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.
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.
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.
Town Comptroller Tamara Wright said the forensic audit would mean the auditing firm, Nawrocki Smith LLP, would pore over every invoice with Long Island Management, which runs the golf course for the towns, instead of auditing just a sample of invoices. She also said it was Town Management Services Administrator Richard Blowes’s suggestion to review the accounts.
Mr. Blowes said in an e-mail this week that he did not specifically request a forensic audit, but rather some help to review Poxabogue invoices to ensure they comply with the town’s terms of the contract with Long Island Management. He stressed that it was a normal and standard procedure.
Specifically, the auditors will be reviewing Poxabogue’s balance sheet accounts for the operating budget, which includes but is not limited to, its fund balance. It will also include a review of capital improvements made out of the capital budget, as well as the transfer of balances remaining in the capital account to the operating fund balance, according to Mr. Blowes’s e-mail.
“This is a routine procedure and is certainly not the first time we have had the auditors look at Poxabogue’s records, procedures and our internal controls,” Mr. Blowes wrote.
The Southampton Town Board recently decided to take back from Long Island Golf Management control over the operation of the restaurant at the golf course. That decision came shortly after the town learned that the man slated to open a new eatery there this summer pulled out of the deal with Long Island Golf Management and that, as a result, it was likely no restaurant would operate there this year.
Ms. Throne-Holst said the forensic audit will be performed to ensure everything is in order if and when the town considers purchasing East Hampton’s share of the course. East Hampton town officials have been talking publicly about selling their interests.
The auditing project will be paid for out of Poxabogue reserve funds, which do not affect town’s general fund, the supervisor said. The cost is not to exceed $16,000.
“I guess there’s concern that we just don’t have the in-house resources to do it, and it needs to be done,” she said.
Ms. Throne-Holst said she can’t see the town going through with the purchase, unless it’s done through revenues generated by the town’s Community Preservation Fund and the land set aside for preservation. She said the idea of buying East Hampton’s share is being driven, in part, by a fear that it could end up in the hands of some other organization.
“Well, the concern would be that ... we would lose a level of control and ownership there,” she said.
Rohma Abbas on Aug 25, 2010