At Tuesday’s City Council meeting, members voted unanimously to allow the city to borrow $38 million for post-Hurricane Sandy recovery expenses while it waits for Federal Emergency Management Agency reimbursement.
Since the day after the storm, city workers have not stopped working on rebuilding, City Manager Jack Schnirman said. The city has 140 storm-related projects, either completed or in the works, for which it needs money, he said, and short-term borrowing, in the form of a revenue anticipation note, will allow them to move forward pending FEMA reimbursement. This is the city’s most responsible option, Schnirman said, rather than letting the projects lapse and slowing the recovery.
“FEMA doesn’t just cut you a check up front, pat you on the back and say, ‘Have a nice day,’” he said. “We need to borrow some money today, so FEMA reimburses us tomorrow.”
The projects to be covered by the borrowing plan range from debris removal to the repair of city buildings, like the Recreation Center and community centers, and water and sewer infrastructure.
The city does not have a “rainy day” fund with enough money to cover these costs, Schnirman said, which is why officials opted for the revenue anticipation note. Because it is to be paid back in the same fiscal year, it will not increase the city’s debt burden, meaning that taxpayers will not have to share the cost.
Schnirman explained that the city allocates money to pay off debt service in the budget each year, so it will be able to cover the interest on this loan. And the interest is also reimbursable by FEMA. So, given FEMA’s 90 percent share of the costs, the state’s increased cost share of 10 percent and the reimbursable interest, the city expects to be made whole after this borrowing effort.
“This really is just to extend our fiscal ability,” said Department of Public Works Commissioner Jim LaCarrubba, “so that the city can continue to move forward with the aggressive recovery we’re undertaking.”