ATLANTIC CITY — Multiple mayoral administrations missed out on getting a proper return on investment from the city’s bank accounts, and new financial services will provide additional revenue for the cash-strapped resort.
The details of the mismanaged banking services began to emerge following a news conference in November during which Council President Marty Small Sr. proposed giving city employees annual stipends to compensate for salaries that are below average for similar work in other municipalities across the state.
In announcing the three-year stipend proposal — which has not been approved by the state and city — Small said an interest-bearing account held by the city had been renegotiated and would begin paying out a monthly return equal to its previous annual payout. The new banking agreement will net the city about $1.68 million in additional revenue.
The state Department of Community Affairs, which assumed direct oversight of the nearly bankrupt seaside resort in late 2016, said that after tackling major financial issues, such as casino tax appeals, casino-payment-in-lieu-of-taxes agreements and addressing deferred pension and health benefit obligations, it turned its attention to the city’s day-to-day fiscal operations and found the underperforming accounts.
“It was during this review that we observed the city — across multiple mayoral administrations — had more bank accounts than were needed, resulting in the city not getting the best banking services that it could,” according to a statement from the state agency.
The state directed the city’s chief financial officer, Michael Stinson, to issue a request for proposals for banking services to “generate competition among banks for the city’s business,” the state said.
The RFP was published in May, and sealed proposals were reviewed in June. Two months later, City Council approved a resolution canceling certain bank accounts.
In November, the state published an advertisement for a chief financial officer in Atlantic City after a decision was made by the state not to renew Stinson’s expiring contract, which ended Dec. 31.
Stinson, who doubled as director of revenue and finance, had been with the city since 2010. At council’s reorganization meeting, Toro Aboderin, who was the CFO in Ventnor, was approved.
Small said an account with TD Bank had previously been paying the city $153,000 annually at a rate of 1.85 percent. The new account will reportedly pay the city $153,000 on a monthly basis with an annual interest rate of 2.25 percent.
“As a result of the RFP, the city was able to negotiate favorable terms and conditions and a higher fixed-rate return on its available cash balances and ultimately consolidated its multiple bank accounts into one account with TD Bank,” according to a DCA spokesperson. “It is undetermined how much money the city could have potentially earned during these years had it maximized its investment potential.”