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Aug 25, 2010 11:26 AMPublication: The Southampton Press

Moody's upgrades Southampton Town bond rating

Aug 25, 2010 11:26 AM

Southampton Town’s bond rating has been upgraded by Moody’s Investors Service to the second-highest possible rating offered by the agency—marking a turnaround in the town’s financial state from earlier this year, when the agency lowered its rating.

The agency, which is based in Manhattan, upgraded the town’s rating from Aa2 to Aa1.

Town Comptroller Tamara Wright took the podium at the Town Board meeting on Tuesday night to announce the news. The rating was issued on Monday, just days after the town issued $22.8 million in bonds, according to Ms. Wright. The bonds are for previously approved projects from 2008 and 2009, and some from even earlier than that, and the new credit rating will be applied to those.

In a report outlining the new rating, dated August 23, Moody’s credits the town’s recent 2009 audited financial statements along with a new financial management team that has taken a proactive approach to correcting accounting problems as reasons for the stronger rating.

The result of the stronger bond rating means the town can attain better interest rates on its bonds, thus making it cheaper to borrow money.

“What it means for the taxpayer is that the amount of interest that’s going to be paid on these bonds basically supported all of these capital projects that the taxpayers are benefiting from— parks, community centers, buses ... that the interest going to be paid is less, so in theory the taxes will be less,” Ms. Wright said.

Meanwhile, town officials are anticipating nearly $700,000 in savings from “refunding” several town bonds floated between 1997 and 2002.

Refunding a bond is akin to refinancing a mortgage on a house, according to Ms. Wright. Because interest rates are now lower, the town will save money on the debt it pays off through the life of the bond.

The majority of the estimated savings, some $500,000, will be achieved in 2012, she said.

Space Study

Southampton Town Hall employees apparently don’t think too much of the space formerly occupied by the Town Justice Court, according to a preliminary report drawn up by consultants Chaleff and Rogers, the firm hired to assess how to best allocate the basement space.

Based on interviews with town employees and department heads, consultant Paul Rogers reported at a Southampton Town Board work session on August 19 that most workers viewed the former court space negatively, associating it with mold, flooding, air quality issues and unpleasant odors—concerns that surfaced before the court moved to Hampton Bays. The report also noted that while many of those issues have been resolved, additional renovations should be performed if the space is to be used for offices, including eliminating walls to open up the area and improving the ventilation system.

Chaleff and Rogers was hired by the town in March, for an amount not to exceed $28,800, to help assess how to allocate the lower level space.

The report also offered other suggestions for spots in need of improvement throughout the building. It notes that the third floor, a converted attic, has a number of shortcomings, lacking an elevator and bathrooms. Natural light is limited, it notes, and in some spaces, there is an uncomfortably low ceiling.

Overall issues with indoor air quality, heating and cooling and the town’s electrical system were also general concerns outlined in the preliminary report.

During his presentation to the Town Board, Mr. Rogers asked the Town Board members to consider whether they might be still interested in a 2006 proposal to relocate the town government’s operations to Hampton Bays. His report, too, urges town officials to consider the long-term usefulness of what is now Town Hall, given its limitations and current condition. The answer to that question, Mr. Rogers suggested, would dictate the level of renovations and repairs officials should make to the current building.

Town Supervisor Anna Throne-Holst said this week that she is in favor of moving forward with renovations. She noted that although an approximately $75 million project to relocate Town Hall to Hampton Bays was in the works years ago, it is not one that can be accomplished now, due to financial constraints.

“And what the question becomes for the Town Board is do we want to look at something like this and invest just a fraction of the money and make this a well usable space for well into the future, rather than just kind of limp by with a mirage of a $75 million project on Jackson Avenue?” she said.

The report offered no specific estimates or specifications for renovations to Town Hall.

Poxabogue To Be Audited

The Southampton Town Board on Tuesday agreed to commission the town’s outside auditors to conduct a forensic audit of the Poxabogue Golf Course’s invoices, in part to prepare for the possibility that Southampton Town might buy East Hampton Town’s share of the property, according to Town Supervisor Anna Throne-Holst.

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Let's hear it for Supervisor Anna Throne-Holst and Comptroller Tamara Wright! This upgrade means they'll be able to sell bonds paying 2.5% interest instead of 3.5%. Do the math -- that's a major saving for the Town. This new administration is making big progress in getting out of the hole in which the Republicans left us.
By Turkey Bridge (1943), Quiogue on Aug 25, 10 11:53 AM
TB: "This new administration is making big progress in getting out of the hole in which the Republicans left us."

