On August 15, 2013, the village of Washingtonville, N.Y. (GO rated A2) was delinquent on a principal and interest payment due on its 2006 public improvement bonds, according to Moody's Investors Service.
The village was notified of its failed payment by the Depository Trust Company (DTC) on August 16, 2013. The village did not realize it owed a payment that day due to organizational issues within the management team. Because of administrative turnover, a new management team assumed office on May 7, 2013. No additional explanation for the oversight has been provided by the village.
The village wired sufficient funds to DTC to make the payment on August 20, 2013, three business days late. Moody's believes the payment delay was caused by an administrative error by the village, not by an impairment of the village's ability to pay.
The lack of awareness of an impending debt service date reveals a managerial weakness that may place downward pressure on the village's A2 rating. Moody's plans to monitor the village's financial operations going forward to evaluate whether management practices are consistent with the A2 rating category.
Following this event, the village established an internal debt service notification system to ensure that it makes timely payments of debt service going forward. Moody's believes a recurrence is unlikely given the remedial steps taken and heightened awareness by the village.
