Long Beach high-rise settlement will span 30 years
The settlement will allow a developer to build two 13 1/2-story apartment buildings facing the boardwalk between Lincoln and Monroe boulevards on Shore Road in Long Beach. Credit: Newsday/Alejandra Villa Loarca
Long Beach City Council members will vote Tuesday night to approve a $75 million settlement after a bill in the state budget extended the time to pay back bonds over 30 years, potentially easing a tax increase on residents.
State lawmakers last week passed a bill by State Sen. Todd Kaminsky (D-Long Beach) in the budget to extend the time to pay off bonds from 15 to 30 years, and allowed the city to issue bonds of up to $77 million.
Long Beach city officials had reached a tentative settlement with developer Sinclair Haberman in December after a Nassau County Supreme Court judge ordered the city last year to pay $150 million in lost revenue and interest for a stalled oceanfront apartment complex.
The city is voting Tuesday night to finalize the settlement, which requires it to grant zoning and building permits within 18 months or face an additional $25 million penalty. The settlement will allow Haberman to build two 13 1/2-story apartment buildings facing the boardwalk between Lincoln and Monroe boulevards on Shore Road. The city is required to pay the initial $75 million payment within five days after the settlement is approved.
City officials said they plan to pay the settlement using long-term bonds, which could lead to tax increases in the city’s budget. But officials said drawing out the payment over 30 years, doubling the time to pay off the settlement, would lessen the annual tax burden. The city is expected to release its budget next week and has not announced the proposed tax rate.
“It was essential to find a solution to this settlement because it poses a major liability that threatens to burden taxpayers for years to come,” Kaminsky said. “This change will ensure that any payment is made in a timely, responsible way while lowering the long-term financial impact on residents dramatically.”
The case has been in litigation for more than 30 years after the city was found liable for defaulting on the property. The city rescinded building permits in 2003.
The property was collecting $1.1 million in interest owed by the city every month, but city officials said interest collection is paused during settlement discussions.
City officials said the city’s finances are improving after its bond rate was dropped last year to one level above junk bond status, which affects interest rates and the city’s credit.
The Wall Street rating agency Moody’s Investors Service maintained the city’s credit rating, but earlier this year offered a positive outlook on the city’s finances.
Moody’s cited the city’s settlement as “an indication that governance may be improving.” Moody’s said the city also has improved its financial reserves.
City officials said they have increased the city’s fund balance from $285,000 to $6.5 million in reserves, using conservative budgeting.
The state comptroller earlier this year also reduced the city’s fiscal stress score to rank the city as susceptible to fiscal stress. Long Beach had been listed as the most financially distressed city in the state for the past three years.
John Asbury is a breaking news and general assignment reporter. He has been with Newsday since 2014 and previously worked at The Press-Enterprise in Riverside, California.