You are such a Dem drum-beater, George, and you know how I love to call you on that sort of thing, but this time I think it's justified. Heaney's administration left us in the financial sewer which I frankly didn't expect to see any positive movement on for quite some time.

Now, if ATH can lower my taxes, I'll lead the charge to make her Empress-for-Life.
By Frank Wheeler (1811), Northampton on Aug 25, 10 4:25 PM
Hey, I'll do the math for you -- on this present issue of $22.8 million in bonds, the saving will be $228,000, and that's just for these bonds, but the benefits will continue. Given the Republican money disasters, it's been a long time since Southampton has had anything to cheer about in the financial area.
By Turkey Bridge (1943), Quiogue on Aug 25, 10 12:00 PM
Just keep in mind the 2009 FInancials that are referenced here focus on the spending and cuts made by the Kabot Administration which had noting to do with ATH. Get your time frame right Turkey George!
By ridiculous (214), hampton bays on Aug 25, 10 9:46 PM
3 members liked this comment
Good point and Anna did keep some worthless Town employees that Kabot had slated for the chopping block! Do that Math Turkey and you will see there really isn't that much to gobble about!
By ICE (1214), Southhampton on Aug 25, 10 11:26 PM
1 member liked this comment
BTW, I voted for Anna, but that doesn't mean I am willing to give unwarranted praise.
By ICE (1214), Southhampton on Aug 25, 10 11:28 PM
1 member liked this comment
Is correct it was the cuts that Kabot made in the 2010 budget and during 2009 that now put Miss Anna on easy street.
Turkey is so blinded with his support for ATH he can't get his facts straight and is trying to give credit to her and Tamara.
As usually he is spinning his wheels for the wrong person.
By reg rep (408), Southampton on Aug 26, 10 7:49 PM
Let's go ahead and grant everything that ridiculous and ICE and reg rep are saying, even though it's a very big stretch. Let's canonize Saint Linda for saving us from financial disaster (conveniently forgetting her long service in the bad old days as top assistant to the Supervisor and Town Board member). But hey, who caused that financial disaster? If not Ms. Kabot, then it was the Republicans who preceded her, i.e., the Heaney crowd, the same crowd that hasn't forgiven Saint Linda for beating ...more
By Turkey Bridge (1943), Quiogue on Aug 30, 10 11:06 AM

Virtually nothing in the 2009 audited statements, achieved through the efforts of Linda Kabot,were from Anna's initiatives. Ditto for the 2010 budget and financials. The only contribution Anna made re this year's budget was to increase it $1.8 Million putting the Town further in the hole.

A large part of Moody's improved ratings were due to the reigning in of Heaney's (Anna's ally) out of control budget achieved totally by Kabot and opposed and undermined by ATH. Now ATH's supporters ...more
By Obbservant (443), southampton on Aug 26, 10 4:27 AM
In politics, if it happens on your watch, you take credit or blame for it, depending whether it's good or bad. This thing happened on Anna's watch so she gets the points. Do it any other way and you're arguing forever.
By clam pie (161), Westhampton on Aug 26, 10 10:30 AM

That's brilliant Clam Pie. Never let documented facts get in the way.

I get it. This near Depression accelerated in the first half of Obama's first year and the Deficits, accumulating since Bush's second year in Office after inheriting huge surpluses. Since this Great Recession peaked in Obama's watch, ergo, it must all be Obama's fault! It happened on his watch! Just brilliant.
By Obbservant (443), southampton on Aug 26, 10 11:05 AM
1 member liked this comment

That's brilliant Clam Pie. Never let documented facts get in the way.

