Bankruptcy May Not Solve Atlantic City’s Problems, Expert Says
"I think that they really need to consider the implications of what bankruptcy means before they start to do it," said Marc Pfeiffer, senior policy fellow and assistant diector at the Bloustein Local Government Research Center at Rutgers.
Pfeiffer is also a former member of the state's Local Finance Board, which would have to approve an Atlantic City bankruptcy filing. He said the city can try to claim bankruptcy, but they officially cannot do it. He says in order for a municipality to file for bankruptcy, under New Jersey law, they have to have the approval of the state's Local Finance Board, and according to Pfeiffer, "that has not happened since the Great Depression.
"I think that they really need to consider the implications of what bankruptcy means before they start to do it," Pfeiffer said.
He said city officials want to hold onto assets such as the Municipal Utilities Authority and Bader Field. But those assets would eventually be sold off during the course of bankruptcy.
"One of the things that often happens is that assets are sold, and one of the things that the city needs is cash, and one of the ways to raise the cash is to sell the assets," he said.
According to Pfeiffer, at this point, Atlantic City is under the control of the state of New Jersey through what is called, "state supervision." He says the state has the obligation to do what ever it can try to prevent bankruptcy and try to basically keep Atlantic City solvent.
Pfeiffer said there's another option, though and it's not a state takeover.
"I think that the city is far better off negotiating with the state," he said. "There is still a lot of recommendations that the emergency managers and the state monitor have said that they can do that they have not done. The big choke points right are the MUA and Bader Field and potentially the Gardner's Basin area for a redevelopment project as well," he said.
Pfeiffer doesn't think Atlantic City officials understand the bankruptcy process, and hopefully, over the next week or so, they will consult with some good advisers who can give them a sense of what would be involved in this process should they choose to move forward.