Long Beach looks to borrow $4 million for Sandy costs

The City Council voted unanimously Tuesday to postpone a measure that would allow the city to issue $4 million in tax-anticipation notes to cover the remaining costs associated with the reconstruction of the boardwalk after Hurricane Sandy, while it awaits reimbursements from the Federal Emergency Management Agency and New York state.

The council was expected to approve the resolution at Tuesday’s meeting, but instead tabled it until April 17.

The 2.2-mile boardwalk, destroyed by Sandy, reopened in October 2013, when a $42.8 million reconstruction project that the city began that April was completed. It was rebuilt with more durable materials, such as a tropical hardwood, a retaining wall and concrete edges in the center of the span.

FEMA covered 90 percent of the project’s costs, while the state funded 10 percent. To date, the city has been reimbursed $39 million from FEMA, but is still waiting for a total of $4.8 million from FEMA and the state, city officials told the Herald. They said they expected the remaining reimbursements in six to eight months.

“A lot of our general fund has been committed to Sandy, and it is reimbursable,” Acting City Manager Mike Tangney said at the meeting. “But, unfortunately, with [Hurricane] Harvey and [Hurricane] Maria, I believe, FEMA is inundated with claims, and the older claims take a little longer to process, because we’re not in the same emergency state we once were. So this is a way to continue our operations while we’re awaiting reimbursement.”

“This is money owed to us for FEMA projects that we closed out,” added John Mirando, the city’s commissioner of public works. “We’ve submitted all the paperwork that we’re supposed to; it’s just a matter of waiting now for FEMA to release the checks, and the state to release their share. There’s nothing else for us to do except wait.”

City Councilman John Bendo asked whether any of the borrowed funds would go toward salaries and city operations unrelated to the storm. Mirando said that some of the reimbursement was for salaries for storm-related work on the boardwalk that was done “in-house” by city employees, and for contractors and engineers.

FEMA officials did not immediately respond to a request for comment.

Questioning more borrowing

Council members agreed to table the latest proposal after Councilwoman Anissa Moore called for more time to review it amid questions about interest payments the city would be on the hook for, the amount of the debt service and how long it would take the city to pay the notes back.

Sandy caused about $200 million in damage to Long Beach, and, including the boardwalk costs, the city said it is still owed $7.6 million by FEMA and the state.

“We have other projects that we’re working on finishing up which we’ll also be closing out, but that’s down the road,” Mirando said, adding that the city cannot be reimbursed until projects are completed.

Last year, the council approved a $6.8 million tax-anticipation note covering Sandy-related expenses while it awaited reimbursements, which followed a $33 million revenue-anticipation note issued after the storm — which was repaid in 2016 — and a $10.4 million revenue-anticipation note issued in 2014 to continue the recovery effort.

Tuesday’s proposal came after State Comptroller Tom DiNapoli’s office announced on March 22 that it had recategorized the city’s level of fiscal stress from “moderate” to “significant,” the highest level under DiNapoli’s Fiscal Stress Monitoring System, citing short-term borrowing, a deteriorating fund balance and increased operating deficits for fiscal 2017.

Officials, however, attributed the level change to the reimbursements the city has yet to receive from FEMA and the state for Sandy rebuilding costs.

As Long Beach prepares its budget for the 2018-19 fiscal year, the council is also searching for a new city manager, five months after former City Manager Jack Schnirman was elected Nassau County comptroller. The city is also searching for a new comptroller following the departure of Kristie Hansen-Hightower last year. Hightower continues to serve as a consultant to the city.

Bendo said that amid the city’s budget challenges this year, the council has yet to have “one substantive discussion about dealing with” those issues.

Funding early retirements

Bendo and Moore voted against a separate resolution to schedule a public hearing on April 17 to discuss a proposed $2.1 million bond measure to finance separation payments owed city employees as part of an early-retirement incentive. Moore said she wanted more information about the proposal and the city’s financial issues.

“We’re putting things on the agenda to borrow money when we can’t even figure out the situation we’re in now,” Bendo said.

That measure passed by a 3-2 vote. Council President Anthony Eramo accused Bendo and Moore of “grandstanding,” saying that the vote was only to schedule a hearing for the measure, which would be discussed later in the month, and that the 2018-19 budget has yet to be presented to the council.

Council Vice President Chumi Diamond said that information about items on the agendas is provided to council members on request, and that there have been some discussions of the budget. “Those who weren’t able to be there were given an opportunity to follow up by telephone,” Diamond said.

“It sounds like, from rumors, that we’re in a lot of trouble,” resident Eileen Hession told the council. “If there are City Council discussions going on, the whole City Council should be there, unless they choose not to attend.”