WAYNE PARRY

Associated Press

ATLANTIC CITY - Atlantic City is about to get a long-awaited state loan to help it stave off default and possibly bankruptcy.

But it will pay a steep price if it can't pay it back: The state will be able to step in and seize prized assets like a much-coveted water utility, and a former airport property that could be home to a huge development.

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The City Council called an emergency meeting Thursday to accept the $74 million loan to help the nearly broke city get through the rest of the year.

Moody's Investors Service warned Wednesday that the city likely would default on a $3.4 million debt service payment on Monday if the loan did not go through before then.

Council President Marty Small said the funds will relieve the short-term pressure on the city as it tries to come up with a fiscal reorganization that would prevent the state from taking over its finances and major decision-making power in November.

"It gives the city some much-needed flexibility," Small said. "It takes some of the worry away. We're still a long way from done, but I am more than 100 percent confident we will come up with a financial plan that will be acceptable to the state."

The city's finances have crumbled as its main employer, the casino industry, has contracted. Four of the city's 12 casinos went out of business in 2014, and surviving casinos have successfully challenged their tax assessments, blowing large holes in the city budget.

The loan is part of a wider agreement between the city and Gov. Chris Christie that was reached earlier this year giving Atlantic City until early November to get its financial act together. The deal avoided a state takeover that would have taken effect this summer.

That agreement called for the city's casinos to redirect $60 million in money that used to fund the Atlantic City Alliance marketing organization, as well as $18.5 million in casino investment taxes, to the city.

The mayor said those funds "can and should serve as collateral for the loan."

But the state still holds most of the cards: it can take over in November if it determines whatever Atlantic City comes up with is not sufficient to put the city on a long term path to stability.

A takeover would let the state sell off city assets, including land and utilities; unilaterally cancel union contracts; dissolve boards and agencies; and assume most of the city's major decision-making power.

Follow Wayne Parry at http://twitter.com/WayneParryAC