5 Charts That Show Just How Screwed Atlantic City Is

Atlantic City winter beach

Atlantic City in February 2015 (Photo | Dan McQuade)

On Tuesday, Atlantic City’s Chris Christie-appointed emergency management team released its first report. The results were grim.

“The acute financial distress facing the City is imminent and the causes of such distress are not transitory,” emergency manager Kevin Lavin wrote in the report. “Absent an urgent, material realignment of revenues and expenses, this crisis will rapidly deepen and will threaten the City’s ability to deliver and maintain essential government services impacting the health, safety and welfare of its residents.” Christie’s executive order required Lavin and consultant Kevyn Orr, who handled Detroit’s bankruptcy, to issue a report within 60 days.

“It’s actually a lot more severe than we thought when we started 60 days ago,” Lavin said, though he and Orr said bankruptcy was not being considered. Atlantic City has a $101 million city budget shortfall and a $47 million deficit in the school district. The managers recommended $10 million in city cuts, including hundreds of layoffs, and appointing mediators to work with casinos and unions.

New Jersey State Senate president Steve Sweeney lambasted the report: “This report does nothing more than dramatize the fiscal crisis in Atlantic City … Today’s report was 60 days in the making and it reached the same conclusions that we did in November: that decisive action is needed to stabilize Atlantic City’s finances, reduce expenses, protect local taxpayers and reposition the casino industry for future growth.” Sweeney has proposed his own plan that includes a PILOT (payment in lieu of taxes) program for the casinos.

Sweeney is right: The report does dramatize Atlantic City’s fiscal crisis. You can read it at the end of this post. But since it’s essentially just a stop-gap report — another one is due in 90 days — let’s take a look at some of its charts that illustrate the bad shape A.C. is in. Read more »

Judge Declines to Approve Sale of Revel to Glenn Straub

A shuttered Revel in November 2014 (Photo: Dan McQuade)

A shuttered Revel in November 2014 (Photo: Dan McQuade)

You’re not going to believe this.

No, wait, you probably will. U.S. Bankruptcy Judge Gloria M. Burns today did not approve the sale of the failed Revel casino to Glenn Straub. The hold-up is a pending appeal by several clubs and restaurants inside Revel that opposed Straub’s purchase of Revel. Burns stayed that sale in January.

Here’s where things get complicated: That sale is actually dead. Straub didn’t complete it. But Revel and Straub then struck a deal for Revel at a lower price. Still, per the Inquirer, the previous ruling means Burns doesn’t have jurisdiction to approve the new sale.

But wait, there’s more. Read more »

Caesars Atlantic City Fined for Losing Two Slot Machines

Bridesmaids Slots

Slot machines in Atlantic City in November 2014

When a casino says it has loose slots, it doesn’t mean this loose.

The New Jersey Division of Gaming Enforcement announced on Tuesday it has fined Caesars $5,000 for losing two slot machines and reporting that all machines had been accounted for. A spokesperson for the DGE said the two slot machines are still missing.

Caesars, which did not respond to a request for comment, reached a settlement with casino regulators over the missing slot machines. Regulators said Caesars discovered it couldn’t find two machines when it was moving machines around in November 2013, but still reported on monthly filings that it knew where all of the machines were.

Read more »

Energy Company Threatens to Turn Revel into $2.4B Fungus Tower

A shuttered Revel in November 2014 (Photo: Dan McQuade)

A shuttered Revel in November 2014 (Photo: Dan McQuade)

The future of the closed Revel casino, Atlantic City’s $2.4 billion boondoggle, continues to be up in the air. Not long after a judge placed the sale to Glenn Straub on hold, the power plant that continues to serve Revel says it will shut off heat, water and electricity at 5 p.m. on Thursday.

Although it’s closed, the building still needs power to prevent the elements from ravaging Revel. “If you shut down the electric utilities to the building, you’re going to get an instant build-up of heat and humidity inside the building [in hot weather], both of which are terrible for finishes, equipment, and everything else that’s inside that building,” Greg Lucado, director of construction-management programs at Philadelphia University, told the Inquirer. “You’ve got a very high humidity environment,” Drexel construction management professor Douglas Carne told the Press of Atlantic City. “That will be almost impossible to control without air handlers operating.” He noted that this would make fungus a factor.

In court filings, a judge wrote that there is no other way for Revel to get power than through ACR’s plant.

