ATLANTIC CITY — Residents and activists claimed victory Wednesday after the State of New Jersey said it would not seek to privatize Atlantic City's coveted water authority.

The announcement caps a year of petition drives and neighborhood activism during a state takeover of city government that many thought  had left the financially strapped city vulnerable to a sale of the water authority to New Jersey American Water or another politically connected  company.

"The water company is a solid asset of this city," said Sheila Hull-Freeman, president of the Bungalow Park Civic Association, who said residents feared rate hikes under a private company. "We have no interest in giving up autonomy to the county, the state, or anyone else."

At a news conference in City Hall, Mayor-elect Frank M. Gilliam Jr. released a statement from former U.S. Sen. Jeffrey S. Chiesa, the state designee in charge of Atlantic City's finances, saying the state would not "sell or lease the Atlantic City Municipal Utilities Authority to a private company."

The statement cited "the important role the MUA plays in the community at large and the visible pride that city residents and businesses have in their water system."

It did not address any future public role Atlantic County's Utility Authority might play in operations, a scenario that has been floated. Chiesa did not attend the news conference. The MUA has been estimated to be worth $100 million.

"This allegiance was evident in this year's petition drive in support of the MUA, and in City Council's vote to give city residents a say in any dissolution of the MUA," Chiesa's statement said. "Therefore, the public can rest assured that the MUA will not be privatized by the state."

Gilliam said the announcement "shows how the power is really with the people."

He said any talk about a potential role for the county would be premature. "It allows the city to do what it wants with its water," he said.

"We made it very clear to the State of New Jersey that we wanted to retain the power of our MUA, and today we have prevailed," Gilliam said.  "It wasn't just a political fight. It was a fight for the residents of Atlantic City to make sure we retained power over our water."

City Council President Marty Small Sr. issued a statement praising residents, the NAACP, and several other national groups for their work, and cited "numerous trips to Trenton" made by himself and outgoing Mayor Don Guardian in an effort "to make our voices heard."

Carol Ruffu, head of the Chelsea Heights civic association, also appeared with Gilliam and spoke of the grassroots petition drive that resulted in 2,348 signatures and a City Council resolution assuring a right of referendum before any moves could be made on the authority.

"We got together, and it was unanimous at all the civic association meetings: We did not want to lose the right to have control of our water," Ruffu said. "We have the best water in the country, just about. With everything going on, with Flint, Mich., and Detroit, there were a lot of horror stories out there."

Lena Smith, an activist with Food and Water Watch who spent a year working on the petition drive in Atlantic City, said the state's announcement was "a huge victory for the residents and the citizens who really should be claiming this victory."

"All of the work people put in to protect their system and the importance of the ACMUA  to the residents is reflected by the state's announcement," she said.