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Tracking the rebound

The state is retaining control of Atlantic City, despite Gov. Murphy’s campaign vow to end the takeover. But local leaders are OK with that

Jim Johnson, special counsel to the governor’s office, speaks as the New Jersey Department of Community Affairs issues its Atlantic City Implementation Plan on April 23, 2019. (PHOTOS BY AARON HOUSTON)

Virtually everyone in New Jersey government and politics agrees that the state needs to continue its control of Atlantic City for the full five years envisioned when then-Gov. Chris Christie authorized the takeover in 2016. In fact, Lt. Gov. Sheila Oliver, at a town-hall style community meeting at the city’s All Wars Memorial on April 23 said the takeover will last at least until the fall 2021. But the tenor of the relationship between the city and state has apparently changed.

Oliver described the state’s control of the seaside town as more of a “partnership” with key local officials.

“We do not believe in top-down leadership, we believe in bottom-up leadership,” Oliver said to applause from local residents and officials during the meeting.

“We hope to demonstrate to our state Legislature that the work has been performed in Atlantic City, the salvation of its finances … land-use development and a number of other things, that the state has been set,” Oliver said, standing alongside Atlantic City Mayor Frank Gilliam Jr. and Jim Johnson, special counsel to the governor’s office.

Christie signed the takeover into law in 2016 to begin direct state oversight when the cash-strapped seaside resort city was on the verge of bankruptcy. During the remainder of Christie’s term, state overseer and former state attorney general Jeffrey Chisea’s law firm billed New Jersey over $5 million for its work in the city.

The Department of Community Affairs, led by Oliver, has the authority to override decisions by the city council, abolish city agencies, seize and sell assets — such as the city’s valuable water works — hire and fire employees, break union contracts and restructure city debt.

City residents bitterly fought against the takeover under Christie, worrying that many of the city’s assets would be sold off but to date no major sales have occurred.

Campaign promise

Gov. Phil Murphy campaigned on ending the takeover, but softened his tone nine months into his term when he said in September that the state should continue its oversight for the next few years. Murphy also insisted the state would not continue Christie’s “big-footing” in the city.

Johnson and Lt. Gov. Sheila Oliver, who also heads the Department of Community Affairs, greet members of the report city’s community after they unveiled the state plan.

“Atlantic City has been counted out time and time again only to rise up time and time again to fight on. I don’t … want to see this city on the ropes again. Everything Atlantic City needs can be found right here within its borders,” Murphy said last year.

Christie, after leaving office, has been critical of Gilliam, especially after his alleged involvement in an early-morning casino fight last November. Charges against him were ultimately dropped.

“I think it just further reinforces the decision that I made and Senate President [Stephen] Sweeney made to have the state take over governance of the city,” Christie told reporters at a luncheon during the New Jersey League of Municipalities conference in Atlantic City.

“The recent episodes are just another example of the way they disappoint us,” Christie added. “The good news is they’re not in a position to make any major decisions anymore and won’t be for quite some time.”

But on Tuesday, Gilliam, who took office in January 2018, praised the turnaround brought about by local businesses and elected officials, and the contributions of larger national companies such as the casinos.

He also praised businesses and institutions that set up or expanded their footprints in Atlantic City, such as Stockton University, South Jersey Gas and the AtlantiCare health system, which operates the AtlantiCare Regional Medical Center in the resort town.

Diversification goal

On April 23, the state and city unveiled a series of reforms that the municipality would aim to implement by the end of 2019 or 2020. Johnson said three of the areas deal specifically with the question of diversifying the city’s economy: economic development, workforce development and job creation, and land use and development.

A report released by the Murphy administration in September justifying the state’s continued takeover indicated that the city needed to expand its economy into sectors beyond the casino industry, lest it face financial peril in the event of another recession or a downturn in the gambling and entertainment markets.

In the midst of the 2016 takeover, five of the city’s 12 casinos shut down, hampered by competing gambling centers in Pennsylvania and New York, all of which sucked business from patrons who opted for much shorter drivers.

As the city’s dominant employers lost business and shut down, the tax revenue from those casinos went up in smoke, prompting the need for the financial aid that came with the state takeover.

Oliver speaking at the New Jersey Department of Community Affairs presentation of its Atlantic City Implementation Plan on April 23, 2019.

One proposal from the Tuesday report calls for boosting employment opportunities for non-English speakers and those with criminal records.

“One of the important elements of the plan is land-use and economic development in tandem,” Johnson said. “When you look around the country at cities, the way they make progress is when they handle issues of what’s commonly referred to as blight, abandoned property.”

“It’s very hard to attract business to a city and entrepreneurs to a city when they look around and they don’t necessarily see opportunity, they see problems,” Johnson added.

A former U.S. Treasury undersecretary and an unsuccessful candidate for the 2017 Democratic gubernatorial nomination, Johnson prepared much of the September report and earns an annual salary from the state of $1.

Johnson and Oliver both talked down Christie’s proposed “tourism district,” which would have included some of the most blighted sections of town.

Johnson said such a district would “divide the city” and that a citywide approach to redevelopment would work better.

Getting granular

Several business officials and local leaders spoke highly of the Murphy administration and the track record of Atlantic City under the Democratic governor’s watch, as did members of the Atlantic City Executive Council, which handles the implementation of the September report and controls much of the decision-making for the city.

“We’re just proud and happy to be part of the solution to what’s facing Atlantic City,” said AtlantiCare Executive Director Sandra Festa. “We’re part of the redevelopment, our new medical arts building that’s going up … We’ll see a lot more [medicine] and [education] in this city, lots of opportunity.”

In January, AtlanticCare unveiled plans for a $38 million medical arts facility at the corner of Ohio and Atlantic avenues, scheduled for completion by 2021.

From left, Johnson, Sheila Oliver and Atlantic City Mayor Frank Gilliam on April 23, 2019.

“I think that the lieutenant governor and Jim Johnson have gone back to the basics, which was important,” said Chris Paladino, president of the Atlantic City Development Corp., which has been overseeing the construction projects within the Atlantic City Gateway Redevelopment Initiative.

Those projects included the construction of the Stockton University Atlantic City campus, which opened this fall, as well as the new headquarters for South Jersey Gas.

“They’ve gotten very granular with respect to our understanding the community, and trying to implement changes at the neighborhood level,” Paladino added. “The focus has been healthy in Atlantic City, helping it help itself. They really started from the neighborhood level, the local community groups and the people.”

Matthew Doherty, executive director of the Casino Reinvestment Development Authority, told NJBIZ that he wants the city to follow in the footsteps of Asbury Park, considered by many in the state to be a success story of a seaside town that reversed a decades-long economic slide.

“Asbury Park has done a really great job over the last 20 to 25 years, transforming itself into a really fun, eclectic environment. We want to bring that same type of idea to Atlantic City. They’ve done well with things like coffeehouses and bars and nightclubs and make it a fun place to go,” Doherty said.

“They’ve done well with attracting small businesses and office spaces, and significantly improved their housing stock,” Doherty added, pointing to a vast “second-home” market of summer rentals that Atlantic City could tap into, where tourists rent out their seaside homes for the summer.

“If you look at the other urban areas around the Jersey Shore, Long Branch, Asbury Park, they both have significant second-time markets, and we want to look to build something like that here in Atlantic City as well.

Daniel J. Munoz
Daniel Munoz covers politics and state government for NJBIZ. You can contact him at dmunoz@njbiz.com.

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