New Jersey Steps In To Turn Around Atlantic City 's Luck
SCOTT SIMON, HOST:
Atlantic City has been in decline for decades. And now the state of New Jersey has made a deal with the city to take over its finances and try to turn the formerly high-rolling town around.
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CHRIS CHRISTIE: We wanted to give Atlantic City a five-year opportunity to have some of these problems worked out on their own. They didn't. And so now we need to take those stronger steps to intervene and to work as partners with the mayor going forward.
SIMON: Governor Chris Christie of course. We visited Atlantic City just over a year ago. It didn't seem like a place to go for a good time. Downtown looked abandoned. Four of the main casinos were closed. Seven thousand people had just lost their jobs. But Mayor Don Guardian - a Republican - said he had to see the setbacks as new opportunities for investors and his city.
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DON GUARDIAN: We are Filene's Basement. You're not going to find a better bargain than coming to Atlantic City. Two billion two hundred million dollars property at Revel you're going to pick up for about $100 million. Four hundred million dollar casino that closed, other than Revel, you're going to pick up for $25 million.
SIMON: So far, there have been few takers. Those four casinos remain closed. What had been the Showboat was just recently purchased. We're joined now by Christian Hetrick of the Press of Atlantic City whose beat has been covering the city's recovery and local politics. Mr. Hetrick, thanks very much for being with us.
CHRISTIAN HETRICK: Hey, thanks for having me on.
SIMON: From your experience and reporting, Mr. Hetrick, what can the state of New Jersey do that Atlantic City, as a municipality, couldn't to try and turn things around?
HETRICK: Sure. Well, it's really big things. The state has really been public about wanting the water company to be either sold to the county, which does have its own utilities authority, or possibly privatized, run by a company like, you know, American Water, United Water, because it's, you know, been estimated that it could be worth $100 million or even more than that.
SIMON: What an opportunity.
HETRICK: Yeah, yeah, and, you know, what's interesting now with this, you know, takeover talk, you know, a lot of people at the last council meeting have been invoking Flint, Mich., for obvious reasons 'cause in that case it was an emergency manager who, you know, recommended changes to that water supply. And - well, I know it wasn't privatized. It was kind of rerouted, but still, people see similarities and are obviously naturally scared.
SIMON: Yeah. I suspect, Mr. Hetrick, a lot of people listening in the rest of America might be saying, look, Atlantic City is a place where people go to, you know, throw away their money. Why can't they make a go of that?
HETRICK: Well, the gambling industry is still very, very big compared to other gambling industries across the country, but it's really half of what it used to be. The casinos collectively, there's eight left. They've brought in $2.7 billion in casino winnings this year. To compare that, they had $5.2 billion in 2006, so it's really been cut in half. And then...
SIMON: And is that because of the other places that have opened up and down the...
HETRICK: Sure, sure, yeah, casinos have sprouted up in Pennsylvania, New York, Connecticut. You know, if you're in North Jersey, why go an hour and a half south when you can probably just hop over the New York State border and maybe go somewhere closer? And so you kind of have, like, this one-two punch where, you know, the casinos are making less money and closing, and in turn that makes it difficult in terms of the city collecting taxes.
SIMON: What about those big old empty casinos? Any activity going on there?
HETRICK: Well, two of them, yes. The Revel casino does have a new owner. It ended up selling for $88 million, and then the Showboat as well just recently sold. And then the other two properties, though, are still - not too much movement on them.
SIMON: Why not just declare bankruptcy and pay off a few pennies on the dollar?
HETRICK: You know, there are pros and cons to it. You know, the city has $240 million in bonded debt. So, you know, through bankruptcy, you would shed that debt. You could toss out some collective bargaining agreements with the police and the fire. But there's cons as well. You know, it's obviously bad PR for a destination resort to be bankrupt. And then it also - bankruptcy doesn't solve the annual budget deficits. So Atlantic City had $100 million budget shortfall they had to fill in 2015. And it's estimated that the budget shortfall in 2016 is going be about $60 million. It solves a debt problem, but it doesn't solve the spending and revenue problems.
SIMON: Christian Hetrick of the Press of Atlantic City, thanks so much.
HETRICK: Thank you for having me.
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