Our organization filed papers in Superior Court yesterday to set aside the $73 million sell-out deal approved by just four of Atlantic City?s nine council members at a closed-door? emergency meeting last week.
Although City Council excluded the public to discuss ?confidential? matters involving ?attorney-client? privilege, five council members went far beyond that in reviewing and approving a complicated 18 page agreement which gives State Government control of all property owned by city government including its water utility and former municipal airport.
Following the meeting, four of those council members approved a vaguely worded resolution which simply authorized Atlantic City’s mayor to “execute a secured loan agreement” with State Government “in anticipation of meeting certain fiscal obligations”.?
Based on that resolution, Mayor Don Guardian and Tim Cunningham, the State Director of Local Government Affairs made various changes and signed the agreement that evening.
Neither the Mayor nor the State made copies of the agreement available to the public or the media until today when Liberty and Prosperity obtained a copy from a confidential source and released it.
The agreement also dismisses claims in made by the City in litigation with the State that State Government unlawfully failed to pay $33.5 million allegedly promised last year when the State prepared Atlantic City’s budget.?? It also requires Atlantic City to pay back with interest $8.5 million advanced by the State for the City’s public schools last May.??? As part of the deal, the State agreed to loan Atlantic City another $64.5 million to meet expenses for the rest of the year.
?While under state supervision, Atlantic City broke almost every law on the books written that protects taxpayers?, according to Seth Grossman, the groups attorney and executive director.
The papers filed by Grossman on behalf of Liberty and Prosperity and three local taxpayers claim that although the public was excluded because of attorney-client privilege, Robert Tarver, the attorney for City Council did not even attend the meeting.?? ?They instead discussed a complicated 18 page document loaning money that can?t possibly be paid back so that the state can seize every valuable asset the city owns?, Grossman said.
Grossman?s papers claim the City also violated the State?s budget law by refusing to adopt a balanced budget which was due last March, by refusing to specify how the $64.5 loan will be spent, and by not having the affirmative votes of 6 of the 9 council members.
?As soon as the state seizes and sells the city?s water utility, any private company that buys it will immediately double or triple rates to get a ?fair return? on its investment?, Grossman said.
Last May, the state legislature enacted an Atlantic City ?rescue? law that exempted Atlantic City?s eight casinos from any tax increases for the next ten years.??? Roughly 110 retail outlet shops and restaurants along with roughly 4,600 housing units already made ?Payments In Lieu of Taxes? and were already exempt from future tax hikes.
?Only about 25% of taxable properties in Atlantic City still pay regular property taxes?, Grossman said.
?A handful of middle class business and homeowners can?t afford to repay the $500 million debt already run up by Atlantic City–mostly while under state supervision?, ?Grossman said.?? ?How can they possibly pay back another $73 million on top of that?.
The State Department of Community affairs supervised Atlantic City government since it October of 2010 when the Superior Court ruled that the City was in ?gross violation? of the Local Budget Law.
The Local Budget Law requires every county and local government in New Jersey to adopt a ?cash basis? balanced budget by March of each year.
Atlantic City ran a deficit of nearly $100 million in 2010 when casino properties lost roughly two thirds of their value following the 2008 recession and competition from Pennsylvania casinos.?? However the City continued to run during the past five years of state supervision, currently has outstanding debts of roughly $500 million.
Last April, Grossman?s organization and three taxpayers filed suit demanding that Atlantic City immediately adopt a cash-basis balanced budget as required by the Local Budget Law.? The Local Budget Law requires each town and county in the state to introduce its budget by February of each year and finally adopt it by March.?? Public hearings are required before it can be approved.
Local governments are allowed to what was budgeted during the previous year until a budget is adopted for the current year.??? Last year, Atlantic City did not adopt a budget until late September.???? Every week of delay in adopting a budget makes spending cuts more difficult.???? If $100,000 is cut from a budget on January first, $100,000 is saved.?? However, if the budget is not adopted until July 1, when half the budget was spent based on previous year numbers, a $100,000 cut in the budget saves only $50,000.
The lawsuit claims the ten year tax break for Casino Gaming Properties is unconstitutional.?? The New Jersey Constitution requires all real estate to be assessed and taxed equally except for narrow exceptions which Liberty and Prosperity claims to not apply to Atlantic City casinos.
Shortly after suit was filed last April, Edward Sasdelli, the State Monitor supervising Atlantic City instructed local officials to immediately prepare a balanced budget by mid May.??? This was not done, and Sadelli resigned from his position several weeks later.
On Monday, Grossman filed a motion asking the court to also set aside the $73 million loan agreement signed by Mayor Guardian and the State last week. ? The State moved to dismiss the lawsuit, claiming that state government now controls Atlantic City, and that Grossman?s clients failed to exhaust their administrative remedies against the state.?? The matter is set for hearing before Judge Julio Mendez at the Atlantic County Court House in Atlantic City on Monday, August 8 at 9:30 A.M.
We urge you to support our efforts by attending the hearing, sharing this information with your friends on social media, and making a financial contribution to Liberty and Prosperity.
Our organization takes its name from Liberty and Prosperity–the motto of New Jersey since 1776.?? Where there is liberty, laws are simple, easy to understand, and apply equally to everybody.?? As a referee in football, it is the job of government to make sure everybody follows rules–not to decide which teams win.??? Where there is liberty, government inexpensive because it is simple, and honest, because government officials have no special favors to sell.???? That is why Liberty creates prosperity, and the Goddesses of Liberty and Prosperity stand next to each other on the New Jersey flag.
Seth Grossman, Executive Director.
Links to Supporting Document:
- Memorandum of Law Opposing State?s Motion to Dismiss
- Additional Counts Seeking to Void New $73 million loan agreement of 7/28/2016
- Loan Document and Resolution
Just as unsustainable spending and debt are crushing Atlantic City, unsustainable spending and debt are also crushing the Transportation Trust Fund and the entire New Jersey economy.??? However, most New Jersey state government debt is not legally enforceable and can be repudiated at any time.?? That is because the NJ State Constitution does not permit state government to borrow any money without voter approval, and only a fraction of the state’s debt was approved by voters.?? Most state debt was incurred by independent authorities like the Economic Development Authority, Transportation Trust Fund Authority, Port Authority of New York and New Jersey, etc.?? Most of their debts were incurred to build overpriced, political projects that to little to benefit the public.?? New Jersey taxpayers have no legal or moral obligation to bail them out if they go bankrupt.?? For details, visit RepudiateNJ.com.