Christie names emergency management team for Atlantic City
ATLANTIC CITY, N.J. (AP) — Trying to dig Atlantic City out of "an enormous hole," New Jersey Gov. Chris Christie on Thursday appointed a corporate turnaround specialist as the city's emergency manager, and tabbed the man who led Detroit through its municipal bankruptcy as his assistant.
Corporate finance consultant Kevin Lavin will have broad but still-unspecified powers over Atlantic City's finances and operations. Kevyn Orr, who helped lead Detroit through a financial crisis, will serve as special counsel to Lavin. Christie issued an executive order appointing the men.
But neither would say whether a Detroit-style bankruptcy filing is in store for Atlantic City, calling such talk premature.
"This is urgent; the trend lines for the city are not good," Orr said after being introduced at the third summit meeting Christie convened on ways to help the struggling seaside gambling resort. "The situation is not going to change."
Lavin said his biggest task will be getting the many stakeholders in Atlantic City — which include its eight casinos, local and state officials, residents and others — to agree on necessary solutions. He and Orr promised to work with Atlantic City mayor Don Guardian and the City Council, and rejected claims they were engaged in "a takeover" of the city.
Residents seemed apprehensive, not necessarily enthused, about the prospect of an emergency manager.
"At least give him a year or two to see how effective he's going to be," said James Pope, a resident of Atlantic City for over 45 years.
Warren Johnson, a 10-year resident of the city, is just happy anything at all is being done.
"They are doing things, so it does show they are paying attention to the city," Johnson told Townsquare Media on Thursday.
Christie said Atlantic City still is not on the right track and needs help with its finances and management.
"I can't wait any longer," Christie said. "We need to take more aggressive action. We are digging out of an enormous hole."
Atlantic City lost four of its 12 casinos last year, and three others are in bankruptcy. The governor said the city's 40,000 residents are groaning under the weight of a $260 million budget, and the local tax rate has doubled since 2010.
Guardian agreed the city needs to trim budgets and eliminate jobs, saying he has already begun doing so in his first year in office. He said he needs to see exactly what powers the two men will have before commenting in detail on their appointment. But City Council President Frank Gilliam had no such reticence, calling the appointments unnecessary.
"Anytime they usurp our power, we have a problem with that," he said.
The two men would not say what their salaries are or how long their appointments would last. They said they still don't know where they will work each day.
Since the last summit on Nov. 12, Democratic and Republican state officials have advanced differing aid proposals. Democrats led by state Senate President Steve Sweeney want to let casinos make payments in lieu of taxes — called the PILOT plan —and help reduce the city's debt.
Republican Assemblyman Chris Brown opposes the casino program, arguing all Atlantic County property owners should get a tax freeze.
The idea of the PILOT plan is to give the casinos cost certainty while eliminating costly and unpredictable tax appeals that have deprived Atlantic City's treasury of tens of millions of dollars in recent years.
Other proposals include creation of a public-private development corporation to bring new business and residents to the city; and diversion of casino investment taxes now used for redevelopment projects to help pay down Atlantic City's municipal debt.
Christie said he is not rejecting any ideas for now, but prioritized the emergency appointments as those that would accomplish the most in the shortest amount of time.
The Press of Atlantic City reported that Orr "held a similar position while overseeing Detroit’s finances while the Michigan city restructured itself in bankruptcy," the publication reported.
It is not yet known how much control the state will assume over Atlantic City or which of the city's departments will be impacted.
The emergency manager position can be handled through an appointment by the governor, but additional efforts to help the struggling city rebound in the wake of several casino closures and thousands of job losses must go through the NJ Legislature.
State Sen. Tom Kean recently unveiled legislation that would waive the payment of state income taxes for any big-name headliners who appear four or more times in Atlantic City during the course of a year. The senator said New Jersey needs to focus on ideas that can help Atlantic City along with the entire state. This comes on the heels of news that the gambling resort has lost half of its revenues over the last eight years.
Joe Cutter, Dino Flammia and Toni Antonelli also contributed to this report.
Here is additional information and video released by the Governor's Office:
Today, the Governor signed Executive Order 171 which appoints an Emergency Manager and Special Consultant to develop and oversee a comprehensive overhaul of Atlantic City’s government:
- Special Consultant to Atlantic City’s Emergency Manager Kevyn Orr: Mr. Orr most recently served as Emergency Manager for the City of Detroit, guiding the city through the largest municipal bankruptcy in U.S. history. By reaching out and speaking honestly with stakeholders and residents, Mr. Orr helped the city shed $7 billion in debt and reinvest $1.4 billion over 10 years in public services. Mr. Orr also brings three decades of extensive legal experience in the areas of business restructuring, financial institution regulation and commercial litigation.
- Emergency Manager of Atlantic City Kevin Lavin: Mr. Lavin has extensive credentials in restructuring both private and public underperforming entities, most recently as the leader of FTI Consulting’s Global Restructuring business unit. Mr. Lavin has played a key role in the turnaround or restructuring of over 150 companies around the globe and across a broad range of industries and has served in interim management roles as CEO, COO and CFO.