Atlantic City OKs state loan to avoid default

The City Council in Atlantic City, New Jersey, has approved a long-awaited state loan to help it stave off default and possible bankruptcy. But if it can’t repay the loan, the state can begin seizing city assets, including a coveted utility plant and land.

The $74 million loan was part of a larger financial aid package agreed to this year by the city and the state.

Moody’s Investors Service warned Wednesday the city likely would default on a $3.4 million debt service payment on Monday if the loan didn’t go through before then.

Democratic Council President Marty Small says the funds will relieve the short-term pressure on the city as it tries to come up with a fiscal reorganization that would prevent the state from taking over its finances and major decision-making power in November.

Atlantic City’s tax base has contracted since four of its 12 casinos closed.