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  • NJ A3614
  • Establishes "Atlantic City Plan for Implementing Economic Recovery Act"; exempts casino gaming property from local taxation and establishes payment in lieu of taxation; creates Atlantic City Planning Committee.
In Committee
Crossed OverPassedSignedDead/Failed/Vetoed
2016-2017 Regular Session
This bill, entitled the "Atlantic City Plan for Implementing Economic Recovery Act" (AC PIER), is intended to address the severe fiscal problems currently faced by Atlantic City, caused largely by a rapid decline in the city's ratable base from lower casino property assessments. The problem is unique to Atlantic City because it is the only municipality in which casino gaming is authorized in New Jersey. For many years Atlantic City had a monopoly on casino gaming within the region and the casino industry grew, greatly expanding the ratable base for the city. In recent years, due to ever increasing competition from casino properties in neighboring states, the value of Atlantic City casino property has declined, and casino owners have won judgments for substantial property tax refunds, well over $100 million, through property tax appeals. The fact that Atlantic City's current fiscal problems are a result of the unique economics of the highly regulated casino gaming industry justifies placing Atlantic City in a class by itself for remedial legislation that is not appropriate for any other municipality. This bill attempts to address Atlantic City's unique situation in several ways. First, to eliminate the risk of large property tax appeal judgments, the bill exempts casino gaming property from normal taxation, for a period of 10 years, and instead requires the casinos to make payments in lieu of taxes (PILOTs) of certain amounts, based on factors such as their gross gaming revenues. The amounts due will be calculated annually and apportioned among the casinos that were licensed in 2014, whether or not they are still operating. The bill further requires the owners of casino gaming properties to make additional payments to the State for 2015 through 2023. The additional payment amount starts at $30,000,000 for 2015 and 2016, and is reduced to $15,000,000 for 2017, $10,000,000 for 2018, and $5,000,000 per year thereafter through 2023. Each casino owner's responsibility for its portion of those sums, as well as the PILOT amount, will be determined by the Local Finance Board, in consultation with the Division of Gaming Enforcement in the Department of Law and Public Safety, based on their gross gaming revenue during the prior year. The additional payment amounts collected by the State are to be remitted to Atlantic City upon the approval of a financial plan submitted by the city to the Local Finance Board. The bill specifies that 13.5 percent of the PILOT collected by the city has to be remitted to Atlantic County for its purposes. The bill requires the establishment of a seven-member Atlantic City Review Commission on January 1, 2025, to review and determine the efficacy of the PILOT program, and to recommend whether it is feasible to extend the program for an additional period of time. The bill requires the State Treasurer to allocate certain monies collected pursuant to the investment alternative tax to Atlantic City for the purposes of paying debt service on prior bonds issued by the city. An Atlantic City Planning Committee is established by the bill, composed of Atlantic City's mayor and council president, and the Commissioner of Community Affairs, the Director of the Division of Local Government Services, and the State Treasurer. The members of the planning committee may designate people to act in their stead, except for votes to approve, or modify, a five-year financial plan for Atlantic City. The planning committee is tasked with developing a five-year financial plan for the city, and establishing benchmarks for the city to meet. The oversight powers of the planning committee are limited, and remain limited if Atlantic City is in substantial compliance with the annual benchmarks. The determination of "substantial compliance" will be made after each annual report prepared by the planning committee is reviewed by a special master to be appointed by the Chief Justice of the New Jersey Supreme Court. The planning committee's initial authority is limited to controlling litigation and Atlantic City's legal affairs; retaining professionals for the city; retaining bond counsel and taking measures to restructure and adjust debts on behalf of Atlantic City, including the issuance of bonds; negotiating and executing contracts on behalf of the city, except for labor and employment contracts; and procuring goods, services, and technology on behalf of the city. If Atlantic City substantially meets its initial benchmarks, the planning committee's powers do not expand during the five-year financial