Towns could borrow to cover storm cleanup

To pay for millions of dollars in cleanup costs following superstorm Sandy, local governments may end up borrowing against expected federal reimbursements.

The costs of recovering from the storm are hitting local governments at a time when many are struggling with weak revenues and a slow economy. Borrowing against expected federal reimbursements provides a way of financing those costs.

Oyster Bay, for instance, plans to borrow up to $6 million while it waits, the town disclosed this week in a borrowing document.

For local entities "it's a short-term strain," said Standard & Poor's analyst Karl Jacob. "It's more of a timing mismatch of laying out money and recouping" federal funds.

Getting reimbursed could take as long as a year; Brookhaven, for instance, finally received $6 million of Federal Emergency Management Agency funds for Tropical Storm Irene costs in August. Tamara Wright, Brookhaven finance commissioner, said the Irene funds would allow the town to pay for its Sandy costs, estimated at $6.5 million, without borrowing. "We have those funds to draw upon."

New York State Comptroller Thomas DiNapoli last week projected the economic damage from superstorm Sandy could exceed $18 billion for the state. Gov. Andrew Cuomo has asked President Barack Obama to reimburse the state and local governments for 100 percent of costs rather than the usual 75 percent.

In the past, the state split the 25 percent difference with local governments. This didn't happen after Irene because the state used other federal disaster funds to pay local governments' share. State Division of Budget spokesman Morris Peters declined to comment on what will happen if FEMA provides less than 100 percent reimbursement.

Local governments have to apply for the aid, which can include reimbursement for work on roads, airports, sewage treatment plants, schools, government buildings, bridges and utilities. FEMA has already given a blanket approval to pay salaries for debris removal in federally declared disaster areas, which include Nassau and Suffolk counties.

Suffolk County spokeswoman Vanessa Baird-Streeter said the county is still assessing damage and does not plan to borrow in anticipation of FEMA funds. Nassau County spokesman Brian Nevin said the county suffered significant damage to its Bay Park sewage treatment plant and West Shore Road and did not respond to a question about whether the county would seek to borrow for Sandy costs.