Hempstead Town scores upgrade in Moody's bond rating

A Wall Street credit agency has upgraded the Town of Hempstead’s bond rating to the highest level, citing improved finances bolstered by federal funding received during the COVID-19 pandemic.

Moody’s Investors Service upgraded its rating last week from Aa1 to Aaa, signifying lower interest rates for the town for future borrowing and capital improvement projects.

Hempstead Supervisor Don Clavin said it is the town’s third bond rating upgrade in three years, which will save hundreds of thousands of dollars for residents to cover borrowing.

“We run a tight ship and crunch the numbers every month,” Clavin said. “It’s the true oversight of town government. It’s a win for residents and an acknowledgment of the hard work we’re doing in the town.”

Moody’s cited the booming housing market and wealthy tax base in Hempstead, which accounts for more than half the population of Nassau County. Credit analysts said the town has managed costs amid longterm debt from retirement benefits and health care.

“The recent improvements in reserves are driven by conservative budgeting, strong operational oversight and substantial federal aid over the past two years,” Moody’s analysts said in its report.

The town’s available operating funds are expected to finish with more than $190 million recorded at the end of last year. The funds, which include an additional $40 million in the water fund, are expected to be a 20-year high for the town. The town also received $180 million during the past two years in COVID-19 federal aid from CARES funding and the American Rescue Plan.

“While the town did benefit from conservative budgeting over the past two years, over $180 million in federal funds allowed the town to navigate a challenging time,” Moody’s officials said. “Management used approximately $85 million on salaries over the past two years that were directly related to the pandemic.”

Hempstead also allocated pandemic aid to hospitals, schools, universities and first responders. Town officials also used funding for various capital projects that otherwise would have required borrowing.

The town has borrowed from reserves to balance the budget for the past two years, including $22.6 million last year, derived from $26.7 million in federal aid that will be eliminated next year. The town is expected to use an additional $17 million in federal aid this year to balance the budget.

Moody’s officials said Hempstead expects to borrow from reserves again next year to lower taxes for residents.

According to Moody’s, the town expects to draw additional revenue from growth and future projects, such as redevelopment in downtown Baldwin and the Nassau Hub, with land surrounding NYCB Live’s Nassau Coliseum now valued at $1.5 billion.

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.