Atlantic City’s Mr. Fix-It

Atlantic City’s
Mr. Fix-It

Atlantic City’s Mr. Fix-It

N.J. Gov. Chris Christie has repeatedly intervened to halt the gambling town’s steep decline — to no avail

Published on January 25, 2016

In Atlantic City

This is a city built on bad bets — and the sucker’s reflex to chase them with good money. It fools the bused-in tourists. It fooled Donald Trump, who chased his dream of a Boardwalk mega-casino into junk bonds and bankruptcy.

And six years ago, Chris Christie couldn’t resist making a big bet here, too.

“I’m not somebody who goes to the idea of state takeovers of anything lightly,” Christie said then, after he helicoptered in for speech on the Boardwalk. “But, you know, we have too much at risk in Atlantic City.”

Above:

New Jersey Gov. Chris Christie, who is seeking the Republican presidential nomination, speaks during a late-October appearance in Des Moines. (Charles Ommanney/The Washington Post)

Back then Christie, New Jersey’s new Republican governor, had decided to take a big gamble with poor odds. Christie chose to intervene aggressively in Atlantic City’s troubles, believing that a better governor — and a little more government — could overcome its steep economic decline.

So first, Christie had the state take over half of the city.

But that wasn’t enough. So he tried a new casino.

But that wasn’t enough. So he tried Internet betting.

But that wasn’t enough . . .

The Deciders

Chris Christie

Nothing reveals more about politicians than the decisions they make — why they chose to do something, how they made it happen, what came of it. In the days before the first votes are cast in Iowa and New Hampshire, The Washington Post is exploring one key choice by each leading presidential candidate and explain the insight it offers into the way he or she might operate in the White House.

More in this series

Ben Carson: From inspiring to polarizing

John Kasich: Spurning the party line

Jeb Bush: He got his way. Then he got a mess.

Carly Fiorina: Pushing ahead and paying the price

Marco Rubio: Marco Rubio’s cold war

Chris Christie: Atlantic City’s Mr. Fix-It

Donald Trump: Remade by reality TV

Ted Cruz: Ambition enough for two

Hillary Clinton: A tough call on Libya that still haunts

Bernie Sanders: His most radical move

Despite Christie’s efforts, four of the 12 casinos shut down. About 7,000 jobs were lost. His intervention went so badly that the state legislature is considering whether to revoke Atlantic City’s last best lifeline, its state-sanctioned monopoly on gambling. The mayor — a fellow Republican, exasperated with Christie — is considering municipal bankruptcy.

Christie’s decision to intervene here reflects his style of governing: Confident. Pugnacious. Braggadocious. And sometimes unwilling to acknowledge the limits of his power.

In his pursuit of the Republican presidential nomination, Christie calls himself a small-government conservative. But here — where he is the government — Christie was confident that government could defeat the forces pulling this city down. So confident that he didn’t mind alienating other people working toward the same end. So confident that, when one government fix didn’t work, Christie’s answer was always another.

All he needed was for that next bet to pay off.

The city and its casinos “just keep getting bailed out and bailed out and bailed out” by Christie, said state Sen. Mike Doherty (R), a critic of the governor who has endorsed Trump for president. “It just never ends. You know, you want to bang your head against the wall.”

This month in Iowa, Christie was asked whether, in hindsight, he would have done anything differently in Atlantic City.

“Nothing,” Christie said.

Instead — even after five years of arm-twisting, money-spending and trouble-shooting on Atlantic City’s behalf — Christie sought to cast himself as a kind of saddened bystander to its fate.

“It’s always awful to happen — you hate to see anybody lose their jobs and places to close,” Christie told reporters at a campaign stop in Fort Dodge, Iowa. “But that was inevitable. There was nothing we could do to change that.”

New Jersey Gov. Chris Christie (R), standing in the unfinished lobby of the Revel casino in February 2011, hands his pen to Senate President Steve Sweeney (D) after signing legislation turning over control of Atlantic City's casino district to the state. (Tom Gralish/Philadelphia Inquirer)

Saving a ‘dying’ city

Long before Christie, Atlantic City had been a problem — and a temptation — for meddling state leaders.

After all, Atlantic City had been dying, at one speed or another, since the end of its “Boardwalk Empire” days, when the city grew rich by flouting Prohibition. But then the rest of the country could drink again. And air travel brought other beaches within easy reach.

“The jet plane is really what killed Atlantic City,” said Mayor Don Guardian (R).

First, government sought to help via urban renewal. It failed. Even today, in the center of Atlantic City, there is still an empty expanse called “Pauline’s Prairie,” named for the 1960s city official who ordered it razed for redevelopment that never developed.

Atlantic City Mayor Don Guardian at his office this month. (Yana Paskova for The Washington Post)

When that didn’t work, the answer was to find Atlantic City a new vice to profit from. State officials legalized gambling here in the late 1970s, in hopes that casinos would re-build the city.

