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- Atlantic City Economy 2019
2019 Budget Address
January 15, 2019
TRENTON — Diversification of Atlantic City’s economy and the stabilization of its ratable base are keys to the city returning to local sovereignty. Atlantic City Wednesday Nov 13, 2019. 2019 Annual Report of the New Jersey Casino Revenue Fund Advisory Commission. Atlantic City) was spent promoting the legislation. Overall contribution to the economy of New Jersey remains considerable. $150,000,000 $170,000,000 $190,000,000 $210,000,000. Atlantic City is a city located in New Jersey.With a 2020 population of 38,041, it is the 23rd largest city in New Jersey and the 1035th largest city in the United States. Atlantic City is currently growing at a rate of 0.39% annually but its population has decreased by -3.83% since the most recent census, which recorded a population of 39,558 in 2010.
presented: January 15, 2019
I am pleased to report that Atlantic County government is in very good shape. 2018 was a year of significant accomplishments and we are on our way to achieving our goal of a strong, diverse and sustainable economy.
We are ramping up our economic development efforts. We provided both financial and staff support for the Atlantic County Economic Alliance and helped to firmly establish its role as the lead agency for business attraction and retention in Atlantic County. The county played a leading role in establishing the ACEA. We now have a professionally staffed, private nonprofit economic development agency focused solely on regional economic development.
We saw the successful opening of the Stockton Campus in Atlantic City. This project, which offers an opportunity to help transform Atlantic City into a town that offers more than just casinos, would not have happened when it did if the county did not step up. Even though Stockton is a state university, the state was in no position to bond. During the last administration, the state’s bond rating was downgraded 11 times. Meanwhile the county maintained its outstanding ratings and never missed a pension payment. Atlantic County was able to step up at no cost to the taxpayer.
We completed construction of the first building of the National Aviation Research and Technology Park (NARTP) on schedule and on budget. We are concluding tenant negotiations and expect to have the building fully rented by mid-year. We are now beginning to develop plans for a second building. The New Jersey Institute of Technology, one of New Jersey’s foremost research universities, agreed to manage research operations at the park. The NARTP is now included in a newly created Aviation Innovation Hub comprising a one mile area around the FAA Tech Center and the Atlantic City International Airport, which has been designated as a Smart Airport Test Bed Research Facility.
Atlantic County is now the center point of an emerging aviation industry in New Jersey as our economic development efforts extend beyond Atlantic County. We developed new strategic partnerships with major aviation companies and institutions such as Boeing, Lockheed, Embry-Riddle Aeronautical University, Joint Base McGuire-Ft. Dix-Lakehurst, the National Institute of Aerospace, the FAA, General Dynamics, and Thunderbolt Software, LLC.
The county was awarded a New Jersey Economic Development Authority Innovation Challenge Grant to develop an operational plan for an Aviation Training Academy needed to develop aircraft maintenance and repair operations. Embry-Riddle Aeronautical University agreed to be our partner on this grant. The significance of Embry-Riddle, the foremost aeronautical university in the world, agreeing to partner with us on this grant cannot be overstated. As with NJIT, their partnership helps validate our economic development efforts.
We also introduced a new workforce development initiative in partnership with Embry-Riddle to improve STEM education in Atlantic County high schools by implementing an aviation STEM program. This is a key component of our economic strategy that calls for improving the skills of the local workforce so that graduates are better able to pursue careers in technology related fields and make our workforce more attractive to potential employers. Our goal is to work with our school districts to structure their curricula so they align with our economic strategy and are reflective of new employment opportunities.
The development of offshore wind energy will offer our area new economic opportunities. Ørsted (headquartered in Denmark) has been designated the developer of an offshore wind farm off the coast of Atlantic City. The county, through the ACEA, provided Ørsted assistance in finding a suitable location that can accommodate their assembly and maintenance operational needs. They recently opened their administrative offices in Atlantic County. This initiative is expected to create approximately 1,000 jobs a year during its construction phase and another 100 permanent jobs.
I am also proud to report that a decade ago the county stepped up to keep Boscov’s department store opened and saved hundreds of jobs. Boscov’s has not missed a payment and its Egg Harbor Township location is Boscov’s highest earning retail department store. We are in the final year of a 10-year agreement without any cost to the taxpayer.
These are just a few of the highlights of our economic development efforts. In the year ahead we plan to build upon the foundation we have established. We have a solid economic development product to sell and interest is growing in what we have to offer.
