N.J. Gov. Murphy gives ax to high-priced attorney who ran Atlantic City under state takeover

Jeffrey Chiesa, left, the state’s appointed overseer of Atlantic City, escorted by Chris Filiciello, the mayors chief of staff, into his first meeting at City Hall. AMY ROSENBERG / Staff .

Jeffrey Chiesa, the close ally of former New Jersey Gov. Chris Christie whose law firm racked up more than $4 million in billings to run Atlantic City under a state takeover, will be transitioned out of that role, Gov. Murphy announced Monday.

The North Jersey-based law firm Chiesa Shahinian and Giantomasi will continue to handle “some litigation matters”  related to Atlantic City, according to the governor’s office. Chiesa’s role will end within 30 days, the state said. The law firm has submitted an additional 50 billing invoices beyond the $4 million, according to a state records custodian, but the amount of those billings was not yet made available under an Open Public Records Act request previously submitted by the Inquirer and Daily News.

The Chiesa law firm has received mixed reviews for its work in Atlantic City, with credit given for a favorable negotiation of a tax-appeal settlement with Borgata. Less popular has been its role in court seeking to cut the city’s fire department budget and its pay. It has also been involved in litigation challenging the law that established a payment in lieu of taxes for casinos.

“It’s definitely a good day for the residents and workers in Atlantic City,” said John Varallo, head of the Local 198 of the International Association of Fire Fighters, which has tangled with the law firm in court. “I’m going to let them walk out the door. It’s been a bad dream for the last year. ”

Atlantic City Mayor Frank Gilliam applauded the move by invoking the Revolutionary War. “In memory of Patriots’ Day, the commemoration of the first battle of the American War for Independence, I am happy about the steps taken by Governor Murphy and Lt. Governor Oliver,” he said in a statement.

Chiesa and his law firm have been running Atlantic City as part of a state takeover since November 2016. Its lawyers are credited with negotiating a settlement over tax appeals with the Borgata that saved the city about $70 million, and with helping to secure state backing for about $50 million in new bonds to pay off a debt to the state, a move that officials say helped avert a tax increase. The state did not move to sell the city’s water authority or other assets, as some had feared.

Chiesa, a former U.S. senator appointed by Christie and state attorney general, billed $400 an hour. His contract with the state permitted his entire law firm, including paralegals, to also bill for their work, at various rates. The Murphy administration has been telegraphing its desire to adjust the state’s role in Atlantic City for months.

Lt. Gov. Sheila Oliver, appointed by Murphy to oversee the Department of Community Affairs, which has authority over Atlantic City under the takeover law, has been a critic of the state takeover and has said she would be scrutinizing the role and price tag for the Chiesa law firm’s activities in Atlantic City.

Murphy also appointed Jim Johnson to serve as a special counsel — pointedly for a salary of just  $1 a year — to recommend ways to return the city to local control.

The statement says the Department of Community Affairs will continue its role in Atlantic City, where Tim Cunningham, the state’s director of Local Government Services, attends council meetings, oversees agendas and budgets, and meets regularly with city officials. Chiesa’s role as “designee” will be phased out within 30 days, the state said.

The takeover law was passed during a time of steep fiscal crisis for the city, which saw five casinos close in recent years and the city coffers go nearly bare. By contrast, the casino resort is now anticipating two new casinos opening and its finances, with the help of redirected taxes and state backing of bonds, have stabilized.

Although the state retains vast powers over Atlantic City operations, personnel, and assets, both Murphy and Oliver referred to the state’s future role as a  “partnership.”

“DCA will continue to play an active role in Atlantic City to build upon the significant gains the City and State have made over the last 18 months in stabilizing Atlantic City’s finances,” Oliver said in the statement.  “This ongoing partnership between DCA’s knowledgeable local government experts and the City’s governing body and its professionals will keep Atlantic City moving in the right direction.”

City Council President Marty Small Sr., who fought the takeover in numerous trips to Trenton with then-Mayor Don Guardian, said he had nonetheless established a productive working relationship with both Chiesa, his law partner Ron Israel, and with Cunningham, the state official. He said the state’s move with respect to Chiesa did not change the fundamental relationship under the legislated takeover.

“From the state’s point of view, it’s a cost-savings measure,” he said. “I think it doesn’t change anything for Atlantic City. We’re still in the state takeover.”

“No one fought harder against the state takeover than me,” Small said. “While they were there, we had a great professional relationship. Tim Cunningham has proven to be a champion for Atlantic City, as far as state aid and other issues are concerned.”

State Sen. Chris Brown, a critic of the takeover and of the price tag for Chiesa, said Murphy “made the right decision for our taxpayers. As I said from the beginning, DCA already had the authority to manage the city’s finances without spending over $4 million with the takeover.”