State control over city’s assets and decision-making powers could lead to privatization of water and public worker layoffs as casino revenues have plunged

This article is more than 3 years old

This article is more than 3 years old

New Jersey has formally taken over Atlantic City, the indebted gambling town where President-elect Donald Trump left a legacy of troubled casinos.

The move threatens to lead to privatization of the city’s water, the undoing of local collective bargaining agreements and public worker layoffs in the city of 39,000.

“It’s kind of ironic that it was a day after the elections occurred that they decided to rob the city of democratic rights,” said Mary Grant, a researcher for Food and Water Watch, an advocacy group. “It’s denying the people a voice in their own future, and it will likely result in the handover of their water system.”

Both local officials and citizens opposed the takeover. The city’s Republican mayor, Don Guardian, said he would, “keep all of our options on the table”.

Flint warnings as Atlantic City may be forced into state takeover of water Read more

The city has been in dire financial straits since revenues to the state’s casino industry plummeted over the last 10 years. Five casinos have closed since 2014, including two low-performing casinos previously owned by the president-elect. Revenue at Atlantic City’s casinos fell more than 50% between 2006 and 2015, according to the University of Nevada Las Vegas Center for Gaming Research.



New Jersey’s unpopular governor Chris Christie, currently Trump’s transition chairman and a candidate for a job in his administration, personally brokered the deal that lead to Atlantic City’s state takeover.

Christie’s advocacy of privatized water in Atlantic City fits in more broadly with calls from Trump’s economic advisers to spur private investment in public works projects, by offering $140m in tax credits to private equity holders. In general, water rates tend to rise after privatization.

“It’s terrible news for Atlantic City,” said Susanna Bohme, associate research director at Corporate Accountability International. “Democratic control is being eroded overall, which we’ve seen in places like Flint, [Michigan] that disproportionately impacts low-income people and people of color, then we also know the private water industry is salivating at the idea of taking over the utility.

“Clearly, there is a problem with political interference on the part of the water industry that is working against the interests of everyday people in New Jersey.”

Atlantic City’s prized Municipal Utility Authority, with a widely cited estimated worth of $100m, is likely the most valuable asset now in state hands. The system would be a prize for corporate water companies, such as American Water or the French corporation Suez, both of whom own systems nearby.

“It’s an incredible responsibility, one that I’ve lost sleep over in the last few weeks,” said Timothy Cunningham, head of New Jersey’s local finance board, according to the Associated Press. The board voted 5-0 to takeover Atlantic City’s finances.

Previously, the city presented the local finance board with a long-shot five-year plan to stave off bankruptcy, which include selling a vacant former airstrip called Bader Field to the Municipal Utility Authority at a price of $100m.

American Water has especially deep ties in the region.

Christie’s Economic Development Authority gave a $164m tax break to the company this summer. American Water’s tax break was worth more than double the high-stakes $72m loan that allowed New Jersey to eventually take over Atlantic City. Suez also got a tax break for $5.5m.

In recent years, the company has increasingly hired the lobbying firm Optimus Partners LLC, owned by Philip Norcross. Norcross is the brother of George Norcross, considered south Jersey’s most powerful unelected power broker.

American Water donated $50,000 to the Republican Governor’s Association, while Christie led the organization, WNYC reported. Both Suez and American Water are also on the board of Choose NJ, an organization that financed Christie’s trips abroad.

During the time Christie was governor, the state also passed a law removing a state consumer advocacy board’s power to fight rate hikes, and removed the requirement for a public vote in the event towns wanted to privatize utilities.

Just 19% of New Jersey voters have a favorable opinion of Christie, after former senior aides to the governor were convicted in a politically motivated revenge scheme the closed down the George Washington bridge between New Jersey and New York.