Standard & Poor’s upgraded Oyster Bay’s credit rating out of junk status on Friday, citing steps the town has taken to improve its finances.
The rating agency upgraded the town’s credit to BBB minus — its lowest investment grade rating — from BB plus which is noninvestment grade. Standard & Poor’s downgraded the town to junk status on April 27, 2016.
A municipality’s credit rating affects the interest rates at which it can borrow money.
“The upgrade reflects the steps the town has taken to stabilize liquidity, restore structural balance in its main operating funds, and begin replenishing its accumulated negative reserve balance,” the report said.
The rating agency said it views “the town’s management as weak, but improving.”
The report cited the results of actions taken in the final months of Town Supervisor John Venditto’s tenure as key to the town’s improved finances.
In 2016, the town board passed an 11.5 percent property tax levy increase that the report said generated $24 million in recurring revenue. The report also cited temporary salary cuts in 2017 and 2018 under a contract approved by the union on Jan. 4, 2017, Venditto’s last day in office.
“These actions overall, coupled with realistic budgetary assumptions and stronger monitoring practices, have been sufficient to stabilize fiscal operations,” the report said.
Preliminary numbers for 2017 show the town expects a $19 million general fund surplus that will reduce the town’s accumulated deficit to $20.9 million, the report said.
“The general fund surplus is the first positive result the town has produced in the last 12 fiscal years,” Standard & Poor’s said in the report.
Standard & Poor’s said the town’s total debt is about $747 million, a $45 million reduction from its April 2016 report.
The town rapidly increased its debt during and after the financial crisis of 2008, peaking in 2015, town financial documents show.
Oyster Bay Town Supervisor Joseph Saladino did not respond to an interview request on Friday, but his spokesman provided a statement.
“This upgrade is the best financial news Oyster Bay has had in years,” Saladino said in the statement. “We are being recognized by Wall Street after independent reviews, and this great news clearly proves the bold steps we have taken to fix Oyster Bay’s finances.”
Standard & Poor’s said the agency is monitoring a lawsuit brought against the town last year by the Securities and Exchange Commission, alleging securities fraud related to disclosure of loan guarantees to bond investors.
Those loan guarantees are at the heart of criminal charges brought against former Nassau County Executive Edward Mangano, his wife Linda and Venditto. The Manganos-Venditto trial began last week at the U.S. Eastern District Court in Central Islip and is expected to continue this week with testimony from restaurateur Harendra Singh.