The New Jersey municipalities most severely impacted by Hurricane Sandy have largely recovered from the 2012 storm and are better equipped for future severe weather events of similar strength, according to Moody's Investors Service.
Moody’s analyst Jessica Raab said in a report Monday that federal disaster aid and tighter building codes have bolstered credit quality of local governments along the Jersey Shore since Sandy. She noted that Ocean County, Monmouth County and Atlantic County are healthy fiscally with strong credit ratings while also tacking important infrastructure improvements.
“Even after the most extensive preparation, communities will forever face the risk of mass storm damage,” said Raab in her report. “But the Army Corps of Engineers continues to invest heavily in Sandy recovery and storm-hardening projects with more than 60 either completed or approved in New Jersey.”
Raab also credited the state of New Jersey and localities taking steps to strengthen building codes in preparation for another Sandy-like or worse storm. She said residential housing prices in the affected counties were “generally resilient” in the wake of the storm with an aggressive rebuilding effort supporting home values and boosting tourism.
"The Jersey Shore's rapid recovery is due in part to robust rebuilding efforts following the storm -- both construction of new buildings and retrofitting existing buildings to meet the stronger building codes -- as well as the region's continued draw as a tourism destination," said Raab. “The credit implications of these infrastructure improvements and building-code adjustments are considerable, partly because they will help prevent damage to property and prevent tax appeals.”
Raab said that Ocean County saw a drop in tourist spending in 2013, but has since rebounded with a compound annual growth of 3.1% the last five years. Monmouth County has seen a 3.3% compound annual growth in tourism spending and like Ocean has exceeded the amount of tourism dollars spent pre-Sandy.
Many cities in the three counties that suffered the most damage from Sandy enjoyed strong finances before the storm, but had less available liquidity to address storm-related capital projects because of smaller operations, according to Raab. This prompted the issuance of numerous short-term notes to assist recovery efforts with almost all of the debt now repaid.
“Having rebounded from post-Sandy lows, county and municipal finances are now a major credit strength, which suggests an increased resilience to future storms,” she said. “The three counties maintained very extensive liquidity in their internal trust funds prior to the storm, which then provided a cushion to temporarily spend down reserves for short-term costs in 2012 and return to a stable level once the funding from FEMA arrived.”