North Hempstead has been awarded an Aaa bond rating from Moody’s Investors Service, the highest grade a municipality can earn.
The town had received an Aa1 rating, the second-highest mark, for the past two years. The rating was upgraded last Thursday.
In a statement, Town Supervisor Judi Bosworth said the new rating “is a reflection of the efforts by my financial team and each and every town employee.”
“It’s extremely satisfying to see the town’s fiscally conservative practice recognized in Moody’s opinion,” she said. “It will translate into savings for our hardworking taxpayers.”
The Moody’s rating measures credit risk within a municipality and reflects the town’s financial outlook. The ratings are important because they affect the interest rate municipalities pay when borrowing money.
The top rating covers the town’s $60.7 million in public improvement serial bonds from 2016.
The town’s Deputy Supervisor Aline Khatchadourian said officials have been working on getting an Aaa rating since 2014.
“It would not have happened without the strong commitment to exercise fiscal restraint, manage debt and control spending at every level of government,” she said.
In a report released last week, Moody’s analysts said the town’s strengths are its strong financial management, marked by conservative budgeting and planning, as well as a large, diverse tax base with high income levels and ample local employment opportunities. The town is challenged, Moody’s said, by being somewhat reliant on sales tax and mortgage tax revenues.
The town’s rating could go down, according to Moody’s, if there’s a large population decline in North Hempstead or if the town spends too much of its reserve funds.
The town ended fiscal year 2015, the most recent year from which data are available, with $21.7 million in its reserves, down slightly from $22.2 million in fiscal year 2014, Moody’s said in its report.
North Hempstead now has the highest bond rating of the three towns in Nassau County.
Hempstead saw its rating drop last month from Aa2 to Aa3 in part because the town’s available cash fell from $98.5 million in 2011 to $30 million in 2015. Meanwhile, Oyster Bay has a Baa3 rating — the agency’s lowest investment grade rating. Moody’s had noted Oyster Bay’s operating fund benefit deficit grew from $64.1 million in 2014 to $73.7 million in 2015.