Moody's Investors Service has assigned a Aa1 rating to the town of Clarence, N.Y.'s $7.3 million general obligation serial bonds - 2012, and upgraded to Aa1 from Aa2 rating on the town's $8.5 million in outstanding parity debt.
The bonds are secured by a 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 proceeds of the bonds will be used to provide new financing and redeem BAN's maturing on July 13, 2012 for land acquisition and various other equipment purchases and improvements.
The upgrade to the Aa1 long-term rating reflects the town's solid reserve and liquidity levels marked by strong fiscal policies and prudent budget management.
The rating also incorporates the town's growing and wealthy tax base near the city of Buffalo (GO rated A1/stable outlook) and a low debt burden.
Effective January 1, 2012, all local governments in New York State are 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 believes that the risks associated with the property tax cap remain unchanged and does not foresee making a rating distinction between debt not subject to the cap.