authority officials unveiled a plan to have the authority buy Bader Field for at least $100 million. The proceeds would pay down the city’s roughly $500 million debt.
The plan was touted as a way to make money off the prized water works without privatizing or dissolving it. Officials also used the announcement to pressure the state to accept the sale, which is part of the city’s fiscal recovery plan to avoid a state takeover.
“Other than vengeance, there’s no reason to try to stop this deal,” Guardian said Sept. 26. “Other than if you’re on the payroll of one of the water companies that are trying to buy it.”
There’s also a pending lawsuit that seeks, in part, to void the loan agreement all together.
Liberty & Prosperity, a tea party group represented by former city Councilman Seth Grossman, claims Council’s approval of the loan violated Local Budget and Sunshine laws. A hearing was recently rescheduled to Oct. 14.
Grossman has said it’s premature for city and state officials to assume the loan is valid and enforceable.