Water rescue? A.C.'s municipal authority may buy Bader Field for $100m
With the state of New Jersey at its gates, threatening to declare them in default of the terms of a $73 million state loan, Atlantic City's water authority is buying its disused municipal airport, Bader Field.
Like asking a rich uncle for help with a down payment, Atlantic City has persuaded its Municipal Utility Authority to pay more than $100 million to buy the broke city's former 140-acre municipal airstrip, Bader Field.
City officials hope the deal -- a Monopoly-esque scenario wherein the Water Works buys property with help from the banker -- will give the city a desperately needed influx of cash and help stave off a state takeover.
They also hope it keeps the state from coming after the city for violating the terms of a $73 million bridge loan that called for action to dissolve the water authority so that it could be used as backup collateral, if needed. City Council brought it up five times but didn't have the votes to dissolve the authority.
The MUA has been at the center of a long-running battle with the state and Gov. Christie, who wants to take over the financially-strapped seaside resort town. At least two water companies, one with ties to the brother of South Jersey political boss George Norcross, have expressed interest in buying the MUA, which supplies the city's drinking water and controls large water sources.
Atlantic City Mayor Don Guardian, speaking Monday in front of the MUA headquarters on North Virginia Avenue, said the sale gives the city the cash needed to start paying down its $500 million in debt and also monetizes the MUA as many, including the state's own emergency manager in Atlantic City, had recommended.
It also keeps the authority independent, as residents and a majority of City Council had urged. The sale must still be approved by council and the state.
"We always talked about`monetizing' the MUA," Guardian said. "That's a tough word to bite when you don't want to sell it or lease it or give it away."
While the city is in technical breach of the terms of the loan, Guardian is asking the state for a reprieve so officials can continue unveiling the seven-part rescue plan that is due in November.
Guardian stressed that the state is in possession of more than $73 million in redirected casino funds owed to the city once its fiscal plan is submitted.
With that money available to the state to repay the bridge loan, and the sale of Bader Field helping to stabilize the city's finances, the concept of dissolving the MUA "no longer makes sense," he said.
Before agreeing to the bridge loan, the state had demanded the MUA as collateral and required that the Atlantic City council pass an ordinance by Sept. 15 authorizing its dissolution. Council failed to do so.
Guardian said the city will soon disclose plans to settle a $150 million debt with Borgata Hotel and Casino, along with other efforts to move toward solvency.
He said the deal for Bader Field would act as a "poison pill" making a purchase of the MUA by a private water company unattractive, because the authority would now come with $100 million in debt.
"This keeps it in public hands," said City Council President Marty Small.
Brian Murray, spokesman for Gov. Christie, referred a request for comment to the Division of Local Government Services, which "notified Atlantic City last week of its breach of the loan terms and a 10-day period to cure." Tammori Petty, a spokeswoman for the Division of Community Affairs, said there would be no comment. A spokesman for State Senate President Stephen Sweeney, who has called for a state takeover, also declined to comment.
The move was hailed by Lena Smith, an organizer with Food & Water Watch, who said the city "must remain vigilant in the face of greedy private water companies that will stop at nothing to profit off this important public resource."
She added that "from Day One, the state takeover has had one clear goal: stealing the water assets of Atlantic City and turning them over to private interests aligned with [Sweeney and Christie]."
Not everybody in town was immediately on board.
City Councilman Frank Gilliam, who attended the announcement Monday, said he could not say whether he would support the sale, and objected to the lack of transparency. He said a similar lack of discussion led to the loan agreement itself, which included terms involving the authority that council later rejected.
Bruce Ward, executive director of the MUA, said selling bonds to allow the MUA to buy Bader would be "the most minimally invasive procedure" to address the "root canal" needed to fix A.C.'s finances. The MUA's bond rating is not as prohibitive as the city's.
Ward said the authority would continue to hold special events on Bader Field and look for other ways to monetize the property. Guardian envisioned Stockton University, which is building a city campus nearby, as a future buyer.
Officials said the value of the waterfront property is at a low point now, but could surge in the future. The authority has expressed interest in using the old airfield as a base for solar or wind projects.
Guardian said the deal, when finalized, would allow the city to reap some portion of any future purchase of Bader Field. Other details, including the exact purchase price and whether the MUA would pay the city a Payment in Lieu of Taxes (PILOT), were "to be determined," the mayor's office said.
The state last week declared the city in violation of the terms of the loan and gave officials until Oct. 3 to remedy the breach.