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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

09 Sep 2011

Aaa RATING AFFECTS $17.6 MILLION OF OUTSTANDING DEBT, INCLUDING CURRENT ISSUE

Municipality
NY

Moody's Rating

ISSUE

RATING

Public Improvement (Serial) Bonds, Series 2011

Aaa

  Sale Amount

$1,000,000

  Expected Sale Date

09/15/11

  Rating Description

general obligation

 

Opinion

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 safety building.

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.

STRENGTHS

Strong socioeconomic profile

Proximity to major employment centers

CHALLENGES

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 2011, respectively.

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 capital needs.

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

KEY STATISTICS:

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 revenues)

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.

REGULATORY DISCLOSURES

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 would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following: parties involved in the ratings, public information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Analysts

Patricia McGuigan
Analyst
Public Finance Group
Moody's Investors Service

Geordie Thompson
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
USA

CORRECTION TO SEPT. 9, 2011 RELEASE: MOODY'S ASSIGNS Aaa RATING TO THE VILLAGE OF SCARSDALE'S $1 MILLION PUBLIC IMPROVEMENT(SERIAL) BONDS, 2011
No Related Data.
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