Atlantic City Casino Reinvestment Development Authority Responds to State Audit Criticism, Including Massive Miss America Funding Bump Amid Plummeting Ratings

Posted on: September 19, 2018, 01:45h. 

Last updated on: September 19, 2018, 01:48h.

Atlantic City’s Casino Reinvestment Development Authority (CRDA) held its first meeting since New Jersey State Auditor Stephen Eells’ office released a scathing report on what it claims are the agency’s mismanagement and misuse of tax funds.

Atlantic City CRDA Miss America
CRDA Chairman Robert Mulcahy is trying to clear the air over the Atlantic City casino agency’s spending, which includes millions of dollars in payments to the Miss America Organization. (Image: Lauren Carroll/Press of Atlantic City/Miss America/

Last week, the state audit concluded that the CRDA “did not always ensure an effective and efficient use of its funds.” Eells also said “certain transactions were not always reasonable or properly recorded in the accounting systems.”

The town’s nine casinos pay the CRDA $5 per occupied hotel room night, plus $3 per vehicle/day parking charge. The state authority is to use the money to facilitate economic and community development.

Founded in 1984, the CRDA has undergone numerous changes in recent years as Atlantic City’s gaming industry plummeted and the city fell into bankruptcy. Most consequentially was the agency’s loss of 1.25 percent of gross gambling revenue it was previously earmarked. Those monies were instead directed to help pay down city debt.

CRDA Defends Spending

The 16-member CRDA met Tuesday for the first time since the state audit release. The Press of Atlantic City reports that Chairman Robert Mulcahy addressed the findings.

“I want to make sure that the public understands that the Casino Reinvestment Development Authority is audited annually by one of the top independent accounting firms in the nation,” Mulcahy declared.

Those professional audits have resulted in unmodified clean opinions, confirming the authority’s design, implementation and maintenance of internal controls relevant to the preparation and fair presentation of financial statements,” the chairman asserted. “I think that’s very important in terms of things that have been said or done.”

Among the more damaging findings in the Eells audit was the lack of financial oversight, which led to the CRDA overpaying vendors, losing revenue, and weakening its future contract negotiating powers. Eells also discovered that the agency awarded deals to the highest bidders in times of emergencies.

Mulcahy says the chaos of the state changes made to the agency were the cause for the shortcomings. The chairman explained that the board dealt ” … with legislative changes … by redirecting the authority’s priorities and appropriately rightsizing and streamlining staff.”

Miss America Misdirected

The CRDA has been making headlines recently for all the wrong reasons. Its decision to continue its relationship with the embattled Miss America Organization raised eyebrows, and prompted New Jersey Assemblyman Vincent Mazzeo (D-Atlantic) to opine that the agency “needs to seriously rethink and prioritize how it spends its money.”

The audit found that the CRDA agreed to a funding increase for Miss America without commissioning a study to determine what economic impact the pageant had on being hosted in Atlantic City.

Miss America received $6,801,000 from the CRDA between 2013-2015. The agency came to new terms with the pageant organizer in 2016 that increased the annual award to $4.325 million, a more than 80 percent surge.

The live September 9 ABC telecast of Miss America — which famously dropped its swimsuit competition amid plenty of controversy —  drew just 4.3 million viewers, down 23 percent from the previous year.