Christie Announces State Takeover of Atlantic City

New Jersey Gov. Chris Christie appointed Kevin Lavin as emergency manager and Kevyn Orr as special counsel, a team with broad powers to govern A.C.

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.”

The pair will essentially usurp the powers of the mayor and city council, effective today. Atlantic City Police Benevolent Association president Paul Barbere called it a “complete takeover.”

“I’m totally opposed to it,” Atlantic City Councilman Frank Gilliam Jr. told The Press of Atlantic City. “We’ve done everything to work with the state and yet still we’re being taken over. For what reasons and on what grounds?” City Councilman Timothy Mancuso called it a “good move.”

Christie has the power to appoint this emergency manager “team,” but the legislature must approve other measures. Currently, there are two competing measures in the New Jersey assembly.

One, a plan proposed by Republican Assemblyman Chris Brown, calls for a five-year freeze on property taxes. Another, floated by Democratic senators Steve Sweeney (the senate president) and James Whelan, would collect 15 years of payments from Atlantic City casinos in lieu of property taxes. Under that PILOT (Payment In Lieu Of Taxes) program, casinos would pay $150 million for two years (compared to a current valuation that would see casinos pay $210 million). Afterwards, the PILOT would be tied to gambling revenue, with property taxes going up or down based on gambling revenues.

Atlantic City has issued $345 million in bonds since 2010, and raised property taxes 53 percent the last two years.

A panel convened by Christie in November recommended appointing an emergency manager for Atlantic City, as well as leasing the water utility and deferring pension payments. In Michigan, where the emergency manager law was crafted by the legislature, an emergency manager in Pontiac slashed the budget in half, sold off the city’s car fleet, sold the Superdome and regionalized the police force. “Essentially what it does is appoint one person who becomes the entire government of the city,” John Philo of the Sugar Law Center in Detroit told the Inquirer.

Orr, the former Detroit emergency manager, slashed budgets there but also pushed changes that led to improved safety. He also cut pensions and slashed retiree health benefits by 90 percent. “And I just remain thankful that, although, some of those aren’t particularly happy with the process,” he told NPR, “that the outcome’s been better than we initially anticipated and that we’re leaving the city in a better condition.”

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