Atlantic City

The state’s continued oversight of Atlantic City and a proposed long-term plan to return the resort to local control are a positive for the city’s future credit, according to Moody’s Investors Service.

The report comes less than a week after the public release of Special Counsel Jim Johnson’s report, which recommended the state maintain oversight of Atlantic City until 2021 and outlined a comprehensive plan to improve the city’s economic and financial well-being.

Council President Marty Small Sr., a vociferous opponent of the state’s 2016 takeover of Atlantic City, said that while he disagreed with certain decisions made by the oversight team, such as a reduction in public safety officials, the impact to the city’s finances has been undeniable.

“I think it’s a positive sign to show that we’re definitely headed in the right direction,” he said. “We just have to keep doing the right thing (and) working together. That way, it won’t only be a credit positive but, hopefully, we can change the rating. We just have to keep making sound fiscal decisions on behalf of the taxpayers of Atlantic City and things will really be better.”

Tuesday’s report was the second time this year the rating agency has delivered positive fiscal news for the once-nearly bankrupt city. In March, the agency gave the city a positive outlook, but noted several factors that could change that going forward, including further contraction in the casino industry, failure to adopt adequate budget solutions, deterioration of already strained liquidity and reserves, default on debt obligations or the elimination of state oversight and collaboration.

The most recent report highlighted state initiatives that have improved the city’s economic future since the takeover, such as settling the casino tax appeals, reducing the number of municipal employees, reducing the city’s reliance on financial aid from the state and two consecutive years without a municipal tax increase.

“Without continued state oversight, the city’s ability to continue making substantial fiscal improvements is dubious,” according to Moody’s.

Atlantic City still has a Caa3 long-term issuer rating and has a very high credit risk to investors. But, the outlook for the city is positive, according to the rating agency.

“While the continued oversight is a credit positive, the city is far from being financially secure,” according to Moody’s.

The Moody’s release said the Johnson report “lays out a strong vision for the future.”

“But the devil is in the details and it remains for the city, state and CRDA (Casino Reinvestment Development Authority) to demonstrate that they can turn this vision into a sound plan,” the report said. “Even then, a plan is only as good as its execution.”

The report specifically notes the city’s “decimated tax base” and that the governing body does not have authority to grant permission for development in primary commercial zones.

“While CRDA is legally required to fund economic development in the city, it is an independent agency answerable to the state, not to the city,” the Moody’s report said. “Continued active state involvement makes it far more likely that the city and CRDA will be able to coordinate to expedite the city’s redevelopment.”

Contact: 609-272-7222 Twitter @ACPressDanzis

Staff Writer

I cover Atlantic City government and the casino industry since joining The Press in early 2018. I formerly worked as a politics & government reporter for NJ Herald and received the First Amendment: Art Weissman Memorial NJPA Award two years in a row.

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