The gambling mecca is on the verge of running out of cash
|ATLANTIC CITY
BOARDWALK is the most expensive street in Monopoly, the board game inspired by Atlantic City’s streets. But it has been hard to shift property in Atlantic City, including on the Boardwalk. Developers are waiting for things to turn round before building on an empty plot on the spot where the Playboy Hotel and Casino once stood. That could take some time: bankruptcy for the once-grand seaside resort seems a strong possibility. Don Guardian, the mayor, has said that without state help City Hall will have to give IOU slips to police and firefighters in place of wages. The city council has found a way to keep paying, for now. But by mid-May Atlantic City will not be able to “pass Go”, let alone “Collect $200”.
Thanks to New Jersey’s aggressive supervision of municipal finances, there has been no default or bankruptcy in the state for nearly 80 years. But no town has had so much go wrong so quickly as Atlantic City. In 2014 four of its 12 casinos closed and gaming revenue, which the state relies on, plummeted. Nearly 8,000 jobs were lost in a city with already high unemployment. Punters were still gambling, just not in New Jersey. When gambling laws were relaxed in nearby states, Atlantic City lost its monopoly (see map).
Atlantic City relies on property taxes for most of its revenue. Real-estate agents are not selling, but are staying busy by reassessing property values. The value of taxable property has fallen by 64%, from $20.5 billion in 2010 to $7.3 billion in 2015. The city owes several casinos tax refunds: Borgata alone is owed $170m. Atlantic City’s jobless rate of 7.7% is far higher than that of the state or the rest of the country. The city, which has a population of 40,000 people, had a deficit of $120m last year, or $3,000 per person. One in three residents lives below the poverty line.
Chris Christie, New Jersey’s governor, has made Atlantic City’s recovery a recurring project. Within weeks of his inauguration he set up a commission to look at gambling. He created a state-supervised tourism district in 2011. He approved multiple loans and held summits. In early 2015 he appointed an emergency management team. Mr Christie had hoped the team, which for a time included Kevyn Orr, previously Detroit’s emergency manager, would shuffle the deck. But despite the mayor adhering to the emergency manager’s recommendations, including workforce cuts, Mr Christie has twice vetoed an aid package, including a bill allowing casinos to make fixed payments in lieu of property taxes. This would have given the city more certainty. Mr Christie now says he will not give any more money without a full state takeover.
The Republican mayor, Mr Guardian, and the Democratic state assembly speaker, Vincent Prieto, both say no dice. A takeover could allow the state to end collective-bargaining agreements, among other things. The stakes increased on April 4th, when the state sued Atlantic City for $34m in property-tax revenue owed to its schools. On the same day Moody’s, a credit-ratings agency, downgraded the city’s already junky rating to reflect a greater likelihood of default within the year. In November New Jerseyans will vote in a referendum to allow gambling in the northern part of the state, near New York city. If passed, this would likely do more damage to city finances.
Over the horizon lie some reasons for optimism about Atlantic City. The eight remaining casinos have seen their revenues jump. The city, long a one-industry place, is beginning to spread its bets. A new conference centre is booked until 2019. Stockton University is opening a new campus there. The Boardwalk, running along a fine sandy beach, still has plenty of appeal. Maybe, as Bruce Springsteen (New Jersey’s most famous poet) once sang of Atlantic City, everything that dies someday comes back.
This article appeared in the United States section of the print edition under the headline "Out of luck"