Read more »

Christie Announces State Takeover of Atlantic City

Photo | Dan McQuade

Photo | Dan McQuade

Chris Christie took a controversial step today that has some Atlantic City politicians fuming. At his third summit on the city’s future, Christie announced the appointment of Kevin Lavin and Kevyn Orr as emergency managers in Atlantic City. Lavin, the emergency manager, and Orr, his special counsel, will have broad powers in A.C.

Lavin, who most recently worked at FTI Consulting, has years of experience in corporate restructuring. Kevyn Orr was Detroit’s emergency manager during its bankruptcy proceedings.

Detroit emerged from bankruptcy in December, shedding $7 billion of its $18 billion in debt. There are not any immediate plans to push Atlantic City into bankruptcy, though it is assumed they are on the table.

“I don’t think the residents will be very happy,” Chris Filiciello, a spokesman for Atlantic City mayor Don Guardian, told the Wall Street Journal. “They elected the mayor to represent them. He has been fulfilling his duties to the best of his ability and we’d like to know what an emergency manager would do that the mayor hasn’t done already.”

Read more »

Revel Sold to Backup Bidder, Who Plans to Appeal Ruling

revel-closed

Photo | Dan McQuade

Update, 1:45 p.m.: A judge awarded Revel to Glenn Straub‘s company. Straub did not get a discount he’d requested, and has been ordered to pay the entire $95.4 million he bid for the casino.

Straub’s lawyer said he will appeal for a stay of the sale.

Earlier: A federal judge is set to hear arguments today regarding the sale of Revel to Glenn Straub, the man who last year floated plans to buy the casino and turn it into a “university for geniuses.”

Revel, which cost $2.4 billion to construct, has been closed since 6 a.m. September 2nd. But there’s been a lot of news in the past few weeks! Late last year, ACR Energy Partners missed a bond payment and asked a judge if it could cut power to Revel. ACR was created to power the now-shuttered casino, Revel is its only customer.

It’s not clear if Revel can get power from another source; shutting down power to the building could cause it to be ravaged by fungus. “You’ve got a very high humidity environment,” Drexel construction management professor Douglas Carne told the Press of Atlantic City. “That will be almost impossible to control without air handlers operating.” Tenants that operated businesses at the Revel remain locked out and are fearful of ACR cutting power.

Read more »

Union: Icahn Backs Out of Deal to Save Trump Taj Mahal

Last night, it seemed the Trump Taj Mahal had been saved with a last-minute deal. Carl Icahn, the lender for most of the Taj’s debt, agreed to a deal with the union to keep the casino running. Trump Entertainment Resorts CEO Robert Griffin signed off on the deal as well.

Well, not anymore. Local 54 Unite HERE said today Carl Icahn has backed out of the deal. The union released a statement:

We thought that we had come to an agreement with all parties that would resolve all of the issues with the Taj Mahal. We signed it, and the Trump CEO signed as well. At noon today, we were told that Carl Icahn had gone back on his commitment and would not enter into the agreement. This is what we have been dealing with for some time now at this property. We are disappointed that Mr. Icahn’s whims are going to add to the feelings of uncertainty and instability that the workers have had to live with and have to endure during this holiday season and beyond.

Read more »

UPDATE: Trump Taj Owner Asks Icahn to Stay Open

Update, 2:40 p.m.: The Trump Taj Mahal’s CEO is asking primary lender Carl Icahn to keep the casino open until a court fight with the union ends.

Icahn has not yet responded to the plea. If he agrees, the casino would remain open well into 2015. Local 54 Unite HERE is currently appealing a court decision that canceled the workers’ pensions and healthcare plans.

Earlier: The union for workers at the Trump Taj Mahal ignored a deadline from the casino to drop its appeal of a court order canceling health insurance and a pension plan for workers.

Both sides remained mum on the deal. The casino is slated to close Saturday morning at 6 a.m., the fifth casino to close in Atlantic City in 2014.

“Every day fewer and fewer people patronize the Taj, and we lose more and more of what little money we have left,” Trump Entertainment Resorts CEO Bob Griffin wrote on December 11th. “We just cannot wait any longer.” Nearly 3,000 people work at the Taj.

Read more »

Bill Would Provide Tax Break for A.C. Casinos

Photo courtesy  Wikimedia Commons.

Photo courtesy Wikimedia Commons.

We started the news day telling you it appeared the Taj Mahal Casino was about the kick the bucket. We head into the late afternoon, however, with news of a possible reprieve.

New Jersey State Senate President Steve Sweeney and Sen. James Whelan have proposed a plan to let Atlantic City’s surviving casinos pay $150 million to the state in lieu of taxes for two years; it would redirect a tax now used to support new developments to help Atlantic City pay off its debt.

AP reports:
Read more »

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