Moody’s Investors Service reinstated a bond rating for Oyster Bay Tuesday, a year after the company pulled the town’s previous rating due to a lack of financial information.
The rating agency assigned Oyster Bay its Baa3 rating, which is its lowest investment grade ranking, effectively a three-notch downgrade from where it was at the time of withdrawal.
On Thursday the town plans to borrow $29.4 million in bonds and to renew approximately $99 million in short-term notes.
Moody’s withdrew its previous rating on Jan. 26, 2016, after the town failed to produce audited financial statements. Last week, Oyster Bay officials met with Moody’s and provided updated financial information. In April, Standard & Poor’s downgraded the town to junk status, citing a decade of deficits and weak financial management.
Credit ratings affect the interest rates municipalities pay when they borrow money.
Town Councilman and Acting Supervisor Joseph Muscarella said in a news release that Moody’s had acknowledged “the town’s significant improvements to actual finances for 2016, budgeted figures for 2017 and stated commitment to continue to work to eliminate fund deficits and build reserves.”
The rating report said Oyster Bay had a “history of structural imbalance and poor budgeting which has led to its currently weak financial position.”
Moody’s said the town’s operating fund balance deficit in 2015 grew to $73.7 million from $64.1 million from a combination of “poor budgeting practices,” unexpected costs and a transition to new accounting software that didn’t work properly in 2014.
On the positive side, Moody’s said Muscarella and the Town Board have “stepped in to help provide more accurate budgeting and encourage both cost savings and the addition of recurring revenue.”
“We’re on our way back,” Councilman Joseph Pinto said in an interview. “The town board has made positive financial decisions.”
Uncertainty remains, Moody’s said, over three lawsuits brought against the town that seek to enforce disputed loan guarantees and what the priorities will be for whomever replaces Supervisor John Venditto, who resigned earlier this month.