Funding for Army Corps project a ‘credit positive’

Moody’s Investors Service is calling a federally funded coastal protection project for the barrier island a “credit positive” for Long Beach that will help the city continue its trend of “improving financial performance.”

The announcement came a week after Sen. Charles Schumer announced that the U.S. Army Corps of Engineers could begin work on the $180 million project this fall, having received a commitment from the federal government to cover all of its costs.

Schumer called the project a major step toward protecting local communities from future storms like Hurricane Sandy, which caused roughly $200 million in damage in Long Beach.

The federal funds will be used to construct a system of dunes, berms and jetties along approximately 35,000 feet of shoreline in Long Beach and the Town of Hempstead, using 4.7 million cubic yards of sand.

News that the project will receive full federal funding came as a relief to city officials.

“We appreciate more positive feedback from Moody’s on the direction of the city’s fiscal and physical recovery,” City Manager Jack Schnirman said.

Long Beach and New York state were originally slated to share responsibility for 35 percent of the project’s cost. The city would have been on the hook for $31.5 million, Moody’s said — approximately 51 percent of its total general fund revenues. “Considering the unwieldy budgetary impact, Long Beach would have issued general obligation bonds to fund the project, ultimately increasing its direct debt burden by nearly 50 percent,” the agency wrote in a Feb. 20 newsletter. “With federal funding in place, the city will not have to absorb the additional debt service costs.”

In December 2011, Moody’s downgraded Long Beach’s credit rating from A1 to Baa3 — a step above junk bond status — after the city borrowed millions to make up for a staggering cash-flow shortfall and exorbitant contractual payouts to a number of retiring police officials.

The new administration declared a fiscal crisis shortly after taking office in 2012, after uncovering what was later determined to be a $9.2 million deficit for fiscal 2011-12.