The city’s credit rating was in the basement. This upgrade — from CC to CCC — indicates Atlantic City has inched closer to the steps that lead to the first floor.
“These are early signs our efforts are working, that we will successfully revitalize Atlantic City and restore the luster of this jewel on the Jersey Shore,” said Brian Murray, a spokesperson from Gov. Chris Christie’s office.
Recent events, an S&P rep told NJ.com, led to the credit upgrade.
Takeover, settlement bolster city’s rating
According to S&P analyst Timothy Little, two factors contributed to the upgrade.
- The state’s takeover of Atlantic City
- The city’s $72 million settlement with Borgata Hotel Casino & Spa.
The AC takeover
Four months ago, the state moved in and took over the city’s finances. That came after Mayor Don Guardian and his council could not provide the state a feasible budget for reducing the city’s immediate and long-term debts.
It was a move that Christie had wanted to implement since he gave Guardian a budget deadline early in 2016.
The Borgata settlement
Perhaps the flagship of Atlantic City’s fleet of financial problems was its inability to pay Borgata $165 million in overpaid property taxes.
Considering the city was $500 million in debt, experts agreed a full payment of the Borgata debt was impossible.
Upgrade may be a temporary win
While news of the S&P upgrade was a much-needed boost to the city’s financial reputation, there are those in the industry who are skeptical that the upgraded rating will last.
Over the course of this year, the city is responsible for making monthly payments toward its debt. While the upcoming payments are reasonable — between $1 and $2 million — a $6.1 million installment looms in November.
An S&P analyst was quoted as saying, essentially, that the upgraded rating is a coat of fresh paint on a home with serious structural issues.
What’s interesting about S&P’s tenuous view of Atlantic City’s future is that it dampens the state’s fiscal accomplishments. Yes, the Borgata deal helped its finances. But the state has far bigger issues to deal with before financial experts give the city a passing bill of health.
There have been other good signs for AC of late, including