We were successful in our challenge of the Casino Property Tax Stabilization Act, more commonly known as the Casino PILOT. This misguided law was unfair to every non-casino property taxpayer in Atlantic County. For some reason the sponsors of this legislation inexplicably failed to guarantee the county a fixed percentage of the 10-year PILOT. Prior to our lawsuit, the state eventually gave us a paltry 10.4% share. We insisted that a 13.5% share of the PILOT was fair. Unfortunately, we had to spend almost $300,000 in legal fees to get what was rightfully ours in the first place. However, the cost to taxpayers for not challenging the law would have been much greater. The difference between the 10.4% share as originally offered and 13.5% over the life of the PILOT is $30 million.
Over the past 10 years, our region has faced significant economic challenges but we were able to work through them successfully. As a result of a national decline in the housing market and the decline in the local casino industry, the tax base of Atlantic County had dropped $27.3 billion. The next highest value loss in the state was approximately $17 billion. The impact of a declining tax base was exacerbated by the fact that we also had to refund over $78 million because of successful tax appeals, mostly by casinos, due to overassessments. These overassessments occurred while the city was subject to strict financial state oversight. No other county has even come close to what we had to refund. For 2018, the county’s refunds of $8.3 million are approximately twice what the next highest county refunded.
In order for Atlantic County government to absorb all this, we had to be in a strong financial position. Whenever possible, Atlantic County has implemented a policy of “pay as you go” so as not to burden the next generation with any debt we would incur. Our current surplus stands at $18.3 million, of which 50%, or $9.165 million, will be applied to the 2019 budget.
The years ahead will offer more opportunity. This optimism is reflected in the 2019 budget I will introduce. Despite some state generated uncertainties at this time, our financial outlook is very good. We have been working with the state monitor for Atlantic City to finalize a number of property tax appeal refunds which we had been led to believe were settled. While these refunds do impact our financial operations, we have been assured that they should not have any significant affect this year.
In 2019, there will be no tax increase. Based on the information we have from the state, it appears the county general purpose tax will go down one cent.
In 2018, the county successfully negotiated nine union contracts. The majority of those contracts settled at 2%. Our total salary and wage expense is up $1,142,235 million, a 1.51% increase. We lowered our health benefits cost by negotiating with unions to move into the State Health Benefit 2030 Plan. By moving to this plan, employees pay less in their pro-rata share and see more in their paychecks. While the state raised the health benefits premiums by 2% for 2019, the county has reduced that entire increase and reduced the overall expense by $148,163 as a result of this change.
The 2019 budget includes some increases that are beyond our control. The first are the psychiatric payments made by the county on behalf of residents. That increase is $620,995 for 2019 and is on top of the $599,530 in 2018.
Although the Joint Insurance Fund has been an effective cost management tool for the county by ensuring ongoing training, regular financial and programmatic case reviews, and sharing of legal services, our cost is determined by an actuarial projection. This year’s projection requires that the county increase this line item by $507,937.
Our total Other Expenses line item is up $536,195, 50% of which include state administered, county funded programs such as the Medical Examiner and Harborfields Detention Center. The lion’s share of the balance is the ongoing maintenance costs of our buildings in Facilities including the additional new space for the police academy on the Mays Landing campus of Atlantic Cape Community College.
The county has maintained a steady debt service for many years. By keeping that line item stable, we have been able to provide funding for major projects such as: the Criminal Court Complex and Government Complex in Mays Landing, Vocational School addition, Atlantic Cape Community College’s Hospitality Wing, Public Works equipment, Facilities and Planning/Engineering capital projects, along with the Stockton Atlantic City campus and the Aviation Research Park, to mention a few. The county’s net debt expressed as a percentage is less than 0.457% of our total debt capacity.
The county’s two bond credit ratings remained stable in 2018. In rating the county Aa2, Moody’s Investors said, “the county has retained a stable financial position despite dealing with the fallout from the financial issues of Atlantic City...” Moody’s credits the county with strong liquidity, modest debt and pension burden, and strong financial management practices and policies.
Standard and Poor (S&P) rated Atlantic County as AA stable. They noted our “very strong liquidity, strong budgetary flexibility, strong budgetary performance, strong debt and contingent liability profile, very strong management, and a strong institutional framework.”
Such findings are validated by the fact that the county has had 19 perfect audits in a row by five different auditors.
In conclusion, let me emphasize that we are in good financial shape. This is due to the ongoing efforts of a great financial team and cooperation of this Freeholder Board. That does not mean that we can now sit back and relax. Just the opposite. It means that we must continue to reduce costs and find efficiencies. Most important, we must work hard to ensure that we build upon the opportunities that lay before us and that we work together to ensure our future prosperity.
Thank you.
