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

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.