Hempstead Town bond rating up after multiple downgrades

A Wall Street credit agency has upgraded the bond rating for Hempstead Town, officials said Thursday.

Moody’s Investors Service boosted the town’s rating from Aa3 to Aa2 after three previous consecutive credit downgrades, town board members said at a news conference. The rating agency Standard & Poor's also upgraded the town’s bond rating, back in January, from A+ to AA-.

Moody’s reviewed the town’s 2017 and 2018 budgets and its outlook for 2019 to determine the rating, town officials said. The new rating should save the town money with lower interest rates  on future borrowing, they added.

Moody’s  cited an “improved financial position that will likely continue to improve” as the town’s management replenishes  its fund balance and reserves. The positive outlook is based on “conservative budget management,” which includes budgeting for a surplus.

“We anticipate that over the next two years, the town will replenish its financial reserves to a level consistent with a higher rating,” Moody’s analysts said.

The town added $16 million to its reserves in 2017 by keeping 70 positions vacant, and put $27 million in savings this year, according to Moody’s The town then backfilled positions at lower salaries. The $432.5 million 2019 budget passed on Tuesday 6-1 by the board — with Supervsior Laura Gillen dissenting — added $8.5 million to town reserves.

Moody’s also considered the town’s wealthy tax base and large redevelopment projects, such as the proposed Islanders arena at Belmont Park and renovations at the Nassau Hub that surrounds the Nassau Coliseum.

“This credit upgrade is a complete denunciation of ‘fake news’ that this budget was irresponsible,” Republican Majority Leader Erin King Sweeney said.

Gillen proposed a budget that was $11 million more, saying she did not subtract anticipated savings from projected retirements. The town council expects 100 employees to retire next year.

“I am emboldened to continue asking the tough questions and acting as the fiscal watchdog that this town so desperately needs,” Gillen said.

The Moody's report did criticize the town for issuing bonds in 2017 to cover $8 million in separation payments for retired employees.

Gillen has called the practice of projecting savings from retirements irresponsible and said it could threaten the town’s bond rating if the town is forced to borrow or use reserves to cover an expected $3 million in unbudgeted separation payments.

By John Asbury

john.asbury@newsday.comJohnAsbury

John Asbury is a breaking news and general assignment reporter. He has been with Newsday since 2014 and previously worked at The Press-Enterprise in Riverside, California.