Oyster Bay faces loss of Standard & Poor’s credit rating

Standard & Poor’s has given the Town of Oyster Bay until April 11 to submit financial information about fiscal 2014 or its credit rating will likely be suspended or withdrawn, the ratings agency said in a news release Monday.

“If we do not receive sufficient information, in particular nearly finalized or fully finalized 2014 audited financials, within the time frame, we will likely suspend or withdraw the rating,” Standard & Poor’s credit analyst Ruth Ducret said in a news release.

Oyster Bay officials did not immediately return a request for comment Monday.

Town officials previously said they expected to complete the financial statements by March 31, but last week Councilman Joseph Pinto said at a town board meeting that the town had received an extension.

In an interview Monday, Pinto said the town expects to provide the financial information by the deadline.

“I’ve been told by our auditors . . . that we are going to make the date,” Pinto said.

If Standard & Poor’s receives the information by April 11, the agency said in the release that it expects to resolve the status of Oyster Bay’s credit rating by April 27. On Jan. 28, the agency placed the town on watch for a possible downgrade due to an estimated deterioration in the town’s financial performance and reserves.

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Standard & Poor’s rates the town credit BBB, which is two notches above junk bond status.

The town’s failure to produce its 2014 audited financial statements has already cost the town its Moody’s Investors Service rating, which was withdrawn in January due to lack of information.

When the town borrowed $121.8 million in the debt market two days later, it paid interest rates that were in the junk bond range. Lower credit ratings increase the interest rates at which municipalities borrow money, which means higher costs for taxpayers. The loss of a credit rating would also increase borrowing costs for the town.

The town plans to borrow $30 million in May to address short-term cash flow issues, according to its financial disclosure.

Town officials have previously blamed the late audited financials on problems upgrading its computers and software to use Microsoft Dynamics AX and phasing out an old mainframe system.

The town hasn’t previously disclosed in its audited financial statements potential liabilities from disputed loan guarantees extended to indicted restaurateur Harendra Singh. It is unclear how the town will address that issue in the audited financials. The town has disclosed that both the Securities and Exchange Commission and the Nassau County district attorney had requested information about the loan guarantees.

Newsday has reported that Oyster Bay has begun withholding $44 million of taxes from Nassau County as part of a decades-old legal dispute over utility taxes.