Long Beach to seek $1M emergency loan

In an unusual step, Long Beach plans emergency borrowing to avert a cash crunch threatening the city's ability to make its final payroll.

Comptroller Sandra Clarson warned in a Nov. 18 memo, obtained by Newsday, that without the borrowing, the city would have a $1.3 million cash flow deficit at the end of the year.

City Manager Charles Theofan, noting that Long Beach rarely does late-year borrowing, said unexpected expenses from Tropical Storm Irene and delayed tax payments from a large property owner sparked the problem.

"[Tropical Storm] Irene cost us $1 million that we did not anticipate," Theofan said. "We will get that money back from FEMA [Federal Emergency Management Agency], but we just don't have it in the bank. Then, one of our major property owners has not paid us its taxes and sewer and water fees, and that's more than $300,000."

But Democratic City Councilman Michael Fagen said the outgoing Republican administration has "been spending money like crazy for almost four years."

Theofan, who said the city has not recently had to resort to end-of-year borrowing, said the city "has to do what it has to do" in order to run government. "It is unfortunate that the unwarranted criticism of the outgoing administration is purely vindictive and will only hurt the city, which in turn will hurt the new administration," Theofan said of Fagen's comments.

Long Beach can pay off the borrowing with tax revenue scheduled to come in early next year, Theofan said.

City officials identified the delinquent taxpayer as the 143-room Allegria Hotel. George Witte, the hotel's new general manager, 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."

Lame duck City Council President Thomas Sofield Jr. did not return calls.

But senior Democratic Councilman Len Torres said, "We're looking at cutbacks and everything. We are going to have to make some hard decisions and bring our budget into the fold of reality. But of course we can't let our workers not get paid, especially during this holiday season."

Torres also noted that three senior police officers, including Acting Commissioner Thomas Sofield Sr. will be leaving the department and that will require additional borrowing. Sofield's severance package will total about $500,000, officials said.