City Seeks Emergency Loan To Meet Payroll

The City of Long Beach is making plans for emergency borrowing in order to make its payroll next month.

Patch obtained a Nov. 18 memo from Comptroller Sandra Clarson to City Manager Charles Theofan, in which she writes that the city is facing a $1.3 million deficit by year's end and suggest emergency measures.

Clarson's memo notes  that the city's opperating cash, at approximately $3.9 million, "is not enough to make the cash payroll in December." She also suggests that the City Council call an emergency meeting on Nov. 30 to vote on a resolution to take out a short-term Tax Anticipation Note.

“The entire process can take up to 14 business days,” Clarson wrote. “ … An immediate decision is required since there is a tremendous amount of paperwork that must be completed … Absent of direction on this matter City of Long Beach employees will not be paid on December 23, 2011.”

City Manager Charles Theofan said unexpected expenses from Tropical Storm Irene and delayed tax payments from a large property owner sparked the problem, according to Newsday. Said Theofan:

"[Tropical Storm] Irene cost us $1 million that we did not anticipate. We will get that money back from FEMA, 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."

The article indicates that the Allegria Hotel, at 80 West Broadway, is the property owner in question.

Clarson's memo also notes that a second issue of concern is unbudgeted termination payouts, of which the city has a liability of  $287,291 for biweekly payouts to retires until next June, along with termination requests from three Long Beach Police Department employees totaling approximately $1.4 million.

“This brings the city’s total outstanding liability to $1,749, 291,” Clarson writes. “At this time, the city’s budget does not have enough for the termination payouts that it is now responsible for.”