ATLANTIC CITY, N.J. — At a ribbon-cutting event, Atlantic City Mayor Donald Guardian read a book to children in attendance that symbolized his hope that they will grow up in a more vibrant community.
At the Sept. 22 ceremony for a kid’s “learning trail” in a city park, Guardian read aloud a story called “The Diving Horse and the Magic Whistle,” which features Atlantic City and contains a note from author Steven Winkelstein saying the book is “a call to action for the glorious city by the sea to meet its long-awaited Renaissance.”
Moments after his well-received book presentation, Guardian spoke to The Bond Buyer about his vision to turn Atlantic City’s struggling financial position around in the short-term while also setting it up for a successful future that the children he read to can benefit from.
“Atlantic City always saw itself as a Jersey Shore town and a convention town or a gambling town, but if you look at great cities they are much more than that,” said Guardian, who was elected as Atlantic City’s first Republican mayor since 1990 in November 2013. “We need to be turning our city around so people want to live here and have jobs that will be available to them.”
One of Guardian’s chief goals upon becoming mayor in January 2014 was to attract more non-casino businesses. This vision took on a bigger meaning when four of the city’s 12 casinos closed during Guardian’s first year in city hall. With increased regional competition in nearby Pennsylvania, Maryland and Upstate New York along with rising online gambling options, Guardian is weighing what the adequate number of casinos in Atlantic City should be in what was once considered the dominant East Coast gambling hub.
“We have competition from gaming all over the northeast,” said Guardian, who headed Atlantic City’s Special Improvement District for two decades prior to his election as mayor. “Maybe eight is the right number, or seven, but we’re very close if eight is not the right number.”
Professor Ben Dworkin, director of The Rebovich Institute for New Jersey Politics at Rider University, said the effects of increased regional gambling completion were aggravated by the 2008 recession when convention bookings dwindled; damage from Hurricane Sandy four years later added to Atlantic City’s struggles. He said that with Atlantic City’s location by the ocean and accessible highway access, Guardian’s vision of transforming it to be more than just a casino town, similar to what Las Vegas accomplished, could be realistic.
“Mayor Guardian very clearly came in with agenda to transform Atlantic City into more than just a gaming destination,” said Dworkin. “Assuming they get through short-term credit challenges there is no reason to doubt that it can transform itself.”
Guardian pointed out that with the exception of the Taj Mahal, which filed for bankruptcy in September 2014, every other casino property has expanded in terms of adding non-wagering features such as clubs, spas and restaurants. He said Harrah’s Resort Atlantic City, which recently opened a new convention center, had 97,000 rooms booked for the first nine months of the year compared to 7,000 in the same period in 2014. The city has the most convention space square footage between Baltimore and Boston.
“Convention business is certainly easy picking since we have the rooms that are not filled by gamblers mid-week when it’s cold,” said Guardian. “Conventions and conference center are the right fit right now in Atlantic City.”
The city welcomed a new 85,450-square-foot Bass Pro Shops Outpost store in April and a 16,000 square-foot mixed-use development from BET Investments next to the Boardwalk Hall sports arena is also slated to open soon. Guardian is also excited about developer Bart Blatstein’s planned $50 million project to convert a failed mall along the Atlantic City Pier into an entertainment, dinning and shopping destination. Former star National Basketball Association center Shaquille O’Neal is also building an entertainment complex in Atlantic City featuring a movie theater, bowling alley, roller-skating rink, restaurants and shops.
“I don’t think Atlantic City is going to become a ghost town,” said Dworkin. “There is too much infrastructure, too much investments and too much at stake.”
Guardian said new non-casino developments in the works will help boost tourism numbers to the Jersey Shore area along with a new summer concert series that debuted in 2014 that draws over 50,000 per show. He added that a planned indoor water park should also attract visitors all year round and that more companies are eyeing setting up their headquarters in the seaside city with Stockton University also looking into opening a satellite campus.
“None of those are going to solve the problems of Atlantic City, but each of them moves us a little bit forward,” he said.
While Guardian has a vision for a more diversified Atlantic City, he faces near-term challenges trying to avoid bankruptcy the midst of a credit crisis.
Atlantic City was faced with a $101 million deficit and did not adopt a 2015 budget until Sept. 22, a bit more than three months before the end of the year. New Jersey Gov. Chris Christie placed the city under emergency manager control in January, which prompted Moody's Investors Service to slash its credit rating six notches to Caa1 because of concern this could lead to debt restructuring.
Guardian was committed to cutting Atlantic City government spending by $20 million to $30 million a year when he took office, but the large budget gap in 2015 accelerated this process. He reduced the city’s workforce by 400 people and was able to receive state and federal grants to help plug the budget gap. Emergency Manager Kevin Lavin is expected to issue his second report this fall with recommendations to improve Atlantic City's financial footing.
Guardian is hopeful that a bankruptcy filing will not be needed and said the key will be whether an agreement can be reached with union workers at the Borgata Casino, to which the city owes $153 million in tax refunds.
The mayor is also hoping New Jersey Gov. Chris Christie will sign key parts of a financial relief package the State Legislature approved in June that would authorize casinos to make payments in lieu of taxes over the next 15 years and would reallocate the casino alternative tax to pay debt service on Atlantic City-issued municipal bonds.
While Guardian tackles the immediate needs of his city, he is proactively trying to position it to withstand future global credit crunches.
“I want to prepare my city for the next recession,” said Guardian. “Whether that is five or 10 years away, I want to make sure that we’re a lot more than just a resort town so that we become resilient.”
