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Moody’s Says Sandy May Add to City’s Financial Woes

City seeks maximum FEMA reimbursement as it faces $200 million in storm-related costs.

Long Beach City Hall, as seen through the post-Sandy wreckage under National Boulevard boardwalk. (Credit: Joseph Kellard)
Long Beach City Hall, as seen through the post-Sandy wreckage under National Boulevard boardwalk. (Credit: Joseph Kellard)

Moody’s Investors Service, the credit-rating agency that downgraded the City of Long Beach to near junk bond status last year, said that Hurricane Sandy may exacerbate the city’s financial strain, as it faces an estimated $200 million in storm-related costs after the administration took steps to close a $10 million deficit by June.

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On Nov. 20 Moody’s released a report that said it expects the Federal Emergency Management Agency to cover at least 75 percent of those costs, but city officials, state lawmakers and Gov. Andrew Cuomo have maintained that they will pursue the maximum reimbursement from FEMA. The ratings agency projects that the city could face possible revenue losses due to the storm, delayed property tax collections if homeowners defer payments, and a decline in the city’s tax based contingent on how many homeowners return to the city, and said that the city may be forced to issue up to $20 million in revenue anticipation notes as a contingency before year’s end if FEMA funding doesn’t materialize quickly, according to the Long Beach Herald.

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Said City Manager Jack Schnirman:

We’re looking for 100 percent reimbursement. We’ve expedited the process, and we might have been the very first [municipality] to kickoff the reimbursement process. We are working with FEMA around the clock on this ... and communicated very aggressively what our needs are. We did all the heavy lifting for the city’s finances before the storm — now we have a whole new set of challenges.

Publius November 27, 2012 at 06:57 PM
Duh. Citizens need to press State and Federal authorities for funding. Emails, faxes, letters, calls to Cuomo, Schumer, McCarthy, King, Skelos, Gillenbrand, Obama.
Carly November 28, 2012 at 07:57 PM
Schnirman did the heavy lifting??? What a joke. If LB wants homeowners to return and reinvest in our beloved city, then he has to actually make decisions to save rather than spend te taxpayers' money. Rather than demand $$ from FEMA, devise a prevention plan that will help rebuild LB strategically to repair and mitigate future storm damage. Then tackle the outlandish union contracts of city workers, cut the exorbitant building department fees to promote investment and eliminate nonessential services. In other words, be a leader.
Publius November 28, 2012 at 08:08 PM
Without outside $$, the storm damage will not be fixed. We can have the greatest plan in the world for rebuilding and protecting, but it will be for naught if we do not have Federal and State money. And the time to get that money is now. If you wait to pursue it, Sandy will become a distant memory to those who you will be pressing. iWe need to support our leaders and, more importantly, press the folks I identified above to get this done.
Publius November 28, 2012 at 08:09 PM
Cont'd --
Publius November 28, 2012 at 08:09 PM
cont'd
Publius November 28, 2012 at 08:12 PM
Regardless of the Sandy issues, this City needs to address its cost structure, as you mention. I recommend to all readers to read the cautionary tales of places like San Bernadino, CA. This City is headed in the same direction without big changes. The current City administration did make some dents in the cost structure, but not nearly enough.
Publius November 28, 2012 at 08:22 PM
San Bernardino--
Publius November 28, 2012 at 08:23 PM
http://openchannel.nbcnews.com/_news/2012/11/14/15150362-from-suburb-to-basket-case-how-california-city-traveled-the-road-to-ruin?lite>
delete me November 29, 2012 at 08:43 AM
San Bernardino is way worse than here - they have a 35% poverty rate, a graduation rate for adults that is lower than Detroits (ouch) and suffered a 55% decrease in median home values between 2007-2010. But yeah, the politics there make LB look tame in comparison. I hope we never get as low as them.
Publius November 29, 2012 at 09:10 AM
San Bernardino may be "way worse" than LB, but a fundamental problem it faces, like squadrons of other municipalities, is employee and retiree costs that exceed the municipalities' wherewithal to pay and maintain infrastructure and services and not drive down property values by overtaxation. We have that very problem here in LB. It is completely fixable if folks on all sides get together for the greater good. It is a problem that the current administration identified and began to address, but ultimately only scratched the surface of the problem and called it a day. WIthout go-forward pension contributions, medical contributions and grade controls, along with generally better financial and employee controls, LB's fiscal problems can only get worse and on an accelerated basis.
delete me November 29, 2012 at 11:53 AM
^ agreed

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