Atlantic City, Bracing for Takeover, Sees Camden as Cautionary Tale
ATLANTIC CITY - Gov. Chris Christie has dedicated much of his time in office to saving Atlantic City. He created a state-run tourism district, he started a marketing campaign and he pledged more than $200 million in tax credits to restart construction of the half-built Revel Casino. An emergency manager he hired cost the state $2.6 million.
Those efforts have so far failed. Atlantic City has seen four of its 12 casinos, including Revel, close on Christie's watch. The city's casino tax base has tumbled from $20 billion when Christie got into office in 2010 to $6.5 billion today. With such depleted revenue, Atlantic City government and its schools are now running a combined deficit estimated at more than $150 million. Christie has refused to provide a loan, and city government has a junk bond rating so it can't borrow money.
Out of cash and out of options, much of Atlantic City’s government will shut down for at least 23 days beginning April 8. Municipal bankruptcy, which would have negative ramifications on the bond ratings of towns throughout the state, is now a possibility.
Christie, backed by Democrats in South Jersey, have their own solution: A state takeover that would render city government powerless. For five years, critical fiscal decisions — laying off workers, selling city assets and raising taxes — would be made by officials in Trenton, instead of anyone elected by the people of Atlantic City. Christie says years of overspending and mismanagement by the city — like providing cars for council members — have forced his hand.
New Jersey has been down this road before. In 2002, New Jersey took over Camden, then the poorest and most dangerous city in the country, in what was considered the biggest municipal takeover in the country.
The takeover made no evident improvements in Camden by the time it ended in 2010. Crime and joblessness rates were still the highest in the state; school test scores and graduation numbers were among the lowest.
Here's a look at the two takeovers.
The legislation that enabled the Camden takeover, the "Municipal Rehabilitation and Economic Recovery Act," sounds an awful lot like Atlantic City's "Municipal Stabilization and Recovery Act." A similar cast of South Jersey Democrats and unelected power brokers are behind both bills.
Promises of Money
Both takeovers come with cash. Camden received $175 million in bonds and loans as the carrot in exchange for a loss of voting rights, but the money went largely to institutions, like an aquarium that didn't pay taxes, a minor league baseball team that has since folded and Cooper University Hospital in Camden, which is run by George Norcross, the South Jersey Democrat considered the most powerful unelected person in the state.
"We thought the bulk of it was going to go to the community," said Pastor Willie Anderson, who was then with a grassroots group called Camden Churches Organized for People. "Well we learned a political lesson. Those at the top didn't get there by being stupid. They're very shrewd and conniving and deceiving."
The Atlantic City takeover would come with money, too. Sort of. A bill now in the legislature would create a payment system for casinos instead of taxes. These Payments In Lieu of Taxes (PILOTs) would be sent to the city and provide a stable year-to-year revenue source. Christie has twice vetoed the PILOT bill — he says he will only sign it if the takeover is also approved by the legislature.
The Camden takeover had the support of the city's mayor and community groups. But when the money failed to trickle down to the neighborhoods, and when the suspension of the powers of the local elected officials went on for years longer than originally planned, opposition grew.
Atlantic City politicians and activists are now reviewing what happened in Camden and seeing it as a cautionary tale. Mayor Don Guardian had at first agreed to some level of state partnership — until he saw the legislation that Christie is backing, which is more similar to the Camden takeover than he originally expected. Now, he likens the proposal to a "fascist dictatorship." The Camden takeover "was a disaster," Guardian said.
Takeovers never work, opponents argue. "If someone can do a study and tell me anything that the state has taken over that has been a success, then my comfort level would change," said Linda Steele, an activist who previously ran the Atlantic City's NAACP.
Sen. Jen Beck (R-Red Bank), has made a similar argument — that New Jersey's school takeovers have always failed. And the pending bill, she feared, could be used to pursue takeovers of towns elsewhere in the state.
Suspicion over state government's role in this gaming city trumps all other concerns. Casinos were introduced in the 1970s as a way of boosting Atlantic City's residential neighborhoods, but that promise from state officials went unfulfilled. Residents often point to the Casino Reinvestment Development Authority, which was supposed to revitalize the neighborhoods by investing the casinos' earnings into the community. The agency has since drawn criticism for sending money elsewhere in New Jersey while accumulating parcels of land in Atlantic City for development that hasn't occurred.
Adding to the resentment in this mostly minority community: 14 of the CRDA's 15 board members are white men.
Powers of the Takeover
Christie is seeking to solve the city's fiscal woes by leaving its elected mayor and council powerless as state appointees reorganize city government, privatize municipal functions and renegotiate union contracts. Christie has called police salaries and benefits too "rich." He argues that the Atlantic City government, with a budget as much as three times that of similar governments in New Jersey, is bloated and has failed to clean up its mess. He said it should have signed shared-service agreements with county government and privatized trash pick-up, lawn-mowing and boardwalk maintenance.