That brought a boom. But it didn’t last. The city’s decline began a decade ago, when Pennsylvania and other states legalized gambling. Unlike glitzy Las Vegas, Atlantic City had a low-rent, bus-born business model, based on its position as the shortest distance between a gambler and a slot machine.

Now, suddenly, it wasn’t.

“We were the ‘convenience gambler.’ Well, [we] lost the convenience gambler. It’s all gone,” said Nick Amato, a lawyer at the firm Genova Burns who has worked in casinos and government here.

By the time Christie was elected, the city was bleeding gamblers. Six of the 11 casinos were in financial trouble, according to reports from the time. And the state’s revenue from casino taxes had fallen by a third since 2006, in figures adjusted for inflation.

At that point, Christie had at least three options.

The first was to do nothing.

Let the free market drive out the weaker casinos. Hope that the city government and the big casino corporations would innovate their way out of the problem — perhaps by re-creating Las Vegas’s mix of gaudy shows, nightclubs and celebrity chefs. The city, clearly, did not want his help.

“The best thing that they could have done is left Atlantic City alone,” said Lorenzo Langford (D), a former pit boss at the Trump Taj Mahal who was then the city’s second-term mayor.

This was the small-government solution. But Christie didn’t see Atlantic City as a pure free-market problem to begin with, spokesman Kevin Roberts said: Its gambling economy had been created by government in the first place, with a state-granted monopoly. And anyway, it seemed risky to leave the saving to others.

The casino companies weren’t obligated to save Atlantic City — in fact, some of them had out-of-state operations that were already cannibalizing the town’s business. And the city itself had been rendered fat and inefficient by casino taxes. It was still paying $1 million a year in pensions for long-retired city lifeguards who only ever worked four months a year — a political favor from 1928 that nobody had ever undone.

Christie’s second option was to kill the old Atlantic City instead of just waiting for it to die.

The Trump Taj Mahal casino and hotel in Atlantic City. (Yana Paskova for The Washington Post)

That would have meant ending its monopoly on gambling and allowing casinos in the North Jersey suburbs where the people were. “Bring back the money that’s leaving the state and that’s not going back to Atlantic City in any event,” said state Sen. Raymond Lesniak (D), from northern New Jersey.

The problem there was political. The new state Senate president, Steve Sweeney (D), was from South Jersey, where Democrats considered Atlantic City a vital economic engine. Christie had been trying to reassure them since back when he was a candidate in 2009. “I want to be very clear on this: I think Atlantic City is priority number one,” he’d said then.

The third option was for Christie to intervene directly, to try to save Atlantic City more or less as it was.

The risk was that he would spend huge amounts of time and money and the city would fail anyway. But Christie’s advisers believed he could do it.

“We recommended they take over the whole city,” said Jon F. Hanson, a real estate investor whom Christie asked to present options for Atlantic City’s future.

Christie agreed. His concession to small government was that he took over only half.

“Look, Atlantic City is dying,” Christie said in 2010, according to media reports. “The question is whether you permit the same doctors to continue to treat the patient or bring in new doctors.”

With the legislature’s help, Christie seized control of the touristy half of the city — including all 11 casinos at the time — putting it under the oversight of a state agency funded by a tax on casino revenue. It would handle street cleaning, zoning and beautification grants and use eminent domain to clear properties for redevelopment. The governor also had a plan for marketing: A new law ordered that the casinos put up $30 million a year to bring in new tourists.

At the time, there were doubts.

“The people involved in this, if you took a thimble and put their knowledge of Atlantic City in it, it wouldn’t fill it,” Thomas Carver, who was running the state agency that Christie put in charge of the district, said in a telephone interview this year. He expressed similar thoughts in public back then and was later forced out by Christie. “Everybody wants to be the hero, you know,” Carver said.

And soon it was clear that the hero had problems.

Christie’s bureaucrats spent millions on widely mocked public art projects. One sculpture featured a nude woman cradling a dead deer — which was stunning, in its way, but hardly made people want to go play the “Sex and the City” slots.

Then there was the slogan.

Christie had ordered up a new ad campaign. But what was the new thing it was selling? The marketers just saw a variety of the old things.

In March 2012, they came up with — “Do AC.”

“The locals called it D.O.A. A.C.,” said Seth Grossman, a local conservative activist who ran against Christie and lost in the 2013 GOP primary. “It showed that Christie was totally clueless.”

Charlie Birnbaum on the rooftop of his Atlantic City home, which the state is trying to seize to make way for an in-limbo development project. (Yana Paskova for The Washington Post)

The Tower of Geniuses

On the Boardwalk itself, it became obvious that Christie’s decision to take over half the city was not the end of his hard choices.

It was the beginning.

