City Council Green Lights $38M Borrowing Plan

The Long Beach City Council on Tuesday unanimously approved a $38.1 million short-term borrowing plan for expenses tied to the city’s recovery from Hurricane Sandy as the municipality awaits reimbursements from the Federal Emergency Management Agency.

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At the meeting City Manager Jack Schnirman said the city needs money for up to 140 Sandy-related projects — from debris removal to the repair of city buildings such as the Recreation Center — that have either been completed or are in the works, and the short-term borrowing through a revenue anticipation notes allows these recovery projects to continue while the city expects FEMA to reimburse the city, according a legislative memo accompany the resolution.

“FEMA doesn’t just cut you a check up front, pat you on the back and say, ‘Have a nice day,’” Schnriman said. “We need to borrow some money today, so FEMA reimburses us tomorrow.”

According to the city’s summary of the proceedings on the resolution at Aug. 20 meeting, the city anticipates the receipt of various revenues beyond the FEMA aid, including sales tax, sales and use tax, utilities gross receipts tax, as well as various fees, rates and charges that the municipality expects to receive during the current fiscal year that ends June 2014.

Schnirman said the city’s “rainy day” fund has insufficient funds to cover the costs of the recovery projects, which is why officials decided to use a revenue anticipation note that does not have to be paid back this fiscal year, and will not increase the city’s debt or tax burden, according to the Long Beach Herald.

At Tuesday’s meeting some residents expressed concern about the borrowing plan, fearing that FEMA would not reimburse the full $38.1 million, the amount of which would become the burden of taxpayers. Resident Doug O’Grady said:

“What if FEMA doesn’t pay? If this goes into default in the next year, who’s going to pay? Think about the guy who’s going to get hurt here; it’s the little guy.”

Schnirman, though, defended the borrowing plan as “absolutely well-thought through. At the end of the day, what’s the alternative? The choice is, fix the city’s infrastructure, keep the city moving forward, or don’t.”

At a council meeting earlier this month, residents questioned officials about the status of FEMA’s reimbursement of the city for the $44.2 million boardwalk-rebuilding project that is ongoing.