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There must be a solid economic plan for future of A.C.

"Never waste a perfectly good crisis" is a favorite phrase of economists. Difficult times are the perfect environments to make the tough, politically unpalatable decisions.

"Never waste a perfectly good crisis" is a favorite phrase of economists. Difficult times are the perfect environments to make the tough, politically unpalatable decisions.

The collapse of its casino monopoly has driven Atlantic City into economic and financial crises. Thankfully, Atlantic City is not Detroit and its future could be very bright. But while the budgetary issues must be dealt with, it is unclear if there is a plan to reposition the city for solid future economic growth.

While some compare Atlantic City's situation to Detroit's, the differences are much more critical than the similarities. Yes, both were largely one-industry towns that did little to diversify their economies. When plants, headquarters, or casinos closed, financial crises ensued. But that is where the similarities end.

Detroit was in a slowly accelerating decline for years. While periodic attempts were made to revitalize the city, the magnitude of the problems, coupled with the simple fact that Detroit had little else to fall back on, made the slide into economic disaster inevitable.

Contrast that with Atlantic City. While the key industry, gaming, has shrunk, it has hardly disappeared. Two-thirds of the casinos remain, and they still provide high levels of entertainment and restaurants as well as gaming.

The streetlights are still on in Atlantic City, critical public services are still being provided, though maybe at too high a cost, and there are already investments being made in some of the shuttered buildings.

Stockton College is bringing a new industry into the heart of the Boardwalk. Private capital is being invested in the city's retail areas, including The Walk and The Pier Shops. There is even some interest in new casinos, as unlikely as that seems.

But maybe most important, Atlantic City has the benefit of being "down the Shore." It is fundamentally a resort that has gaming. It is not what it had become: a gaming center that, oh by the way, might have beaches and the Atlantic Ocean just on the other side of a world-famous Boardwalk.

The beach

The hospitality and tourism industry has always been Atlantic City's economic foundation, and it can return to it. The ocean is not going away, and the beaches will still be there - at least a few more decades. Along the Jersey Shore are wealthy vacation/second-home communities, and the summer visitors provide a huge economic base into which the resort can tap.

While Detroit was nothing without the auto industry, Atlantic City is everything, even with a smaller casino sector. It just needs to make use of its strengths to do what it should have 15 years ago: Diversify.

So why am I concerned? I am uneasy about the restructuring process. Recently, the state appointed an emergency manager, Kevin Lavin, and a financial consultant, Kevyn Orr, to oversee the turnaround. Given the many difficult and politically sensitive budget-cutting decisions that must be made, it might be easier for outsiders to manage the government's downsizing.

But the financial changes cannot be made in a vacuum. The leadership must not simply erase the budget deficit; it has to also restructure the economy for future growth.

The right experts?

So far, Lavin has said little about his vision of what Atlantic City's economy should look like when it comes out the other end of this process. Lavin may be a brilliant corporate restructuring lawyer, but this is a financial and economic restructuring of a city. We need to know what he brings to that discussion.

As for Orr, he is an expert in corporate and municipal bankruptcy and oversaw the Detroit bankruptcy. The credit agencies and markets assumed that is where he would take Atlantic City, and his appointment led to an immediate and sharp downgrade of the city's bond rating, raising borrowing costs. If the city is to be put into bankruptcy - no New Jersey municipality has defaulted on general obligation debt in 45 years - then he is probably the right person for the job. If bankruptcy is not the goal, what is the purpose of hiring Orr as an adviser?

Atlantic City may be financially bankrupt, or close to it, but it has enormous economic potential. If the appointed managers can't see the ocean from the red ink, they may be able to get Atlantic City out of its financial bind, but they will not reposition the city to grow strongly as it goes forward.

If that happens, we will have wasted a perfectly good crisis.