I get it. This near Depression accelerated in the first half of Obama's first year and the Deficits, accumulating since Bush's second year in Office after inheriting huge surpluses. Since this Great Recession peaked in Obama's watch, ergo, it must all be Obama's fault! It happened on his watch! Just brilliant.
By Obbservant (443), southampton on Aug 26, 10 11:05 AM
I'm not saying that's how it should be, but that's how it is, because people don't take the time to look behind the bare facts, and that's how they'll see it. Are they right? No, but that's the reality of politics.
By clam pie (161), Westhampton on Aug 26, 10 2:17 PM
These 2009 financial statements that people are talking about -- they're the same financials that Chris Nuzzi just cast the sole vote not to accept. What's going on there? What's Mr. Nuzzi's problem with these numbers?
By fidelis (199), westhampton beach on Aug 26, 10 10:37 AM
It's not Anna Thorne- Holst administration that made the needed cuts to get the financial crisis back in order, It was Linda Kabot's administration..Let's give the credit where the credit is due.
By sayitaintsojoe (100), Westhampton on Aug 26, 10 11:48 AM
1 member liked this comment
The bonds were sold , then the rating was upgraded, now the bonds are worth more overnight? Who exactly bought these bonds and did they know of the impending upgrade? FRAUD???
By deKooning (97), southampton on Aug 27, 10 10:57 AM
no, not exactly. there is a rating issued almost every year. and usually will occur after the independent audit. the fact that the Town bonded just when the audit was issued and the credit rating was given was a coincidence.

After the national financial meltdown I don't think Moodys or S&P will be giving ratings lightly. Considering they have downgraded entire countries the fact that Southampton has the second highest rating speaks volumes and I don't even know if anyone has the highest ...more
By ridiculous (214), hampton bays on Aug 27, 10 11:16 AM
I think they are giving em lightly... then profiting heavily at our expense. Is it possible that we need a new government in our country? Present government is simply not equipped to deal with the excessive finance capital that is floating around.
By deKooning (97), southampton on Aug 30, 10 9:46 AM
This story and issue is completely bogus. Southampton did not receive an upgrade. Last April Moody's recalibrated all the accounts using an international standard. As a result almost all accounts in the United States were bumped up because the standard Moody's was using was measured against a new lower international standard. It is all explained on the Moody's website. At that point Southampton was given a Aa1 rating (almost every Town and school district on Long Island, including Suffolk County ...more
By mrmako61 (148), southampton on Aug 30, 10 8:31 PM
Still waiting for a response from someone who was sucked in by this bogus story and claim by the administration in Southampton.
By mrmako61 (148), southampton on Sep 1, 10 6:36 PM

From my recollection this upgrade was mentioned back in July and, unless I’m missing something, there’s nothing here that says this happened last week.

And I guess you’re right about the recalibration in the spring, but that doesn’t mean that the upgrade was a given. That just doesn’t make sense. I mean, do you think Moody’s is just going to give out a better rating just for the hell out it without reviewing anything? Especially with all the audits and financial news coming out of ...more
By Bella Wood (4), Hampton Bays on Sep 2, 10 11:01 AM
Bella Wood..."that doesn't mean the upgrade was a given. That just doesn't make sense...." You do not know of what you speak, or do not understand the recalibration and how it was done. The upgrade was a given. To prove that point I looked at some other Towns. East Hampton, with all its mismanagement, $20 million deficit, former budget officer under arrest and facing an indictment,........received an upgrade as a result of the recalibration. That fact alone illustrates the bogus nature of ...more
By mrmako61 (148), southampton on Sep 2, 10 8:30 PM
mrmako61 is right !!
ATH and her buddy Tamara cooked up the whole scheme to make themselves look good and make the Republicans look bad...a page from the Obama school of politics.
Moody's upgraded ALL governments in April, the TOS issued bonds and Moody's, of course, affirmed the rating they gave a few months ago.
Check out this link to the BOND BUYER article to get the real facts..
By lucklucy (9), Hampton Bays on Sep 2, 10 11:09 PM
well, I guess I'm stupid...because if the upgrade was given after the review of the audits and the upgrade was a given, then why even waste time reviewing the audits in the first place? and if the financial state of a town doesn't matter, such as EH getting bumped up, then why even have a grading system? it's like giving out good grades to students regardless of how well they do.... and if the upgrade is no big deal would that be the same if it was downgraded again?
By Bella Wood (4), Hampton Bays on Sep 3, 10 9:04 AM
I'm not arguing with you Bella...the upgrade was not given as a result of areview of any audits -- it was given last April and did not take into consideration anything except the Town's current rating at the time and where it should be placed using a new recalibrated scale effecting all municipalities, towns and other rated agencies and businesses.

If it receives a down grade in the future due to a review of operations it would be a down grade from where it was placed on the new scale ...more
By mrmako61 (148), southampton on Sep 4, 10 4:08 PM