Christie puts management team in place to overhaul city’s operations, finances
By Brent Johnson
NJ Advance Media for The Star-Ledger
Gov. Chris Christie announced on Thursday that he was installing an emergency management team to help revive the financially strapped Atlantic City and dig the gambling resort out of what he called “an enormous hole.”
Local officials balked at the drastic move, though the Republican mayor, who was initially opposesd to the decision, appeared more willing to accept the arrangement on Thursday.
The governor named Kevin Lavin, a corporate finance attorney who specializes in helping troubled companies, to overhaul the daily operations and finances of the city, which has seen four casinos close and more than 8,000 people lose their jobs over the last year.
Christie also named Kevyn Orr, a former corporate bankruptcy lawyer who led Detroit through the largest municipal bankruptcy filing in U.S. history last year, as a special counsel to Lavin.
“I can’t wait any longer,” Christie said at the third summit he has held in Atlantic City with casino executives, business and union leaders, and state and local officials to search for ways to revitalize the city. “We need more aggressive action. It’s time to confront the dire circumstances with which we are confronted.”
The move comes as Christie considers whether to launch a bid for the 2016 Republican nomination for president, and it could have implications for his campaign.
Officials stopped short of calling it a state takeover. Under the order, the team is expected to produce a plan within 60 days “to place the finances of Atlantic City in stable condition on a longterm basis by any and all lawful means.”
The plan could include the restructuring of municipal operations and the adjustment of debt, like public employee pension obligations. Lavin has the authority to negotiate with those that would be affected by the changes, and the authority to consult with any of the city’s stakeholders, from union leaders and county officials to creditors and bondholders.
Under Christie’s executive order, all state agencies and Atlantic City employees and elected officials are to cooperate in drafing the plan and must provide Lavin with any information he requests pertaining to the city.
Gathering information
“What we’re doing right now is getting information,” said Lavin, who most recently worked for corporate turnaround firm FTI Consulting in New York. “That’s all we’re doing. Getting an understanding of the situation we’re in. We need to delve into the details to see what’s going on.
Lavin and Orr said their salary and budget have not been ironed out, and they did not know where they would be working. They also said it was premature to speculate if Atlantic City would declare bankruptcy.
Orr took over Detroit’s management in March and resigned just as bankruptcy ended in December, with the city having shed $7 billion of its $18 billion in debt.
A recent report said Atlantic City’s property tax base is projected to fall from $11.3 billion this year to $8 billion by 2016.
“This is urgent,” Orr said at a news conference after Christie’s announcement. “The trend lines for the city both on the revenue side and the cost side are not good.”
Christie’s executive order was issued through a state law that allows the state to step in to help financially ailing cities and towns.
The idea of a management team was recommended by an advisory commission Christie formed in Atlantic City, a one-time premier gambling destination that has struggled over the past decade amid growing competition.
Still, local officials have criticized the move. Mayor Don Guardian, who recently completed his first year in office, initially said he was “100 percent opposed” to an emergency management team, fearing the city’s staff would be replaced.
But on Thursday, Guardian seemed more open to the move, saying it wasn’t as drastic as he once expected.
“It’s cooperation that we need,” he said. “It’s working together. It’s necessary for us to rethink how we are doing business in Atlantic City.”
But City Council President Frank Gilliam was firm in his opposition.
“I don’t believe it’s necessary,” said Gilliam, a Democrat. “I find it very imposing that we will basically have outsiders come into the city and dictate the direction of the city without sitting down with the city fathers and getting their input. We’re open to working with them. But at the same time, any time that they usurp our power, we will definitely have problems with that.”
Christie said he was not trying to undermine Guardian, but instead wanted the management team to work with the mayor and city council.
“He has inherited an awful mess,” the governor said of the mayor. “What we are doing is giving the mayor enhanced tools to be able to bring this to a successful resolution. This is not a move in any way to supplant the mayor’s role here in the city.”
Orr agreed.
“You still have a mayor, you still have a council,” he said. “We want to work closely with them.”
It is not the first time the state has stepped in to rescue the struggling city. Atlantic City was placed under the oversight of the state’s Local Finance Board, which falls within the Department of Community Affairs, in 2010. The mayor and the council will remain subject to the same level of review of the finance board.
State law ultimately gives the state government and Christie administration the ability to execute the recommendations that Lavin will be responsible for putting forward, which, again, could include restructuring city government and canceling debt obligations.
“We were all anticipating a coup here, and it didn’t turn out to be a coup,” Bill Dressel, director of the New Jersey League of Municipalities said. “It turned out to be a situation where the administration is bringing some real professional individuals in to provide more tools and resources to the mayor in making prudent decisions and moving Atlantic City forward.”
State lawmakers have also introduced plans to help Atlantic City.
The Democratic plan — led by state Senate President Stephen Sweeney (DGloucester) — is anchored by a proposal to have casinos make payments to the city in lieu of taxes for 15 years to help cut the city’s debt.
A Republican plan spearheaded by state Assemblyman Chris Brown (R-Atlantic) aims to give all Atlantic County property owners a five-year property tax freeze instead.
NJ Advance Media staff writer Christopher Baxter contributed to this report.
Kevin Lavin, left, will lead efforts to help revive Atlantic City, while Kevyn Orr will serve as special counsel to Lavin.
Gov. Chris Christie greets Atlantic City Mayor Don Guardian before the start of Thursday’s meeting in Atlantic City. (ARISTIDE ECONOMOPOULOS/NJ ADVANCE MEDIA FOR NJ.COM )
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