Although the state has had veto powers over city spending and fiscal monitors in City Hall for years, the takeover would come with new control. Most notably, it would give Christie and future governors the ability to roll back union contracts with police officers, firefighters and other public employees. That's why the more liberal state Assembly has yet to pass the Senate's version of the bill. The Camden takeover did not give the state such power over collective bargaining.
During a recent debate, State Sen. Nia Gil slammed Christie for trying to weaken unions through the takeover: "His presidential run, his vice presidential run or his will-you-take-me-please presidential run, he will be able to say he was able to take over the city and destroy collective bargaining."
The current version of the takeover in Atlantic City is only slated to last five years; so was Camden's — until Democrats changed the law and extended it.
Already politically connected developers who contribute handsomely to state politicians are laying claims to territory. Supporters say the takeover would speed the redevelopment process, avoiding a city bureaucracy that delays progress.
Also at play: An influx of money could come into the city in the next few years if New Jersey voters approve a referendum on the ballot in November to allow two casinos in North Jersey. Some of the revenue from those casinos would be sent to Atlantic City for redevelopment efforts, and political power brokers want to be able to control how its spent without interference from city politicians, who are viewed as amateurish.
George Norcross of Cherry Hill is the powerful Democrat whose hospital benefited from the 2002 Camden takeover. Legislators under Norcross's sway pushed the measure at the time, and contributors to his political network scored contracts out of the deal. Now he is reportedly involved in the Atlantic City takeover. He recently attended a meeting at the governor’s mansion on the Atlantic City takeover, according to The Atlantic City Press. And he has also been meeting with Atlantic County's top official, Dennis Levinson, a Republican, according to The Bergen Record.
"This guy has an extraordinary amount of power and he gets things done," Levinson said of Norcross. "I want him investing here in Atlantic County."
But Norcross's involvement raises alarms among community activists, who say their friends in Camden have warned them that the takeover will benefit political bosses and powerful developers but do little to aid the people.
"When it comes to decision making, the majority are white, they don’t live here, and they make the decisions," said Steven Young, an Atlantic City resident and activist with the National Action Network. "So it's like a slave and master relationship that we must get rid of."
Young notes that another Norcross brother is a congressman, Donald Norcross, who represents parts of South Jersey. "So they have a lot of influence and a lot of money," Young said. "But what we have is the truth."
George Norcross wouldn’t speak for this story. But Democratic Assemblyman Lou Greenwald, a Norcross ally who is shepherding the takeover bill through the Assembly, praised Norcross's involvement in Camden and says the takeover there was actually a long-term success. He said it laid the groundwork for improvements that took hold after the takeover ended -- like creating a county-run police force with cheaper union contracts that has seen modest gains in public safety.
"There was stability that was brought back to the city and a level of investment confidence that allowed for conversations like the development of South Jersey’s medical school with Rowan University," Greenwald said. The medical school is affiliated with Norcross's Cooper University Hospital.
Greenwald believes the state could stabilize Atlantic City in the same way, with university campuses growing there, too, over the course of the five-year takeover. Asked about concerns that George Norcross is making a power grab, Greenwald said: "No one has either had the courage or ability to bring that up to me, so I have not heard one person say that yet."
Greenwald said Norcross is continuing to fight for what he always has fought for -- a fair share of resources for the less populous southern part of the state.
"When people are against things they try to find bogeymen to point to," Greenwald said. "At the end of the day Camden is better off because of the involvement of all of those individuals."
And he says Atlantic City will be better off, too.
The toxic water crisis in Flint, Michigan -- which was under a state takeover when its water supply became poisoned with lead -- has stoked fears about efforts to outsource the water utility in Atlantic City. The current version of the takeover bill delays privatization of the water supply for a year, but discussions about a sale have already been held. And Christie has cited the city's failure to make money off privatizing services as a reason for the takeover.
The fact that George Norcross’s brother, Phil, is a lobbyist whose firm represents both casinos and a company that could privatize Atlantic City’s water has added to the controversy.
During the Camden takeover, the state's chief operating officer in Camden overruled the city council and raised water and sewer rates for residents.
Phil Norcross is also connected to the Camden takeover; his law firm won at least $200,000 in takeover money for legal work. He didn't return a call to comment for this story.
The obscure state agency that would run Atlantic City
During its takeover, Camden was run by state-appointed chief operating officers with ties to George Norcross who made more money than the governor. But Atlantic City would be run, according to the takeover proposal, by an obscure state agency called the Local Finance Board.
The Local Finance Board barely has enough members as it's currently constituted to hold meetings. A review by WNYC showed three vacancies. All of the other members are serving expired terms; Christie hasn’t made the mandated appointments.