Now that the state ran the casino district, for instance, it had to deal with the district’s biggest problem: a half-built empty hulk of a casino, the Revel. Its construction had halted. If Christie let the thing sit, it was an eyesore. But if he tried to get it built, it might go bust — and pull other casinos down with it by dividing the market even more.

Christie, again, decided he could fix it.

Starting in 2010, he called lenders to twist arms. He wrangled the legislature into promising up to $261 million in tax incentives, which the Revel could collect if it ever turned a profit. The state provided a $2.6 million grant — the biggest training grant awarded by the Christie administration at that point — to train the casino’s workers.

“You have a stalled construction project. So [by building it], you get employment of the people in the construction unions,” said Hanson, Christie’s adviser on Atlantic City, explaining his rationale. The unions wield considerable political power among New Jersey Democrats, whom Christie needed to work with.

“What would you recommend we do?” he asked. “Just let it stand there? Like it is now?”

The Revel opened in spring 2012. But it quickly began to lose money — $35 million in a single quarter its first summer — and it filed for bankruptcy in March 2013. As that bet went bad, Christie tried another gambit. This time it was online gambling, under a system in which only people within New Jersey were allowed to place bets.

That helped the casinos. But it didn’t help Atlantic City much. Now people could gamble at home in their underwear instead of visiting.

Online gambling began in late 2013. There were technical problems. It didn’t bring in the money Christie had predicted.

Then, in 2014, three old casinos closed. The last to give it up was the Showboat, which even today has the story of its death spiral plastered on its windows: $19.99 all you can eat! Drink specials for locals! Your dog is welcome here! CLOSED.

Then, in August 2014, a fourth casino said it would shutter.

The Revel.

“This was an inevitable thing to occur,” Christie said after all the closings.

Today, the Revel is again a hulk on the Boardwalk — though now a fully built, 47-story hulk with over 1,000 empty guest rooms. Its new owner, Florida developer Glenn Straub, has floated the idea of making it an enormous think tank called the “Tower of Geniuses.”

John Palmieri, head of the Casino Reinvestment Development Authority, the state agency that oversees Atlantic City's casino district. (Yana Paskova for The Washington Post)

Still, in the Revel’s shadow, Christie’s government-led effort is still chugging on. One block away, the state is still trying to seize a house owned by a piano tuner, Charlie Birnbaum, as part of an old plan to build a mixed-use development next to the Revel.

But now the Revel is dead. The state can’t even say what it will do with Birnbaum’s house once it’s been seized.

Nevertheless.

“Right now, [the house is] in our plan,” said John Palmieri, whose agency runs Christie’s half of the city. “We need that control.”

That’s perplexed Birnbaum, whose parents bought the home in the 1960s. His mother was beaten to death in the house in 1998 by an intruder who stole her VCR. Birnbaum challenged the seizure in court, and he is waiting for a judge to rule.

In the meantime, he said, there is one upside to owning property in a failed neighborhood, full of sealed-off buildings and razed lots.

“I’m probably in the safest area of Atlantic City,” Birnbaum said. “Because there’s no place to hide and there’s very little to steal.”

New Jersey Gov. Chris Christie speaks with protesters, mostly casino workers, in Ocean City, N.J., in 2014 in the wake of a spate of casino closures. (Mel Evans/Associated Press)

A troubled town

In late 2014, Christie had yet another card to play. He returned to an old idea — legalizing sports betting at the city’s casinos.

But, again, there was a problem. Federal law seemed to prohibit New Jersey from allowing sports betting operations. The state’s challenge to that law is now at a federal appeals court.

This year, after all of Christie’s attempts to save it, Atlantic City seems on the verge of losing its lifeblood — and more of its autonomy. Legislators and Christie have talked about a more complete takeover of the city, with the state replacing even more of city hall’s functions.

The solution for a failed government effort, in that case, would be a stronger, bigger government.

“It’s disingenuous. It’s bullying. It’s just not fair. We haven’t done anything to deserve this,” said Guardian, the Republican mayor. The city already has some state oversight of its finances, and the mayor said he thought that was working. In a recent interview, he said he hadn’t talked to Christie in months.

That makes Guardian the latest player in Atlantic City’s troubles to wind up embittered toward the governor.

“I do send him my coldest regards,” said Langford, the first mayor Christie had worked with.

“The governor and I do not have a speaking relationship,” said Lesniak, the North Jersey senator who’s shaped the gambling debate for years.

People thought Guardian and Christie would work well together.

“I did, too,” Guardian said. “But obviously, that was not the case.”

For Christie, Atlantic City doesn’t come up often on the campaign trail. At a debate in September, Trump — who faced, and caused, his own heartaches here — declared that “Atlantic City is a disaster.”

Christie didn’t challenge him on it.

 Ed O’Keefe contributed to this report.

A corner of the Boardwalk this month in Atlantic City. (Yana Paskova for The Washington Post)

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