Tag Archives: lb bailout

AP Loves Long Beach (But, mostly just our fiscal crisis)

Normally the Associated Press only takes an interest in Long Beach when we get hit by a hurricane or are struck by a comically exaggerated gang fight. But no longer. Those keen news hawks over at the AP have caught on to what we here have been writing about for months, and was then was picked up by the Long Island Herald, Newsday, Wall Street Journal, and Bloomberg. Newsflash, Long Beach is broke, and the New Gang are attempting to do something about it.

Will they succeed? Will they fail? Will they make Hawaiian shirts mandatory on Fridays? Only time will tell.

I’ve included the brief newswire below:

Popular Long Island city grapples with fiscal woes

Associated Press

LONG BEACH, N.Y. — The city of Long Beach on Long Island is considering a proposal to declare a fiscal emergency.

The matter had been on the agenda at Tuesday night’s meeting of the city council. City spokesman Gordon Tepper says it was tabled until Feb. 7.

He says city officials want to study the legal language in the proposal before voting. He says the city is struggling with a fiscal crisis and faces a $48 million debt. Moody’s downgraded the city to a credit rating of just above junk bond status.

Officials say plans call for a curb on overtime and improved accountability.

The city on Long Island’s south shore is a popular destination during summer months. Last year, it played host to the first professional surfing tournament ever held in New York.

—Copyright 2012 Associated Press

Injunction Planned against Bailout Plan (Taking ’em to Court)

In the next turn of events surrounding the emergency bailout of over $4 million, City Council Member Mike Fagen, representing the new Democratic majority that takes power in January, will be seeking “injunctive relief” at Nassau County’s highest court to block the City Council majority’s plan.  His full press release can be read here

The press release calls the $500,000 “lump sum” to departing acting Police Commissioner Thomas Sofield Senior (father of sitting City Council President Thomas Sofield Junior) an “outrageous insult” to the taxpayer. Further the press release states that “the Republican administration of Thomas Sofield Junior, has in three and one half years, squandered a $13.5 million surplus.”

City Councilman Fagen will be holding a press conference on the steps of Nassau Country’s Supreme Court at 11am (not quite high noon) to discuss the injunction.

Fagen has long been a critic of the City Council majority and sees these developments in the final days of their waning reign as the “ultimate insult.” What’s being discussed in Fagen’s press release is that several members of the police department are “unexpectedly” retiring/resigning after the Republican majority was defeated in November’s election. They are calling for a lump sum payout of their accrued vacation and sick time (perfectly legal under union rules), but the total for these officers is an unbelievable $2.4M – nearly 3% of the city’s annual budget! Fagen doesn’t dispute that they are entitled to their sick/vacation time, but he wants to know how they accrued the time because “no documentation… has been provided.” Further he wants to know why they are requesting $2.4M to cover these expenses – in his estimation, $1M more than is required.

It’s a showdown at the high court today and these events will determine if the City is allowed to borrow over $4M to cover debts that they have rapidly amassed. The press conference is at 11AM, and the emergency City Council meeting is tentatively scheduled for 5PM (and open to the public).

You can read the press release here.

LB Bailout Totals $4.25M (Emergency Council Meeting)

Just last week we received word that the City is effectively broke. The combination of a massive retirement package, a hotel that’s caught up in litigation stopping it from paying its bills, and supposedly overtime from a storm that hit three months ago, have put the City deep in the red.

Then, we were told the City would need a bailout of around $1.4 million – borrowing money that it expects to get when taxes come in in January. But, from tomorrow’s agenda, we can confirm the real number is more than $4 million between the sale of Tax Anticipation Notes and Budget Notes.

First off, the City wants to issue $1,7500,000 in tax anticipation notes (IOUs). These funds are required simply to keep the grinding gears of Long Beach running. This money is required by law to pay the cops, firefighters, city workers, and back every check the City has to sign through the end of the year.  In the brief explainer about the tax anticipation note, there is no reference to the payments FEMA supposedly owes Long Beach after Irene that City Manager Theofan cited as a prime reason for the shortfall.

Now here’s the real surprise, to pay off the accrued sick and vacation time of three City workers (perhaps more have been added to the list) – Acting Police commissioner Thomas Sofield Senior being one – the City wants to borrow $2,500,000! Earlier, this figure was pegged at $1.4 million, and has now increased by 78% ($1.1M) in one week.

What really is shocking, is to pay for the $2.5M (no breakdown on how that number is arrived at) the City is not using Tax Anticipation Notes (saying we know we’re getting this money, but just don’t have it yet), but is instead issuing budget notes. From my understanding, budget notes are the same as municipal bonds, and will have to be paid back, with interest, like any other loan. So because of the way current rules exist that allow for a massive accural of vacation and sick time  (in acting police commisioner Sofield’s case some $500,000 in 30 years) and then require its payback within 60 days, the city is required to borrow money it doesn’t have, and then pay interest on that with your tax dollars.

