Supervisor Hails the Town’s Credit Rating Upgrade

Just about six years after East Hampton Town faced down a fiscal crisis caused by mismanagement that left the town with a $27 million deficit, Moody’s Investors Service has upgraded the town’s credit rating to the Aa1 level — a positive stamp of approval only one level below Moody’s top Aaa rating.

“This has been a long time coming,” said Town Supervisor Larry Cantwell at a board meeting on Tuesday. The fallout from financial mismanagement during the McGintee administration, which resulted in the need for the town to borrow more than $20 million to cover the deficit, has been largely resolved due to efforts over the ensuing two administrations, including his own, Mr. Cantwell said.

“The town has controlled expenses, increased nontax revenue, and built surpluses, all while investing in the capital improvements needed to maintain a municipality that functions efficiently and effectively,” the supervisor said in a press release. “In 2003, the town achieved the highest credit rating in its history and, today, based on the work of two administrations, we have restored that rating.”

Two constants over that time, he said, have been Len Bernard, the budget officer, and Charlene Kagel, the town’s chief auditor, who Mr. Cantwell credited for their work. “The financial guidance they’ve given the town had been largely responsible for the technical side of getting the town in shape,” he said — as have the efforts of town department heads and employees.

“Except for the deficit financing that’s still outstanding — half of which will be paid off next year, and the rest three or four years later — it’s pretty much a full recovery for the town, financially,” Mr. Cantwell said. A total of $10.3 million remains to be repaid, according to the Moody’s rating report.

Moody’s said that the upgraded rating, including a shift from a “stable” to a “positive outlook,” “reflects the town’s improving financial position as a result of deficit financing, ongoing conservative budgeting, and strengthened financial management practices.”

The report also cited town strengths that include “sound, conservative management with demonstrated ability to restore financial flexibility.”

“The positive outlook reflects our view that the town’s financial position will continue to improve. The town is expected to maintain a solid financial position due to its conservative budgeting and strong financial management practices with limited future borrowing planned,” the Moody’s report says.

The rating also reflects, said Moody’s, a “moderate debt burden and sizeable tax base characterized by very strong wealth and income levels” in the town.

The credit rating came in advance of the town’s annual debt sale this week, raising some $18 million in bonds and notes, and refinancing bonds that were issued in 2008. The credit rating upgrade was expected to result in better interest rates that would help the town to save approximately $300,000 in interest over the life of the bonds.

Town officials had invited Moody’s representatives to East Hampton last week to brief them on the financial progress East Hampton has made over the last six and a half years. They also gave a tour of sites and facilities operated and recently improved by the town.

“One step below Aaa — the ‘gold standard,’ if you will,” commented Mr. Cantwell on Tuesday. If not for the remaining debt from the previous deficit, he said, the town’s financial rating would likely be on the top rung.