Riverhead Town’s credit rating remains unchanged.
Moody’s Investors Service assigned an Aa3 rating to the town’s $5.6 million public improvement serial bonds and the refunding of $34.55 million in existing debt.
The new serial bonds finance improvements for the Riverhead Water District.
Moody’s downgraded Riverhead from an Aa2 to an Aa3 rating in 2015.
“The Aa3 issuer rating reflects a below-average but stable financial position that will likely improve in the near-term with the recent sale of the Enterprise Park at Calverton,” Moody’s Investors Service said in a credit opinion dated Nov. 14. “The rating also reflects the town’s modestly sized tax base with above-average debt and fixed costs,” the company said.
The pending sale of EPCAL is expected to significantly improve the financial flexibility of the town, according to the opinion. It will also replenish the general fund reserves to the level required by the town’s adopted policy, 15 percent of annual revenues. The town has not been in compliance with that policy for at least five years, Moody’s noted.
Other than the significant development planned for EPCAL, the remainder of the tax base has slowly begun recovering from the recession, the credit ratings agency said.
“Management notes that downtown revitalization and repurposing of old big box stores are ongoing. The town’s two largest employers, and the primary drivers of the local economy, Tanger Outlet Mall and Northwell Peconic Bay Medical Center remains stable. Given the somewhat rural nature of the town’s tax base, wealth levels are average nationally but below-average for the region. The town has above average exposure to environmental risks, specifically hurricanes and rising sea levels. Management continues to proactively mitigate these risks,” Moody’s said in the credit opinion.
The credit rating assigned by a credit ratings agency like Moody’s affects the interest rates at which municipalities can sell bonds to investors — the better the rating, the lower the interest rate paid by the municipality.
The bonds were sold on Nov. 20, Supervisor Laura Jens-Smith said.
The $5.6 million new serial bonds were sold at a 2.55 percent interest rate for a 12-year term. The $34 million, 15-year bonds were sold at 3 percent.
“We had a strong response in the market and we’re very happy with the interest rates,” Jens-Smith said.