The New Jersey overseer of Atlantic City will use his newly-vested powers to reject action taken by the city's controversial Municipal Utilities Authority at a recent meeting - most notably the MUA board's awarding of $3,000 bonuses to ... themselves.

The bonuses, first reported by the Press of Atlantic City, were approved at a special meeting last month of the MUA, the coveted local water works that the state has pressured Atlantic City to sell or lease to help ease its dire fiscal situation.

Meanwhile Tuesday, the N.J. Casino Reinvestment Development Authority announced it was cutting ties with its executive director John Palmieri for a less expensive replacement - but would pay him a $225,000 severance, the equivalent of one year's salary. His replacement will receive $175,000. The state overseer does not have veto authority over the CRDA.

The rejection of the MUA board vote will be the first concrete action taken by the state overseer, former U.S. Sen. Jeffrey Chiesa, granted vast governing powers in Atlantic City after a state board rejected Atlantic City's own recovery plan.

Also at the meeting, according to the transcript and the story by the Press of Atlantic City, the MUA board voted to increase its rates by 10 percent, the result of the withdrawal of New Jersey American Water from a $1.7 million annual purchase of water.New Jersey American Water is one of the private companies that has been seeking to buy or lease Atlantic City's MUA, a move resisted at the municipal level.

Tammori Petty, spokeswoman for the Department of Community Affairs said in an email that the state "rejects the actions taken at the ... November 28th special meeting; in particular, its vote to give outgoing members a $3,000 "gift" in addition to ... regular compensation and benefits package."

"This action is further evidence of the MUA's disregard for the ratepayers they serve and clearly demonstrates the Authority does not understand the severity of the City's financial condition," Petty said.

She said Timothy Cunningham, the director of the Local Government Services, and Chiesa, his designee, "will immediately avail themselves of all powers under the Municipal Stabilization and Recovery Act to reverse the action of the MUA and will undertake a comprehensive review of the remainder of the November 28th meeting minutes."

The takeover legislation gives the state overseer the authority to veto minutes of City Council and all authorities, and to dissolve departments, boards and authorities. The fate of the city's Municipal Utility Authority has been at the center of takeover discussions for more than a year.

American Water, the nation's largest publicly traded water and wastewater utility, recently joined a growing list of corporations with plans to move to Camden using incentives awarded through the Grow New Jersey program.

It is represented by lobbyist Phillip Norcross, brother of powerful South Jersey insurance magnate George Norcross, who has pushed for a takeover.

Some state officials have advocated for a county takeover of the MUA, long known for its low rates, quality and quantity of water reserves, and as a place where local Atlantic City residents could get jobs, even as casinos might pass them over.

One board member, William Cheatham, on Tuesday denied knowing anything about the bonuses, despite the recorded vote. Another board member, Gary Hill, told the Press the bonuses were supposed to be for departing members, and that the resolution would be corrected.

The resolution describes the bonuses as a gift to the seven board members for their service. Chiesa is to be paid hourly for his service, but the state has not yet released his hourly rate , or any other terms of his service.

In other A.C. news involving the state, the CRDA, which oversees the Tourism District created five years ago by Gov. Christie, said its executive director John Palmieri would be replaced by his less expensive deputy, Chris Howard, but receive a severance.

Christie has defended Palmieri's salary in the past, but also criticized similar  "boat checks" received by departing police and fire department workers. Palmieri said in an e-mail Tuesday, "The CRDA is honoring the contract that was executed over 5 years ago," in awarding the $225,000 severance.

The CRDA, which gets a percentage of casino revenue, has funded various projects from outlet shops to casino pools and expansions, to police technology to Boardwalk lighting. It will lose $18 t0 $20 million of this funding as the state-mandated casino levy is redirected to Atlantic City itself.

Palmieri said he and chairman Robert Mulcahy agreed that his departure would be consistent with a more constrained CRDA mission. Palmieri oversaw a CRDA that spent millions acquiring property near the former Revel Casino, including an unsuccessful eminent domain battle against piano tuner Charlie Birnbaum. The CRDA pays no taxes on its lots.

Palmieri said he stood by the strategy. "We spent about $8 or $9 million assembling parcels, demolishing property, cleaning sites and creating development parcels within the South Inlet," he said. "Now you might argue, to what end, right? We've laid the ground work for some good development that will obviously require an improving economy to get done."

He said the redeployment of the casino levy would altar the CRDA's mission, but, he said, "We understood the critical need to support efforts to resuscitate the the city."