Moody's Investors Service said it has downgraded to Baa1 from A3 the rating on the village of Amityville, N.Y.'s $10.2 million long-term general obligation debt and placed it on review for possible downgrade.
The outstanding debt is secured by the village's general obligation pledge as limited by the Property Tax Cap - Legislation (Chapter 97 (Part A) of the Laws of the State of New York, 2011).
The downgrade reflects the village's very weak financial position including limited liquidity and the growing reliance on short-term borrowing for cash flow needs with concern of market access. The rating also factors in the village's tax base that has been relatively stable until a moderate decline in 2012, with potential further erosion going forward. The rating also reflects the village's manageable debt burden, along with its above-average socio-economic indicators.
The review for downgrade reflects the village's reduced liquidity position and need to access the capital markets by the end of the fiscal year for short-term financing to pay ongoing operations, including a possible budget note, depending on the timing of a FEMA reimbursement.
Also, the fiscal 2014 budget is pending adoption which will indicate the village's ability to address its reduced financial position going forward.
