Exclusive: Atlantic City emergency fiscal management costs top $2.6 million

Reuters News
Posted: Jan 14, 2016 6:39 PM

By Hilary Russ

(Reuters) - New Jersey taxpayers will owe $2.62 million for roughly a year's worth of work by a team of professionals called in to help turn around the distressed gambling hub Atlantic City, according to invoices obtained and compiled by Reuters.

It is not clear what taxpayers have to show for it.

Despite the work by a state-appointed emergency manager and the law and accounting firms he hired, so little progress has been made in reversing the seaside resort's fortunes that lawmakers are now considering a full takeover of city operations.

Reuters reported in September that the amount was $2.15 million, but invoice reports since then for additional work by restructuring lawyers at Skadden, Arps, Slate, Meagher & Flom have pushed the total up by 20 percent. Reuters obtained the documents through a public records request.

Governor Chris Christie appointed Kevin Lavin as emergency manager on Jan. 22, 2015. Since then, Lavin's team has produced one report, in March.

The Press of Atlantic City this month obtained a non-public draft of a follow-up report. A spokesman for Lavin told Reuters last week that a report is expected "within the coming weeks."

Four of the city's eight casinos closed in 2014, pummeled by competition from neighboring states. That contributed to a 70 percent reduction in the city's property tax base, to a projected $6 billion this year from $20.5 billion in 2010.

Lavin and his team - including Skadden, Ernst & Young LLP [ERNY.UL], and mediator Donald Steckroth - were to review and propose solutions to the city's immediate fiscal crisis, suggest possible longer-term fixes and negotiate with labor unions.

Separately, the state had already appointed a monitor and had to approve the city's budget and hiring.

But lawmakers are seeking an even firmer grasp. On Tuesday, they introduced legislation that would strip Atlantic City's elected officials of most of their control, except for the ability to file for municipal bankruptcy.

"You can't justify a $262 million budget for 40,000 people. It's obscene," Senate President Steve Sweeney, a co-sponsor of the bill, said earlier this week. "(The mayor and city council) need to make the tough decisions now."

Mayor Don Guardian and city council members denounced the takeover proposal. Guardian said on Wednesday the city trimmed $14 million from its 2015 budget and expects to cut $16 million more this year.

(Reporting by Hilary Russ; Editing by Daniel Bases and Lisa Shumaker)