Seth Grossman, Executive Director and Attorney for the South Jersey organization Liberty and Prosperity urged Atlantic City Council members to reject the $73 million “bridge loan” from the State if Judge Mendez grants its application to void a resolution approved by four council members at a closed meeting last month.??? Papers filed by the group in Superior Court last week alleged three defects in City Council’s action.
?First, the meeting held in gross violation of the Open Public Meetings Law?, Grossman said.??? ?The public and council members were given barely an hour?s advance notice, and it was held in closed session?.
Second, the resolution called for emergency appropriations without prior approval of a budget, and it was approved by just four of nine council members–all in gross violation of New Jersey?s Local Budget Law.?? Emergency appropriations require a two-thirds majority of the full council, or six affirmative votes.?
Finally, Grossman said, ?the resolution? did not mention any of the provisions contained in the 18 page loan agreement, and the full agreement was not made available to the public or the council members themselves until days later.?
?Given all these violations, I think there is good chance that Judge Mendez will void this action and send it back to City Council for reconsideration.?, Grossman said.
?Now that all council members finally know the details of the loan agreement, I hope they will soundly reject it?, Grossman said.
Grossman called the $73 million loan package “assisted suicide” for Atlantic City.
?This loan adds 15% hike to a debt that is already unsustainable?, Grossman said. ???Last May, the State exempted all eight casinos from any take hikes for the next ten years.?? When those exemptions are added to 110 businesses and 4,500 housing units that already pay PILOT, only? 25% of Atlantic City properties are left paying regular property taxes.??? There is no way they can afford the massive tax hikes needed to pay that debt.”
Grossman said that the loan agreement signed by Mayor Guardian hours after the late afternoon closed council meeting also hocks the City?s water utility and the site of its former municipal airport– and gives up millions of dollars of claims against the State.
Grossman said while rejecting the loan will cause an immediate crisis, delay and denial will cause even more hardship.
?If the loan agreement stands, the middle class home and business owners who own most of the 25% of properties still paying regular property taxes will be crushed.?? They will also pay big hikes in water rates if the water utility is sold.?? Local government in Atlantic City will be another failed agency of a hopelessly insolvent state government”, Grossman said.? “It is better to have the day of reckoning sooner than later?.
?Because the City is illegally operating without a budget five months after the March 20 deadline, it sent out tax bills last week with a a made up? tax rate with a 17% increase”??? Because of big tax hikes in past years, this is causing enormous hardship.?? And this is small change compared to the real tax hike needed for 25% of properties to repay some $500 million of debt–mostly run up while Atlantic City was under state supervision.?
Grossman said the Loan Agreement also releases state government from all liability for the unbalanced budgets adopted by state government during the past two years.
?The state?s Local Budget Law clearly states that every city in New Jersey must adopt a cash basis balanced budget by March 20 of each year.
?Last year, State Officials arbitrarily adopted a budget that was $71 million in the red, and they plan to do the same thing this year?.
“If State Officials applied State law, Atlantic City would have been forced to seek bankruptcy protection and make hard choices on unsustainable public school and local government salaries two years ago.
“By ignoring the law, state officials created the problem.?? Under the ?state mandate-state pay? provision of the New Jersey Constitution, state government, not local taxpayers should pay for this.
Last May, Atlantic City officials sued the state for reimbursement of this money.?? Although the case was not adjudicated, the 18 page loan agreement approved by four council members on July 28 waives and dismisses these claims against the State?.
Grossman said the four Council Members were lied to and bullied into voting for the Resolution with virtually no advance notice or opportunity to learn these details.
?They were told the City was about to run out of cash?, Grossman said.?? That seems highly unlikely since tax bills had just gone out and the City is usually flush with cash during August?, Grossman said.
The litigation is before NJ Superior Court Judge Julio Mendez.?? ??? Last Monday, August 8, Judge Mendez heard arguments by the New Jersey Deputy Attorney General Melanie Walters and Atlantic City Solicitor Anthony Swan to dismiss the lawsuit, and by Grossman to challenge the City Council action of July 28.???? After 90 minutes, Judge Mendez concluded arguments and took the matters under advisement.
Grossman?s organization, LibertyAndProsperity.org? filed suit against Atlantic City and State officials last April claiming that the City was illegally operating without a budget that should have been adopted by the state?s March 20 deadline.??? It also challenged the State?s ?Casino Stabilization? legislation that effectively exempts all eight casino hotel properties in Atlantic City from real estate tax increases for the next ten years.?? ?When coupled with tax breaks previously given to 110 business and 4,500 residential properties, the whole burden of future tax hikes is placed on 25% of the property in Atlantic City?, Grossman said.
Grossman moved to amend that complaint to challenge the July 28 City Council meeting which approved a vaguely worded resolution authorizing Mayor Guardian to sign ?appropriate documents concerning a secured loan agreement?.