March 30, 2015
Atlantic City, New Jersey's struggling gambling hub, will get a 60-day extension of a $40 million state loan that is due Tuesday, the city's revenue director told Reuters on Monday.
"We have been working with the state and the due date will be extended," Stinson said.
The cash-strapped city needed the lifeline. A report by its state-appointed emergency manager last week called for cost cutting, layoffs, and potentially debt restructuring to stabilize the city's budget, which has a projected $101 million deficit.
It also called for significant state support, without which the city "cannot stand on its own," the report said.
Without the extension, the city would have had to try issuing bonds to repay the loan. But that's a tall order: with the city's next fiscal steps uncertain, its market access has been thin since late last year.
The state loan, offered in December at a 0.75 percent interest rate, came in the first place because the ocean-front resort town was unable to borrow the $40 million in the capital markets.
Even that amount was scaled back from a planned $140 million bond sale, a large portion of which was to repay property tax appeals won by casinos.
The city owes the Borgata Hotel Casino & Spa $88.25 million for tax appeals, for example. That bill is still due, and the casino has sued to try to stop the city from issuing new bonds to pay other creditors before it.