Jump To Another Year In The Atlantic City Real Estate Market:
The Atlantic City real estate market has been hit hard by the current pandemic. Local unemployment appears to have been less insulated from volatility than most of the country. As a result, consumer confidence in the housing sector has been shaken, and now serves as a primary obstacle on the road to recovery. Nonetheless, real estate in Atlantic City has made up a lot of ground since the last recession.
Near-term prospects for the Atlantic City housing market aren’t as bright as they were at the beginning of the year. However, the disruption brought about by COVID-19 has created a window of opportunity for patient investors. Emerging fundamentals suggest well-positioned entrepreneurs can take advantage of an attractive rental market. There are now several indicators working heavily in favor of prospective landlords in the Atlantic City real estate market.
Atlantic City Real Estate Market 2020 Overview
Median Home Value: $116,711
1-Year Appreciation Rate: +10.4%
Median Home Value (1-Year Forecast): -1.4%
Median Rent Price: $1,400
Price-To-Rent Ratio: 6.94
Unemployment Rate: 24.0% (latest estimate by the Bureau Of Labor Statistics)
Population: 37,743 (latest estimate by the U.S. Census Bureau)
Median Household Income: $27,786 (latest estimate by the U.S. Census Bureau)
Percentage Of Vacant Homes: 24.17%
Foreclosure Rate: 1 in every 6,690 (1.4%)
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Atlantic City Economy 2019 Nissan
2020 Atlantic City Real Estate Investing
The Atlantic City real estate market has set the bar for real estate investing over the last decade. Few cities have successfully combined affordability and high foreclosure rates with unique demand in the way AC has. Despite the relatively low cost of entry for local investors, demand has remained consistent. The thriving gaming industry continues to draw people in from around the country, and investors should benefit.
For years, investors have been able to flip real estate with attractive profit margins. Even today, when most cities across the country have appreciated too much for the likes of rehabbers, Atlantic City still awards patient investors with plenty of flipping opportunities. That said, new fundamentals brought about by the pandemic have shifted many investors’ exit strategies.
Atlantic City real estate investors may still enjoy attractive profit margins on flips. However, many investors appear to be trading in the short-term prospects of flips for long-term rentals. Several emerging trends are tilting the scales in favor of landlords, and it’s all because of the new landscape created in the wake of the Coronavirus.
The Atlantic City real estate investing community should consider looking into long-term rental properties for three reasons:
Home prices have increased by about 31.2% in as little as three years. The ratios rehabbers prefer are getting harder to come by.
Interest rates are historically low. At 2.94%, interest rates on 30-year fixed-rate mortgages are incredibly affordable and can significantly reduce borrowing costs.
With a price-to-rent ratio of 6.94, it is considerably more affordable to buy a home in the Atlantic City real estate market. Investors who do so intending to rent their property to tenants will find the price-to-rent ratio working in their favor. While it is considerably more affordable to own, the area’s low inventory will force many people to rent, driving up both competition and rental asking prices.
Investors are lucky to have several viable exit strategies at their disposal, but none appear more attractive than building a proper rental property portfolio in the wake of the pandemic. Too many important market indicators are pointing towards becoming a buy-and-hold investor to ignore.
2020 Foreclosure Statistics In Atlantic City
Foreclosure activity has eased across the entire country, and the Atlantic City real estate market is no exception. While The Great Recession brought about an influx of new foreclosures between 2008 and 2012, Atlantic City has made drastic improvements in the time since. In the last year, foreclosure filings in Atlantic City have dropped 82.0%, according to RealtyTrac.
For some context, Atlantic City lowered its foreclosure rate slightly more than the national average. As recently as August, “the number of properties that received a foreclosure filing in the U.S. was 11% higher than the previous month and 81% lower than the same time last year,” according to a foreclosure trends summary presented by RealtyTrac.
After significantly detracting from its foreclosure filings in the last year, Atlantic City now has a foreclosure rate of 1.4%; that means one in every 6,690 homes is either in default, up for auction, or bank owned. The percentage of distressed homes across the United States, on the other hand, is a more modest 0.7%.
The Coronavirus is expected to cause a spike in foreclosures. The unexpected economic downturn will most likely prevent homeowners from paying down their principal. Consequently, more homeowners will find themselves distressed later in the year. Forbearance programs are expected to keep people in their homes for now, but homeowners will be expected to become current on their mortgages sooner or later. When that time comes, those who can’t comply may find themselves distressed, and well-positioned investors in Atlantic City may be able to offer a helping hand.
2020 Median Home Prices In Atlantic City
Atlantic City Economy 2019 2020
The Atlantic City real estate market has boasted unique price movements in recent history. Whereas the majority of the country has seen steady gains since the market bottomed out in 2012, Atlantic City saw its median home value take a different trajectory. It wasn’t until January 2017 that real estate in Atlantic City reached its lowest point of the last decade.