plan. If, however, the special master determines that the city has not substantially met its benchmarks pursuant to the five-year financial plan, then the planning committee's powers increase to include the dissolving or otherwise disposing of any municipal authority, board, commission, or department, or any of their functions, expect for departments and functions directly related to public safety and emergency services. The planning committee would not have any power to dissolve the municipal police or fire departments. The planning committee's first set of additional powers also include vetoing the minutes of City Council or any of the city's boards, commissions, or departments, including independent boards and authorities. This would include the housing authority, parking authority, redevelopment authority, and the planning and zoning boards. The planning committee would also have the authority to sell, convey, lease, monetize, or otherwise dispose of any of the city's interest in an asset, such as water, sewer, wastewater, and storm water infrastructure equipment, facilities, and services. The planning committee could also sell or lease real property. When the planning committee intends to act with respect to a municipal asset, it is first required to prepare a cost-benefit report on the short-term and long-term effects on the city's finances. That report has to be reviewed by an independent auditor or registered municipal accountant to confirm that the planning committee's analysis is sound. If the report is so confirmed, then the proposal for the asset transaction is sent to the Governor for final approval. The planning committee cannot dispose of city assets without approval from the Governor. Upon the second benchmark report review by the special master, if the city is not substantially meeting its benchmarks, then the planning committee may exercise a final set of powers. Those powers, which are only triggered upon the city substantially failing to satisfy two annual benchmark reviews, include amending or terminating any existing contracts or agreements, but not including bonds and notes; unilaterally modifying or terminating any collective negotiations agreements to which the city is a party, not including those related to the school district; acting as the sole negotiating agent for the city in collective bargaining; modifying the terms of any expired collective negotiations agreement still in effect, providing that those modifications are reasonable and directly related to stabilizing the finances or assisting with the fiscal rehabilitation and recovery of the city; unilaterally abolishing any non-elected municipal positions, without respect to Civil Service procedures, and exercising or delegating the duties of those positions itself; entering into agreements with Atlantic County or any of the surrounding municipalities to share or consolidate services; exercising any municipal authority under the "Local Redevelopment and Housing Law" when the planning committee deems it necessary or appropriate to help stabilize the finances, restructure the debt, or assist with the financial rehabilitation and recovery of the city; exercise any municipal authority pursuant to the "Redevelopment Area Bond Financing Law," when the planning committee deems it necessary or appropriate to help stabilize the finances, restructure the debt, or assist with the financial rehabilitation and recovery of the city; and exercise any municipal authority on behalf of the city under the "Long Term Tax Exemption Law," when the planning committee deems it necessary or appropriate to help stabilize the finances, restructure the debt, or assist with the financial rehabilitation and recovery of the city. The bill amends a provision of the "Local Authorities Fiscal Control Law" to permit an authority created by the city to contribute additional amounts of its undesignated fund balance or unreserved retained earnings to the city annually. This provision only applies when the city is subject to supervision under this bill. The bill amends and repeals provision of law related to the Atlantic City Alliance in order to make funds available to the city that would have otherwise been used to support the tourism district established in 2011.
2nd Reading in the Assembly
Reported out of Assembly Comm. with Amendments, 2nd Reading  (on 4/14/2016)
Date Chamber Action Description
4/14/2016 A Reported out of Assembly Comm. with Amendments, 2nd Reading
4/14/2016 A Recommitted to Assembly Judiciary Committee
4/14/2016 Assembly Judiciary Hearing (11:00 4/14/2016 Committee Room 11, 4th Floor)
4/7/2016 A Reported out of Assembly Committee, 2nd Reading
4/7/2016 A Introduced, Referred to Assembly Judiciary Committee
Date Motion Yea Nay Other
Detail 4/14/2016 Assembly Judiciary Committee: Reported with Amendments 7 0 0
Detail 4/7/2016 Assembly Judiciary Committee: Reported Favorably 7 0 0