Atlantic City Makes Bond Payments, Avoids Default (For Now)

But the situation remains dire for the financially troubled New Jersey resort city.

Photo | Dan McQuade

Photo | Dan McQuade

Atlantic City made a $1.8 million bond payment this morning, but Mayor Don Guardian could not guarantee at this point the city would make its bond payment next month.

“I wanted to make sure I didn’t put the bonds before payroll, before schools, before anyone else,” Guardian said. “But if we didn’t make our bond payment, it would be detrimental to everyone, including us.” The mayor said the city would be able to meet payroll this month, and expected to make a payment to the school district on May 15th.

Atlantic City had considered skipping the bond interest payment in order to make payroll, which would make it the first New Jersey municipality since the 1930s to default on a bond payment.

Quarterly taxes are due this week, and Guardian said the city is expecting $40 to $50 million in payments to come in. The Borgata, which is embroiled in a tax dispute with the city, will not be making its $7.2 million tax payment this month.

If Atlantic City had missed a bond payment, it would have had repercussions around the state. The Wall Street Journal recently called Atlantic City “America’s worst-rated town.” The city has a $33.5 million hole in its budget, according to the mayor.

“Financially, we’re running on fumes,” Guardian said. “The perfect storm of the saturation of casinos in the Northeast, four casinos closing here in Atlantic City and massive inherited legacy debt from years of bad decisions by all levels of government and the lack of a compromise bill that would provide much-needed revenue in Atlantic City … we really are teetering on the edge.”

N.J. Gov. Chris Christie has been pushing for a state takeover of Atlantic City; State Senate President Steve Sweeney has pushed a bill that would give the state control over the city’s government and finances. There is a competing bill, from assembly speaker Vincent Prieto, that gives Atlantic City more say in the takeover. PolitickerNJ reports Democratic boss George Norcross III and Governor Chris Christie are attempting to kill that bill before it’s voted on this week.

So, despite making the bond payment, the drama will continue in Atlantic City. Stay tuned.

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