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State of New Jersey to Take Over Atlantic City, NJ

The State of New Jersey is getting ever more involved with the day-to-day operation of the nation’s second-largest gambling market.  Atlantic City agreed Tuesday to let state officials take control of the city’s troubled finances to help it get back on its feet and avoid crushing tax increases that otherwise would have had to be passed on to residents and businesses.

It’s Gov. Chris Christie’s second major move to assume greater control in Atlantic City, whose 11 casinos have been reeling from a nearly four-year revenue plunge set off by competition in neighboring states and the continuing poor economy. Earlier this year, Christie announced plans to set up a special casino and tourism district in Atlantic City overseen by the state.  “Atlantic City is at a crossroads where its revitalization and future as a resort destination are now taking shape,” the Republican governor said of the overwhelmingly Democratic city. “This is not the time, nor is it the right message to be sending, for Atlantic City to be imposing burdensome tax increases on its citizens and business community.

“We want to help Atlantic City through this difficult period, but we also want the city to improve and maximize its management and fiscal policies so it is best positioned for revitalization and long-term prosperity,” Christie said.  Atlantic City elected officials sought to portray the move as help from the state rather than an outright takeover, even though the state retains ultimate control over the city’s finances.

“We welcome this partnership with state government in what we are trying to accomplish for our city,” Mayor Lorenzo Langford said. “The governor can help us to convey to the rest of New Jersey all the progress we are making to improve the management of our city to pave the way for a brighter future.”  The arrangement will allow the city to gradually close its $9.5 million budget deficit over five years, sparing residents and businesses a significantly larger property tax increase this year. The state’s Local Finance Board voted Tuesday to approve bonding to pay for Atlantic City’s tax appeals.  Under the agreement, city officials reduced a previous request to exceed the state property tax cap by nearly $10 million to just over $2 million instead.

Had the higher waiver been approved, Atlantic City taxpayers would have been hit with an average increase of $253. The lower waiver means that increase will now be $157.  Other benefits of state supervision include allowing the city to defer some expenses. The state of New Jersey may also provide staff and resources to help the city with its finances.  The municipal budget up for a vote Wednesday night is about $216 million.  Atlantic City government needs help, the mayor has no clue.

Atlantic City Casinos & Hotels Send Layoff Notices

Atlantic City hotels and casinos are sending out notices to its workers warning them they could be laid off soon as the struggling casino prepares to change ownership.  John Pasqualoni, Resorts casino’s chief operating officer, told employees in a memo Thursday that they will receive notices in the mail Friday as required under the Worker Adjustment and Notification Act, otherwise known as WARN.  The notices were first reported by The Press of Atlantic City.

Resorts Casino — the first in the nation to open outside Nevada — is being bought by veteran casino executive Dennis Gomes and developer Morris Bailey for $35 million. That’s the lowest price ever paid for a casino in New Jersey’s 32-year history of legalized gambling.

A casino spokesman would not comment on the notices or say how many of the casino’s 2,124 workers could lose their jobs.  The notice warned layoffs would occur Dec. 1 — the  same day Gomes and Bailey are expected to receive approval from the state Atlantic City Casino Control Commission to take over Resorts.  “We are doing everything in our power to ensure the sustainability of the property and facilitate the smooth transition of the purchase of Resorts Atlantic City,” Pasqualoni wrote in the memo to employees. “However, there are some considerations that are outside of our control and for that reason, not only is this notice a legal requirement, but I believe it is the right thing to do.”  Neither Gomes nor Peter Hoelzle, president of the RAC Atlantic City Holdings, immediately returned calls seeking comment Friday.

Atlantic City Hotels Layoff Casino Workers – News!

After Resorts Casino defaulted on its mortgage and turned itself over to its lenders in December 2009, the two sides hammered out a deal that let the lenders own the casino in return for canceling nearly $381 million in debt. The lenders formed RAC Atlantic City Hotels & Casino Holldings, which was given a one-year casino license.  RAC said then that it wanted to find a buyer as quickly as possible.   “We have no intention of operating the casino or the hotel well into the future,” Hoelzle told the state casino commission last fall.

Gomes and Bailey struck the deal to buy Resorts Casino Atlantic City from RAC in August.  Resorts opened in 1978 but in recent years has been dwarfed by newer, bigger casinos around it. It also was hurt when slots parlors opened in recent years in neighboring Pennsylvania began siphoning off its most loyal customers, mainly day-tripping senior citizens who would ride the bus to play slots for a few hours.  By fall of 2008, the nationwide recession had pushed Resorts to the brink, and the casino made no payments on its $360 million mortgage after October 2008.  Its lenders, including Wells Fargo on behalf of Credit Suisse First Boston Mortgage Securities Corp., could have foreclosed on it but chose to work out the deal in which the casino ceded ownership to them.

Hopefully, by trimming the fat, Atlantic City hotels and casinos will be able to cut costs and stay afloat into the future.

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