Will once 'lost cause' Atlantic City beat the odds to escape takeover?

3 x 2 don guardian at podium
At one time, state takeover of Atlantic City seemed inevitable. Late last week, the chess pieces seemed dramatically rearranged. Mayor Don Guardian expects to learn the city's fate on Tuesday.

ATLANTIC CITY - The other night, with journalists converging, Mayor Don Guardian was locked out of his seventh-floor office. Nobody seemed to have a key.

Not that long ago, it seemed Guardian might be permanently locked out of his office - with Atlantic City under siege by a governor whom Guardian was openly comparing to a fascist, threatening a state takeover.

Now, armed not with fiery rhetoric but with accountants and bond counselors and a detailed 123-page recovery plan that even Wall Street called "robust," the gregarious Guardian shrugged off the omen of the locked door and held his news conference in the hallway, beneath portraits of mayors who came before him.

There seemed a cautious sense that Atlantic City, against all odds, might prevail. The state has until Tuesday to give its thumbs-up or thumbs-down on the city's plan by determining if it restores "fiscal stability." Rejecting it would allow the state to move to take over city government and seize assets.

At one time that seemed inevitable. Late last week, the chess pieces seemed dramatically rearranged.

With Gov. Christie weakened by Bridgegate revelations, State Senate President Stephen Sweeney no longer running for governor, the North Jersey casino idea that would have led to a tantalizing pot of Atlantic City redevelopment money looking doomed, and with unions and politicians circling the wagons, everyone's lovable, broke seaside resort seemed on the verge of, at the very least, making a case for self-rule.

Christie's office directed queries to the Department of Community Affairs. George E. Norcross III, the South Jersey power broker who floated the takeover idea at a December 2015 meeting at Drumthwacket, the governor's mansion, said in a statement he just wanted Atlantic City fixed "one way or the other." Sweeney, who repeatedly made the case for a takeover, denied it was ever inevitable and joked about the rampant speculation that there was a secret plan to divvy Atlantic City up for special interests.

"I actually had it drawn up on a cocktail napkin," Sweeney said.

In New Jersey, you never know.

Here's how the landscape has changed since May, when Atlantic City won a 150-day reprieve in the Legislature to come up with a recovery plan, even as it was rummaging municipal sofas to stay afloat.

Christie: The governor has been coming in to Atlantic City with big ideas since 2010. He has held news conferences on the Boardwalk, brought in Detroit bankruptcy experts, called the mayor a liar, appointed emergency managers, propped up Revel with tax incentives, and created a state Tourism District.

Will the politically weakened Christie reemerge as his old self for a takeover by the sea and make Atlantic City his last stand? Signs point to a waning desire to Do A.C. with an iron fist.

Rutgers University political scientist Ross K. Baker says the playbook of bravado and verbal aggressiveness Christie turned to in Atlantic City no longer works for him.

"He let a lot of people down," Baker said. "The revelation of his conduct, his pettiness, his vengefulness are not attractive human qualities."

 

North Jersey: One of the rationales for a state takeover was to reassure North Jersey lawmakers that it would not be reckless to send a projected $200 million from proposed North Jersey casinos down to Atlantic City. But the referendum to allow casinos up North seems headed for defeat, in part because of the noise made by Atlantic City officials and residents as their town nearly went belly-up.

In a startling political twist, Sweeney, long considered a gubernatorial candidate, threw in the towel when North Jersey politicians consolidated around another candidate, Phil Murphy. Sweeney, closely tied with insurance executive Norcross in exerting the power of South Jersey, had been boxed out. Many considered that maneuver aimed at the heart of the South Jersey power interests that had Christie's ear for years, especially where Atlantic City and Camden were concerned.

"North Jersey said: 'You already have Camden. Now you're positioning to take over Atlantic City - and you're going to take over the governorship? Wait a second,' " said Bill Dilorenzo, an Atlantic City firefighters union official. "I think they overcalculated on Atlantic City. Maybe they're going with Plan B."

Plan B: One of the main "cocktail napkin" theories involved the city's Municipal Utilities Authority, coveted for purchase by at least two politically connected water companies.

Atlantic City Council members refused five times to dissolve the authority, long a source of jobs for residents, even when their vote put them in violation of the state's loan.

In the end, the city's financial consultants came up with a novel idea.

In addition to the plan's anchor components of deep cuts in spending and workforce, innovative ways to add revenue, and a tentative settlement with Borgata over a $150 million tax refund, the plan calls for selling the city's old airport, Bader Field, to the city's Municipal Utilities Authority for $110 million.

While the deal raised eyebrows, the consultants defended the solution and said it was legal. They portrayed it as a way to keep assets in local hands, preserve Bader Field's value for a better market, and pay off crushing debt.

Bond counsel Ed McManimon seemed especially proud to say that special interests "weren't able to dent the shield of the mayor and council."

"The city focused on a plan," McManimon said. "Those who wanted to kibitz . . . the people who wanted to dissolve the MUA, buy Bader Field, they had to stand aside."

Some of those interests - like developer Joe Jingoli, who for a time was named to redevelop the inlet section and was thought to be angling for the Revel - simply have enough on their plate. Jingoli, who has ties to Christie top adviser Jon Hanson, the governor's original go-to guy in Atlantic City who argued for a Michigan-style takeover, was recently named developer of Stockton University's Atlantic City campus.

The wonks: Will accountants and spreadsheets trump politics? The city's consultants managed to drown out the argumentative Atlantic City Council, whose president, Marty Small, wrangled a bare majority to approve the plan, even as members complained of being insufficiently briefed and then were caught dozing through the power points.

In a revealing moment, the mayor's chief of staff, Chris Filiciello, saved his most impassioned words for the consultants, calling them "courageous" for even taking on the city's case at all. The authors of the plan, paid $400,000, were PFM Group Consulting, run by Michael Nadol, a budget guru in the Rendell administration; NW Financial Group; and McManimon, Scotland & Baumann, bond counsel.

"Even to be here today with this plan," Filiciello said recently. "Six, seven months ago we were about to be taken over by the State of New Jersey, then we were about to run out of money. Each time, we were able to find a solution. Most people thought it was a lost cause."

arosenberg@phillynews.com

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@amysrosenberg

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