12626782870?profile=RESIZE_710xHomes like this one in Sanibel can withstand hurricanes, as seen following Hurricane Ian striking the Gulf Coast island city in 2022, but removing a mountain of debris is still costly. Photo provided

Related: Hurricane season: What to expect 

Critically eroded beaches make coast more vulnerable as storm season arrives

Manalapan: Town to start committee to gather facts about what’s happening with beach

 By Larry Barszewski

If a hurricane strikes South County this year, coastal communities can expect federal and state disaster relief to come to their assistance. But do they have enough money on hand to handle the emergency situations they’ll encounter before those outside dollars start flowing?

That’s a question local elected officials will have to determine as they begin budget discussions this month for a new fiscal year that begins Oct. 1. However, for most of this hurricane season, which runs from June 1 through Nov. 30, the die is cast.

Over the next four months, the amount of money available if an emergency occurs varies from less than $1 million in Briny Breezes to almost $88 million in Boca Raton. The local governments don’t guarantee most of those dollars will be available in the event of a disaster, only that they should be there as long as the governments don’t spend them on something else first.

Two Gulf Coast barrier island communities ravaged by Hurricane Ian in 2022 — Fort Myers Beach and Sanibel — had a mix of reserves they turned to in the hours and days after Ian struck.

Their takeaway: You can never have enough put aside, but you do need to have a kitty available.

12626782484?profile=RESIZE_710xHurricane Ian in 2022 devastated oceanfront communities like Sanibel, requiring significant spending by local government before reimbursement from federal and state agencies arrived. Photo provided

“Following Ian, all the disaster reserves were immediately appropriated to ensure the city had the funds to pay employees (many were on call and working around the clock in the weeks following the storm) and to address immediate operational needs,” said Eric Jackson, Sanibel’s public information officer, responding in an email to questions from The Coastal Star.

“The reserve amount was adequate to guarantee cash flow to pay personnel and keep the city running following the storm,” Jackson said. “To fully meet the challenges of a disaster of this magnitude, no amount of attainable reserves would be sufficient for a local government.”

Most South Palm Beach County cities and towns have money they can tap, but only some have dollars specifically set aside for a disaster: $20.4 million in Boca Raton, $1.8 million in Highland Beach, $100,000 in Gulf Stream and, in Lantana, $750,000 in an insurance fund for damage not covered by other sources.

Instead, most plan to rely heavily on dollars in their budgets that aren’t set aside for any specific purpose, their undesignated fund balances. This money provides a budget cushion that can also be used to pay for other projects or priorities — be it a road construction project in Gulf Stream or water pipe replacements in Ocean Ridge.

12626781664?profile=RESIZE_710x“The town does not differentiate between cash reserves and hurricane emergency reserves,” Ocean Ridge Town Manager Lynne Ladner said. “In the event of a disaster such as a hurricane, all unassigned cash reserves are available to ensure that town operations can continue to operate and recovery efforts are not hindered by a lack of resources.”

One reason for not designating specific emergency reserves is that the “unassigned status gives the town maximum flexibility to meet emergency or unforeseen conditions as [they] arise,” South Palm Beach Town Manager Jamie Titcomb said. In addition, he said, each town department has some contingency funds that could be used for disaster items that specifically affect the given department.

Fort Myers Beach had several pots of money available when Ian came ashore on Sept. 28, 2022, just days before the city’s new budget year started. At that time, it had $2.6 million in reserves, with more than half designated for an emergency, said Nicole Berzin, the town’s public information officer.

“We do have an emergency fund, and it had a balance of $537,114. We had $1,060,000 of the general fund balance that had also been set aside for emergencies, and $600,000 of the general fund balance set aside as an operating reserve,” Berzin said. The budget that began Oct. 1, 2022, also had another $443,000 contingency in it that could be used for emergencies, she said.

“In addition to the above, the general fund did happen to have about $3.6 million reserved to be transferred to the capital fund in FY23 to support future capital projects. Although not specifically designated for emergencies, the cash intended for capital could be available to temporarily fund emergency expenditures until assistance was received, which is exactly what happened,” Berzin said.

Meanwhile, Sanibel had set aside $5.5 million in emergency reserves, which was put to use immediately, Jackson said. It restocked the emergency reserve level to $5.9 million in its current budget, Jackson said.

At the time Ian struck, Sanibel also had an undesignated reserve — recommended to equal about 17% of its operating budget — available for use if needed. That was another $4.5 million.

“While reimbursements take time, it is expected that 95% of the $5.5 million will be replenished — 90% from the federal government and 5% from the state. The remaining 5% is the responsibility of the city of Sanibel,” Jackson said. “There is nothing definitive on how quickly the city will receive the reimbursements.”

On South County coast
In South County, current undesignated reserves available in an emergency are around $13.5 million in Lantana, $7.3 million in Gulf Stream, $6 million in Ocean Ridge, $4.2 million in Manalapan, $950,000 in Briny Breezes and $630,000 in South Palm Beach, officials in those communities said.

“If we get a direct hit, obviously we would have to get into our fund balance,” Gulf Stream Town Manager Greg Dunham said. While that fund balance backs up the town’s current road and drainage construction project, Dunham said the balance is expected to be increasing, in part due to rising property values — and the Town Commission has also said it doesn’t want the balance to go below $4 million.

Highland Beach has $3.6 million available, with half made up of undesignated reserves and the other half specifically for a hurricane or other disaster, Town Manager Marshall Labadie said.

Larger South County municipalities also rely heavily on undesignated reserves. Besides Boca Raton’s $20.4 million set aside for a hurricane or other disasters, it has $67.5 million in undesignated fund balance it could tap into if needed, city spokeswoman Anne Marie Connolly said.

“While the city does not have a specific written policy regarding fund balance designations for emergency reserves, there is an aim to reserve approximately six weeks of operating costs for hurricane/disaster emergency reserve in the general fund,” Connolly said. Depending on the specific type of hurricane damage incurred, the city has reserves in other areas that might be used, such as for stormwater, water and wastewater infrastructure and operations, she said.

Delray Beach estimates it would have at least $44.7 million available in unassigned fund balance, while Boynton Beach has $11.8 million in reserves. However, while Delray Beach’s reserves equal about a quarter of its general fund budget, Boynton Beach’s figure is only about 10% of its operating budget, less than the 16.7% — or two months’ worth of operating expenses — recommended by the Government Finance Officers Association.

Keeping a larger fund balance is sometimes met with opposition from those who would prefer the dollars be used to reduce property taxes.

“The primary purpose of the unassigned fund balance is to serve as a guardrail for revenue instability, catastrophic events such as hurricanes and floods, and cash flow instability,” Delray Beach Chief Financial Officer Hugh Dunkley said. “The unassigned fund balance is also available for the City Commission to exercise its discretion to fund new programs and/or initiatives that were not included in the adopted budget for the fiscal year.”

In the final analysis, no community can completely handle by itself the financial impact of a direct hit.

Sanibel’s storm recovery cost, for instance, was well over the town’s entire $84 million FY 2023 budget, which was approved at about the same time Ian struck.

“Recognizing this challenge for the city (and other local governments), the state took over debris operations and directly paid for those services. Other significant state and FEMA assistance was also provided,” Jackson wrote in his email.

There are also financial hits that come down the road.

“The city lost 34% in taxable property values following the storm,” Jackson said. “The storm greatly impacted the city’s Capital Improvement Plan by eliminating improvement expenditures that were not considered essential and tied to public safety. Facility building expansions and technology improvement purchases were examples of planned projects that were shelved.”

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