Fitch Ratings assigns an 'AA' rating to the Town of
Hempstead (the town), New York's $33.9 million public improvement
(serial) bonds, 2006 series A. The bonds are scheduled for competitive
bids on Feb. 16 and will mature serially March 1, 2008-2018. Bond
proceeds will fund various general government capital projects. In
addition, Fitch affirms the 'AA' rating on $288.3 million in
outstanding general obligation bonds. The Rating Outlook is revised to
Positive from Stable.
The 'AA' rating reflects the town's stable and diverse economic base, sound financial operations, moderate debt levels and limited future capital needs. Given the built out nature of the town there are limited tax base development opportunities, however growth in taxable market value has been strong, averaging 8.9% annually over the past five years. The town's future taxing capacity may be somewhat limited by the effects of the countywide 2004 property revaluation, which shifted values away from commercial properties toward single-family and multifamily residential units, thereby increasing the property tax burden on residential taxpayers.
The revision in the Rating Outlook to Positive is based on strong financial management practices including conservative budgeting and a demonstrated ability and willingness to raise recurring revenues. Given the rising interest rate environment declines in mortgage tax revenues are expected. Mortgage tax receipts comprised 13% of revenues across all tax supported operating funds in 2005. Any further rating improvement will be dependent on the town's ability to maintain its financial flexibility in the face of deterioration in economically sensitive mortgage tax receipts.
Situated on Nassau County's south shore just east of New York City, Hempstead accounts for 41% of the county's land area and 57% of its population. At 4.4% in November 2005, the town's unemployment rate remained well below those of the state and nation at 5.3% and 4.8%, respectively. Commercial office and retail activity are prominent and should increase modestly within the town's highly developed land area. Despite the built-out character of the town, growth in market value has been strong. Hempstead residents' wealth levels are above average compared to those of the state and nation and market value per capita is a very strong $126,476.
The town's already strong financial condition has shown improvement over the past several years due to conservative budgeting practices, good cost controls, a willingness to raise recurring revenues and a marked increase in non ad valorem revenues, particularly mortgage tax receipts bolstered by the low interest rate environment. All major tax supported operating funds are healthy, with strong liquidity and reserve levels. Tax supported special revenue funds account for more than one-half of town spending. Unaudited results for 2005 indicate a surplus of approximately $23.6 million across all tax-supported funds, increasing the unreserved fund balance level to 35% of town-wide spending. The town was able to reverse a budgeted $13.3 million drawdown in 2005, primarily due to strong mortgage tax collections, which outperformed budget expectations by $20.1 million.
Overall debt levels are moderate at $2,637 per capita and 2.1% of market value. The town's 2006-2010 capital improvement plan totals a manageable $184 million, with the bulk of spending ($113 million) dedicated to highway improvement projects. The plan will be entirely debt funded with borrowings to equal about $36 million annually. The town amortizes its outstanding debt rapidly with 89% of principal retired within 10 years.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
The 'AA' rating reflects the town's stable and diverse economic base, sound financial operations, moderate debt levels and limited future capital needs. Given the built out nature of the town there are limited tax base development opportunities, however growth in taxable market value has been strong, averaging 8.9% annually over the past five years. The town's future taxing capacity may be somewhat limited by the effects of the countywide 2004 property revaluation, which shifted values away from commercial properties toward single-family and multifamily residential units, thereby increasing the property tax burden on residential taxpayers.
The revision in the Rating Outlook to Positive is based on strong financial management practices including conservative budgeting and a demonstrated ability and willingness to raise recurring revenues. Given the rising interest rate environment declines in mortgage tax revenues are expected. Mortgage tax receipts comprised 13% of revenues across all tax supported operating funds in 2005. Any further rating improvement will be dependent on the town's ability to maintain its financial flexibility in the face of deterioration in economically sensitive mortgage tax receipts.
Situated on Nassau County's south shore just east of New York City, Hempstead accounts for 41% of the county's land area and 57% of its population. At 4.4% in November 2005, the town's unemployment rate remained well below those of the state and nation at 5.3% and 4.8%, respectively. Commercial office and retail activity are prominent and should increase modestly within the town's highly developed land area. Despite the built-out character of the town, growth in market value has been strong. Hempstead residents' wealth levels are above average compared to those of the state and nation and market value per capita is a very strong $126,476.
The town's already strong financial condition has shown improvement over the past several years due to conservative budgeting practices, good cost controls, a willingness to raise recurring revenues and a marked increase in non ad valorem revenues, particularly mortgage tax receipts bolstered by the low interest rate environment. All major tax supported operating funds are healthy, with strong liquidity and reserve levels. Tax supported special revenue funds account for more than one-half of town spending. Unaudited results for 2005 indicate a surplus of approximately $23.6 million across all tax-supported funds, increasing the unreserved fund balance level to 35% of town-wide spending. The town was able to reverse a budgeted $13.3 million drawdown in 2005, primarily due to strong mortgage tax collections, which outperformed budget expectations by $20.1 million.
Overall debt levels are moderate at $2,637 per capita and 2.1% of market value. The town's 2006-2010 capital improvement plan totals a manageable $184 million, with the bulk of spending ($113 million) dedicated to highway improvement projects. The plan will be entirely debt funded with borrowings to equal about $36 million annually. The town amortizes its outstanding debt rapidly with 89% of principal retired within 10 years.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
© 2006 Business Wire