In the first quarter of 2017, Atlantic City’s median home value dropped as low as $85,200. Today, the median home value in Atlantic City is $116,711; that means home values have increased an impressive 31.2% in as little as three years. Dating back to July of last year, appreciation rates in Atlantic City have more than doubled the national average—10.4% and 4.1% respectively.
Despite recent progress, home values in Atlantic City are expected to take a short-term hit amid a pandemic. Over 12 months, it’s safe to assume values will drop by about 1.4%. Home values have already dropped slightly from their recent highs in March, and they may drop slightly more as the economy struggles to gain some traction during the pandemic.
Local unemployment woes have caused a lot of uncertainty in Atlantic City, and may suppress home values briefly. According to the Bureau of Labor Statistics, Atlantic City’s unemployment rate is a very unhealthy 24.0%. In spite of a more than 10.0% improvement over the previous month, AC’s unemployment rate is still more than twice the national average.
Fewer people with stable incomes will hurt home values until improvements are made. Unemployment is headed in the right direction, but confidence will remain low until the numbers correct themselves. Therefore, the Atlantic City real estate investing community may view today’s home prices as an opportunity. Home prices have increased for three consecutive years, and 2020 appears to offer a discount.
Atlantic City Real Estate Market: 2016 Summary
Median Home Price: $186,400
1-Year Appreciation Rate: -13.1%
3-Year Appreciation Rate: -17.7%
Unemployment Rate: 4.7%
1-Year Job Growth Rate: 2.0%
Population: 39,551
Median Household Income: $50,546
Atlantic City Real Estate Investing 2016
The Atlantic City real estate market experienced a mixture of highs and lows in 2016. The first half of the year generated decent home prices in comparison to the national average, despite home appreciation and total equity gains not living up to expectations. Atlantic City’s real estate prices were down from the previous year, but the trend improved in 2016.
Factors influencing the Atlantic City real estate market in 2016 were affordability, new housing construction, and changes in the local economy. Affordability for the Atlantic City housing market was strong during the first-half, with homeowners paying less than historical standards. New housing construction continued to grow relative to the previous year. That said, the local economy recorded subpar numbers in the second quarter.
Appreciation rates remained vastly below the national average, as the second quarter recorded one-year and three-year rates of -13.1% and -17.7%. Price trends in the previous three years added to the post-recession slump the city was already experiencing at the time. Nevertheless, there remained one constant for the Atlantic City real estate market in 2016: investment opportunities. Local affordability and demand meant the Atlantic City real estate investing community had plenty of chances to thrive.
Atlantic City Real Estate Market: 2015 Summary
Median Home Price: $210,000
1-Year Appreciation Rate: -3.3%
Unemployment Rate: 11.3%
Population: 39,551
Median Household Income: $52,127
Atlantic City Real Estate Investing 2015
There is no way around it: the Atlantic City real estate market was one of the worst-hit during The Great Recession. On top of a shrinking economy, the collapse of the casino sector was enough to drive the city into a financial crisis on par with Detroit. However, the gaming industry in Atlantic City was still afloat in 2015, which kept the local housing sector alive.
The median home price was $210,100 at the time; slightly above the national average. As a result, Atlantic City real estate investors saw several deals come their way with attractive spreads. The area’s affordability was historically strong in 2015 and continued to improve. Atlantic City homeowners spent about 10.7% of their income on monthly mortgage payments, compared to 15.1% that was the national average.
According to RealtyTrac, there were about 639 foreclosures within the Atlantic City limits in 2015. That is to say, each of these distressed properties was either at risk of being repossessed, already repossessed, or scheduled to be placed up for auction. Regardless of the scenario, these homes became a focal point of the Atlantic City real estate investing community. Distressed properties were a staggering 103.0% higher than the previous year.
The average, non-distressed home in Atlantic City had a median sales price of $66,000. Those of a distressed nature had an average sales price of $59,000. For those keeping track, that was an 11.0% discount at the time or about $7,000 per property.
Atlantic City County Map:
Atlantic City Real Estate Market Summary
The Atlantic City real estate market wasn’t able to enjoy a fast-paced recovery over the last eight years. Whereas most markets across the country saw nearly eight consecutive years of price growth and demand drive healthy fundamentals, real estate in Atlantic City lagged behind the national average. That said, the Atlantic City housing market is very affordable, and the hotel scene still drives plenty of demand. The latest setback initiated by the Coronavirus may represent an opportunity for local investors. The long-term prospects look particularly attractive at the moment, and buying a home today could turn out to be a great move.
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