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MOODY'S ASSIGNS Aa2 TO CROTON-ON-HUDSON'S (NY) $3.1M REFUNDING G.O.BONDS AND $3.8M G.O. BONDS

02 Mar 2011

Aa2 AFFECTS $16.7M OF OUSTANDING G.O.BONDS

Municipality
NY

Moody's Rating

ISSUE

RATING

Public Improvement Refunding Serial Bonds, Series 2011

Aa2

  Sale Amount

$3,135,000

  Expected Sale Date

03/09/11

  Rating Description

General Obligation Refunding Bonds

 

Public Improvement Serial Bonds, Series 2011

Aa2

  Sale Amount

$3,801,500

  Expected Sale Date

03/09/11

  Rating Description

General Obligation

 

Opinion

NEW YORK, Mar 2, 2011 -- Moody's Investors Service has assigned a Aa2 rating to the Village of Croton-on-Hudson's (NY) $3.1 million Public Improvement Refunding Serial Bonds, Series 2011 and $3.8 million Public Improvement Serial Bonds, Series 2011. Concurrently, Moody's has also affirmed the Aa2 rating on the village's $16.7 million of outstanding general obligation debt. The bonds are secured by the village's unlimited tax pledge.

SUMMARY RATINGS RATIONALE

The Aa2 rating reflects the village's well-managed financial operations with ample reserve levels. It also incorporates the village's wealthy, moderately sized economic base, stable taxable values, and a manageable debt position.

Proceeds from the $3.1 million refunding bonds will be used to refinance outstanding maturities of the village's 1999 and 2000 bonds for an estimated net present savings of approximately 6% of par. Proceeds from the $3.8 million general obligation bonds will be used to finance various capital projects as a part of their ongoing capital improvement plan.

STRENGTHS

-Strong, proactive financial management practices which have resulted in sound financial operations and solid reserve levels

-Moderately-sized tax base characterized by strong socioeconomic factors

CHALLENGES

-Maintaining consistent reserve levels amidst ongoing spending pressures

CREDIT OPINION

WELL-MANAGED FINANCIAL OPERATIONS RESULT IN SOLID RESERVE LEVELS

Moody's anticipates that the village's financial position will remain stable, given a history of conservative budgeting of revenues, the maintenance of strong reserve levels, and timely tax increases. Fiscal 2010 resulted in a slight surplus with total General Fund balance increasing to $5.9 million, or 37.7% of General Fund revenues, from $5.6 million, or 35.7% of General Fund revenues. Unreserved General Fund reserves remained steady $4.3 million, or 27.5% of General Fund revenues.

Fiscal 2011 experienced a 2.7% increase in spending (budget-to-budget) mainly driven by increases in contractual personnel costs, health care spending, and pension contributions. Budgetary growth is primarily being funded through an increase in property taxes and a $650,000 appropriation of fund balance. While year-to-date results indicate that revenues, which are primarily comprised of property taxes (64.5% of fiscal 2010 General Fund Revenues), sales taxes (7.2%), and state aid (1.8%), are coming in on budget, management has conservatively estimated replenishment of most, but not all, of the fund balance appropriation due to recent initiatives to rebuild internal reserves for future pension increases. Year-end reserve levels are expected to be within historical norms and remain so as the village continues to address rising health care and pension costs, which Moody's views as an ongoing budgetary pressure over the near term.

AFFLUENT, MODERATELY SIZED ECONOMIC BASE

Moody's expects that growth in the village's moderately-sized $1.32 billion tax base will slow in the near term reflecting the regional housing trend and the sluggish economic outlook. In the longer term, the village will continue to benefit from a large commuter presence and close proximity to employment opportunities in Westchester County (rated Aaa/stable outlook) and New York City (rated Aa2/stable outlook). Taxable values have decreased slightly in the last five years after successful tax appeals that included top tax payer, Hudson National Golf Club, and a change in the calculation of special franchise assessments decreasing the assessed valuation of utility franchises. The village reports no significant outstanding tax appeals at this time. The village's previously strong average annual full value growth of 7% has slowed to a 2.8% over the last five years reflecting a limited number of lots available for development and area market value trends. Income and wealth levels in the village are well above state and national medians and full value is a healthy $160,899.

MANAGEABLE DEBT BURDEN

Moody's expects the village's low direct debt level of 1.4% to remain manageable. The village's overall debt position of 3.2% is slightly above average and represents the village's prorated share of the overlapping obligations of Westchester County, the Town of Cortlandt and the Croton-Harmon Union Free School District (G.O. rated Aa2). The adjusted debt burden decreases to a moderate 2.8% of full value when accounting for state building aid for school district debt. Amortization of principal is average (72% of principal repaid within 10 years) when compared with the state and national medians (77% and 78%, respectively). Future capital and borrowing needs are expected to decrease slightly from historical norms as the village wraps up current projects. Favorably, the village has no exposure to variable rate debt or derivative products.

WHAT COULD MAKE THE RATING GO - UP

-Sizeable growth in the village's underlying tax base stemming from significant commercial or residential redevelopment

-Significant growth in reserves

WHAT COULD MAKE THE RATNG GO - DOWN

-Significant erosion in the village's financial position as evidenced by its financial flexibility and/or reserves

KEY STATISTICS

2000 Population: 7,606

2011 Full valuation: $1.32 billion

2011 Full value per capita: $166,572

Direct debt burden: 1.4%

Overall debt burden (adjusted debt burden): 3.2% (2.8%)

Payout of principal (10 years): 72%

Fiscal 2010 Unreserved General Fund balance: $4.3 million (27.9% of General Fund Reserves)

1999 Per capita income (as a % of State and as a % of US): $39,441 (168.6% and 182.7%)

1999 Median family income (as a % of State and as a % of US): $100,182 (193.8% and 200.2%)

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009.

REGULATORY DISCLOSURES

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

Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit 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 ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service 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 the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Dora Lee
Analyst
Public Finance Group
Moody's Investors Service

Robert Weber
Backup Analyst
Public Finance Group
Moody's Investors Service

Geordie Thompson
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

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


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

MOODY'S ASSIGNS Aa2 TO CROTON-ON-HUDSON'S (NY) $3.1M REFUNDING G.O.BONDS AND $3.8M G.O. BONDS
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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