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Southampton Town lobbies Moody's to raise bond rating
After suffering a downgrade to its bond rating during the recession, Southampton Town wants financial firm Moody’s Investors Service to bless its fiscal health by giving it the highest rating for local governments.
A delegation of Southampton officials went to Manhattan last week to pitch the strength of the town’s finances, pointing to controlled spending — including a reduced workforce — and budget surpluses.
“We’ve had three solid years of financial sure footing, particularly compared with what’s going on nationally and in the region,” Supervisor Anna Throne-Holst said.
Bond ratings affect the cost of borrowing, and can signal the financial health of a municipality. Southampton had its finances downgraded by Moody’s in 2010 to Aa2. The rating was upgraded a notch the following year to Aa1.
The town now is seeking an Aaa rating, the highest given by Moody’s, and one held by only 15 entities in New York, according to town officials.
The town board last week increased the amount the town has to carry in reserves, under law, to 17 percent, up from 10 percent.
Additionally, according to a presentation to Moody’s, the town’s employees have dropped from almost 560 in 2008 to 480 this year, mostly through attrition.
Throne-Holst said the presentation “tells a compelling story about why we should unquestionably be” in the highest-rated category.
The town had a $4 million budget surplus last year, which it used to prepay a loan to the state pension system, increase its reserves and pay for short-term costs such as cars and computers.
Leonard J. Marchese, the town comptroller who helped make the presentation, said the concern from Moody’s was that they believed Southampton was “more of a second-home community.”
But, he said, the town is confident. “First, no one is foreclosing on a $10-million home,” he said. Second, many residents consider their beachfront home to be their primary residence, he said.
He said the town expects to hear from Moody’s by the end of the week.
— DAVID M. SCHWARTZ