November 21, 2012 | 1008 views
Moody’s: Sandy could add to city’s financial strain
It had only been several months since the city took steps to balance its budget and close a $10 million deficit before Hurricane Sandy hit on Oct. 29, causing damage that is expected to cost the city roughly $200 million.
Moody’s Investors Service, the credit-rating agency that last year downgraded the city five levels to a step above junk bond status, said that the storm could now add to Long Beach’s financial woes.
In a report released on Nov. 20, Moody’s said that it expects the Federal Emergency Management Agency to reimburse the city at least 75 percent of the storm-related costs. The city estimates that the state will cover at least one-half of the remaining reconstruction costs, leaving the city responsible for about $25 million.
But the city, along with state lawmakers and Gov. Andrew Cuomo, are seeking the maximum reimbursement from FEMA. Moody’s acknowledged that it is possible for the agency or the state to reimburse the city for a higher share of its costs.
“We’re looking for 100 percent reimbursement,” City Manager Jack Schnirman said. “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.”
Moody’s said that if FEMA funding doesn’t materialize quickly, the city would likely be forced to issue up to $20 million in revenue anticipation notes before the end of the year as a contingency. FEMA reimbursements after previous extreme weather events, Moody’s said, have sometimes taken more than a year, and it could take time before Long Beach is reimbursed.