Aaa RATING AFFECTS $17.6 MILLION OF OUTSTANDING DEBT, INCLUDING CURRENT ISSUE
Public Improvement (Serial) Bonds, Series 2011
Expected Sale Date
NEW YORK, Sep 9, 2011 -- Correction to rating.
Moody's Investors Service has assigned a Aaa rating to the Village
of Scarsdale's (NY) $1 million Public Improvement (Serial) Bonds, Series 2011.
At this time, Moody's has also affirmed the Aaa rating on $17.6 million of
outstanding debt secured by the village's unlimited property tax pledge.
Proceeds of the bonds will finance improvements to the town's existing public
SUMMARY RATING RATIONALE
The Aaa rating reflects the village's strong and well managed
financial position, large suburban tax base with substantially above
average resident wealth levels and manageable burden.
Effective January 1, 2012, all local governments in New York State will be
subject to a property tax cap which limits levy increases to 2% or the rate of
inflation, whichever is lower. While school district debt has been exempted from
the cap, debt has not been exempted for all other local governments.
Moody's will continue to treat all general obligation debt issued in New York as
an unlimited tax pledge through the end of the year. We continue to research
what the impact of the new property tax cap will be on debt issued by nonschool
districts after it goes into effect next year. For more information regarding
the property tax cap please reference the Special Comment "New York State's
Property Tax Cap will Further Pressure Local Government Finances; School
District's Most Impacted" released July 5, 2011.
Strong socioeconomic profile
Proximity to major employment centers
Managing within an environment of constrained revenue growth
DETAILED CREDIT DISCUSSION
FINANCIAL POSITION EXPECTED TO REMAIN SOUND DESPITE PLANNED USE OF RESERVES
Moody's expects the village's financial position to remain healthy over the
near-term given its conservative budgeting practices and prudent use of
reserves. Three years of operating surpluses resulted in an increase in General
Fund balance to a strong $10.3 million at the close of fiscal 2011(unaudited),
or 23.1% of revenues. These reserves are largely represented by cash, which the
village utilizes to finance of capital needs. Transfers from the General Fund to
the Capital Fund totaled $.9 million and $1.4 million In fiscal years 2010 and
To maintain service levels, for fiscal 2012 the village increased the tax rate
5.5% and appropriated $1 million of fund balance to offset a 1.1% decline in
property values and a substantial increase in the state required retirement
contribution. The outlook for fiscal 2013, assuming no change in service
levels, includes another $1 million appropriation of General Fund balance and a
tax cap override. The village also has the option of reducing cash financing of
LARGE SUBURBAN TAX BASE WITH SIGNIFICANTLY ABOVE AVERAGE RESIDENT WEALTH LEVELS
The village's $7.7 billion tax base benefits from proximity to New York City (GO
rated Aa2/stable outlook) and to other established employment centers within
Westchester County (GO rated Aaa/negative outlook). The village experienced a
10.8% decline in the full value of real property in fiscal 2011, due, in part,
to a change in the state equalization rate which adjusts assessed values
to market values. The village is in the initial stages of a revaluation of real
property to bring assessed values in line with market values. Properties were
last reassessed in 1969.
The village is required to make the county and school district whole on their
property tax levies. Collections remain strong, approximating 99% annually.
Wealth and income indices markedly exceed suburban New York and national medians
(2010 per capita income was 328% of the state) and the village's full value per
capita, at $434,247 in 2011, is among the highest in the state. Also,
unemployment levels in Westchester County remain at 6.8%, below state and
national levels, as of June 2011.
MANAGEABLE DEBT BURDEN
Moody's expects the village's below average overall debt burden (1.5% of full
valuation) to remain manageable given the town's ongoing pay-as-you-go capital
expenditures and limited borrowing plans. On a direct basis the village's direct
debt burden is a nominal 0.2% of full value. Debt service represented a modest
3.4% of fiscal 2011 unaudited expenditures. Near term borrowing plans
are relatively modest and include storm drainage improvements.
WHAT COULD MAKE THIS RATING GO DOWN
Substantial reduction in operating reserves
2010 Population: 17,709
2011 Full value: $7.7 billion
Full value per capita: $434,247
Direct debt burden: 0.2%
2011 General Fund balance (unaudited): $10.3 million (23.1% of General Fund
2010 General Fund balance: $9.2 million (21.7% of General Fund revenues)
2010 Per Capita Income: $100,428 (327.8% of NY, 371.4% of U.S.)
2010 Median Family Income: $208,750 (327.8% of NY, 405.9% of U.S)
Post-Sale General Obligation debt: $17.6 million
The principal methodology used in this rating was General Obligation
Bonds Issued by U.S. Local Governments published in October 2009. Please see the
Credit Policy page on www.moodys.com for a copy of this methodology.
For ratings issued on a program, series or category/class of debt, this
announcement provides relevant regulatory disclosures in relation to each rating
of a subsequently issued bond or note of the same series or category/class of
debt or pursuant to a program for which the ratings are derived exclusively from
existing ratings in accordance with Moody's rating practices. For ratings issued
on a support provider, this announcement provides relevant regulatory
disclosures in relation to the rating action on the support provider and in
relation to each particular rating action for securities that derive their
credit ratings from the support provider's credit rating. For provisional
ratings, this announcement provides relevant regulatory disclosures in
relation to the provisional rating assigned, and in relation to a
definitive rating that may be assigned subsequent to the final issuance of the
debt, in each case where the transaction structure and terms have not
changed prior to the assignment of the definitive rating in a manner that
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involved in the ratings, public information.
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Public Finance Group
Moody's Investors Service
Public Finance Group
Moody's Investors Service
Journalists: (212) 553-0376
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CORRECTION TO SEPT. 9, 2011 RELEASE: MOODY'S ASSIGNS Aaa RATING TO THE VILLAGE OF SCARSDALE'S $1 MILLION PUBLIC IMPROVEMENT(SERIAL) BONDS, 2011
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