Atlantic City, N.J., emergency manager suggests privatizing fire department

[January 16, 2016]  (Reuters) - Atlantic City, the distressed New Jersey gambling hub, should consider privatizing its fire-fighting services and convention center and find ways to make more money off its drinking water utility, the city's emergency manager said in an updated fiscal rescue plan.

The report comes one year after Governor Chris Christie appointed Kevin Lavin as emergency manager. Lavin's report, which also calls for additional layoffs, follows an initial assessment last March.

New Jersey taxpayers have so far spent $2.62 million on Lavin and his team of accountants, restructuring lawyers and a mediator, according to invoices obtained and reviewed by Reuters through public records requests.

"I'm glad the emergency manager has, after spending millions of dollars in no-bid contracts and wasting months of time, concluded what we all know: that Atlantic City government is broken and needs to be fixed immediately," Senate President Steve Sweeney said in a statement.

Sweeney is now pushing for a full state takeover of Atlantic City operations that would strip elected officials of nearly all power.

Lavin said in a statement that over the past year his office and city stakeholders have "kept the city from falling into financial ruin" by tackling a $100 million budget deficit.

"Unfortunately, our momentum has been stalled by parochial politics that continue to inhibit progress, all to the detriment of the taxpayers of Atlantic City," he said. "Many of the most critical and financially important issues need to be addressed urgently."

He said the city should consider privatizing the entertainment and sports arena Boardwalk Hall and should regionalize municipal services, including police.

The city is facing tough odds. Its school district is projecting a budget deficit of up to $55 million in fiscal 2017.

Atlantic City also has at least $190 million of casino tax appeals and other unbonded debt. In part because of that, the city's "ability to raise public funds in order to repay the unbonded debt is highly unlikely," the report said

The report found that the city does not qualify for "adequate" financing under the state's Qualified Bond Act, which it used in the past to issue bonds because its credit rating is at junk status.

Mayor Don Guardian said in a statement he would review the report.

"I fully recognize that much work still needs to be done to fix the problems that have accumulated over the past 30 years," he said.

(Reporting by Hilary Russ; Editing by Daniel Bases and Leslie Adler)

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