The down-to-its-last-dime city will take it, but Atlantic City Mayor Don Guardian said Tuesday the terms initally offered by the state on a $73 million bridge loan were "extremely overreaching."
Guardian noted that the loan would not have been necessary at all if about $78 million in non-taxpayer redirected casino funds due the city by virtue of recent rescue legislation were made available by the state.
The redirected casino funds have been long promised to the city by the state, but in the final rescue package approved by the state legislature and signed by the governor, the money stays with the state until it approves a fiscal plan due Nov. 3 from the city.
Despite withholding that money, which the loan agreement executed with the state Department of Community Affairs acknowledges is the first collateral for the loan, the agreement sets out a procedure for the state to additionally seize the proceeds of assets like Bader Field and the city's Municipal Utilities Authority.
The recent rescue package, the Mayor noted, requires the bridge loan but, "ironically, restrictions in the Act prevented the City from accessing non taxpayer funding."
"If this redirected casino revenue were available today, a bridge loan with interest from the State would not be necessary," Guardian said.
The loan agreement also requires the city to include in its 3d quarter property tax bills any hikes to the school and county tax rate that each "appropriately accounts for the entire amount" of their respective levies. The city does not set the school and county tax rate.
And it requires weekly reporting by the city of cash flow, proposed and actual spending, and all known accounts payable.
Among the other stipulations the city agreed to in order to receive the loan:
* The city has to initiate an ordinance by Sept. 15 to dissolve its water authority and allow the assets to be used as additional collateral should the city default on the loan. The city's water works, valued at at least $100 million, has been coveted by several private water companies that are politically connected, including one represented by Philip Norcross, the brother of South Jersey political broker George Norcross, who has shown increasing interest in Atlantic City during the last year.
Guardian has advocated dissolving the MUA and bringing it under city control, in order to monetize it for an estimated $4 million more annually, money he says could be used to pay back Borgata the more than $150 million owed in tax appeals.
* In addition, the loan agreement stipulates that state aid might also be used as collateral, and requires the city to dismiss a lawsuit against the state that sought to gain access to the redirected casino funds, and putting proceeds from a sale of Bader Field into escrow as additional collateral. Sealed bids are due on Thursday for Bader Field, the defunct municipal airstrip once valued at $850 million.
The redirected casino funds are the last two years of a casino-funded marketing plan signed into law by Christie, which allocated $30 million a year to develop a city wide promotional strategy that resulted in the DoAC campaign, free beach concerts and a widely mocked art park. In addition, about $18 million in casino tax money that previously went to the state Casino Reinvestment Development Authority was targeted in the recent legislation to be sent to the city.
Guardian noted that the city was able to make a $3.475 million debt payment on Monday, despite not receiving the loan by that date. The loan agreement has been signed by both the state and city.
"Moving forward, we will continue to work diligently to ensure the City continuous to run efficiently while also concurrently putting together a viable 150-day Atlantic City rescue plan," Guardian said in his statement.
Tammori Petty, a spokeswoman with the DCA, said the redirected funds "do serve as collateral against the State loan."
"Additional terms of the loan would apply if the other funds are insufficient to ensure the timely payback of State dollars," she wrote in an email.
The 18 page loan agreement was signed by Guardian and Timothy Cunningham, director of the Division of Local Government Services.