This appears to be a mess that keeps getting bigger. It is further baffling that with these sort of financial hiccups possible, Moody’s could have come in and accurately evaluated the city’s bond rating. But then again, they don’t have a great track record.

Tomorrow’s panic session is open to the public, but as of yet, the time is not posted.  One resident relayed to me that they were told the meeting may be held at 5PM (two hours earlier than the usual city council meeting time).  Certainly doesn’t sound like they want this to be the best attended City Council meeting.

Take a look at the whole emergency meeting agenda here.

Allegria Owes City $300k (LB Bailout keeps getting worse)

(Photo courtesy Allegria Facebook)

The document dump story first published in the Long Beach Herald – that the City is broke and must borrow money to make payroll – has yet another angle to it, and that’s everyone’s favorite Long Beach hotel, the Allegria.

City Manager Theofan obliquely confirmed that the Allegria owes the City more than $300,000 in back taxes, and sewer and water fees.

The Allegria, to their credit, commented to Newsday and said, “Any issues related to the Allegria are contingent upon our current reorganization plan that is before the court [and] it [paying the city] is part of our current reorganization plan.”

What does that mean?  Basically, that the City and the Allegria have already been in court for some time, confirming the City has long known that this money wasn’t coming in.  The Allegria is working it out through their lawyers, their lenders’ lawyers, and the City’s lawyers, how much and when they will pay back their debts.  You’ll remember that we talked about the land under the Allegria (owned by a separate corporation) filed for bankruptcy in the summer.

Again, like the supposed shortfalls caused by Irene, this falls into the category of things the City has known about for months, and it is impossible that this just “surprised” city officials, requiring last minute, emergency budget action.

Read Newsday’s full story here

Long Beach’s “Surprise” Lack of Cash

(Some cash seized in the LBPD Raid, perhaps it can help with payroll)

The comments section is already a buzz about the fact that Long Beach is broke and has to now borrow money just to make payroll.  It strains credulity to think that some members of the City administration did not know about this and could be at all surprised by this interruption.  I’ll get into it more later, but this topic has created a lot more questions than answers, specifically about what money the City has and what money the City owes.

Thankfully, the memo includes a fairly detailed breakdown of just that.  You can analyze it yourself here.

Of course, this breakdown doesn’t include the real whopper (readers may note I suck at spelling that word, sorry), which is the $1.4 million sick/vacation payout required to three members of the LBPD (including the acting commissioner).

I pointed out – as did many others – that the idea you can accrue $500,000 worth of vacation and sick time is insane.  I’m happy to get just 10 vacation days (and a few sick days) a year, and if I don’t use them, I lose them.  As my employee handbook states, the whole point of vacation/sick days is to de-stress you (vacation day) and help you get better (sick day).  “Saving” these days, doesn’t help you or your employer, hence why in the private sector, they often don’t “carry over” to the next year, and if they do, they certainly aren’t allowed to add-up to these astronomical levels.

Scrooge Comes to Long Beach (and we need a bailout)

The Long Beach Herald has a whopper of a story before the holiday season.  It seems Scrooge has come to Long Beach, and without emergency action, Long Beach can’t make payroll on December 23rd.  Meaning that, Long Beach’s workers won’t get paid two days before Christmas.

Of course, in the leaked menu obtained by the Herald, City Manager Theofan and the comptroller are frantically working to borrow money – over $1 to cover the shortfall.  An emergency City Council meeting will be held on November 30th to approve the Long Beach “bailout.”

It’s interesting that for month’s we’ve heard about the fiscal health of Long Beach, yet when push comes to shove, we can’t pay our bills and seemingly have known we wouldn’t be able to for as many months.

City Manger Theofan explained that it was all Irene’s fault because of the overtime the City racked up, and FEMA hasn’t paid up yet.  How is this a surprise and why weren’t residents aware of this earlier.

The other whopper to come out of this memo is that while resigning acting police commissioner Sofield Senior will not be getting a golden parachute.  But his accumulated sick and vacation time add up to 500k.  And he wants it within 60 days.  And here I am getting excited about my 10 vacation days a year that are use or lose…

The plan the City Manager has floated is to borrow $1.5 million to cover the payroll shortfall of $1.4 million (are we already assuming the estimated shortfall is larger than $1.3 million?).  If my math is right, the City only has $100,000 to pay the $1.3 million bill.  Much later after all the obfuscation about Irene, the crux of the matter comes up, and that’s these unbudgeted payouts.  The memo says these payments total to a monstrous $1.4 million for the three employees, making any Irene-incurred overtime seem like just a drop in the bucket.

 

Read the article for the rest of the info.  It’s great.