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Town S&P rating affected by referendum fate

Oyster Bay Town Hall on March 26, 2012.

Oyster Bay Town Hall on March 26, 2012. Credit: Nicole Bartoline

The stakes were raised Thursday for a referendum on Oyster Bay's planned sale of its public works complex when a bond agency said it might lower the town's rating if it doesn't get the anticipated cash.

Standard & Poor's Ratings Services put the town on "credit watch," warning it could run out of cash by November if the Aug. 20 referendum isn't approved.

Deputy Supervisor Leonard Genova responded that "any statement about a cash-flow problem on Nov. 1 is premature. There are ongoing negotiations on a variety of fronts that may more than make up for any shortfalls."

The town is trying to sell the 54-acre Syosset site for $32.5 million to Oyster Bay Realty LLC, whose partners include Simon Property Group, owner of several local malls. Simon wants to stop Taubman Centers Inc. from building a mall on the former Cerro Wire property adjoining the public works site. Taubman, which says it would pay more for the land, gathered signatures on a petition to force the public vote.

Standard & Poor's analyst Lindsay Wilhelm wrote that the $32.5 million "would provide a significant boost" to the town, which included $17 million from property sales to balance its 2013 budget. But she added in an interview Thursday that "this is obviously a one-time situation and we want to see some further structural reform to consider a higher rating."

The report notes Oyster Bay's 2012 audit showed a $6.9 million deficit in the general fund and deficits of $10.3 million and $11.9 million in its garbage collection districts and solid waste disposal funds, respectively, while the highway fund maintains a positive balance of $4.1 million. Wilhelm said the deficits in the garbage collection districts and solid waste disposal funds were due to uncollected money from litigation related to a property tax settlement with Verizon.

The report noted Oyster Bay implemented a retirement incentive program that eliminated 90 positions, increased fees, and negotiated a wage freeze with its unions in fiscal 2013 to save $9 million. The town also approved a 3.8 percent property tax levy increase for fiscal 2013 for an additional $6.8 million in revenue.

John Capobianco, the Democrat challenging Republican Supervisor John Venditto in November, said the report proves "the town's fiscal insanity. Relying on one-shot revenue deals can no longer mask Team Venditto's incompetence."

Todd Fabricant, chairman of the Cerro Wire Coalition, made up of groups fighting the mall, said, "The S&P bond rating comments crystallize why a 'yes' vote on Aug. 20 will certainly help the town finances."

Kyle Sklerov, spokesman for Long Island Jobs Now, a group formed by Taubman to push for the mall, called the S&P report "proof the town has been consistently mismanaged. That's why we believe the taxpayers will vote 'no' on the referendum."

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