The Town of Oyster Bay's credit rating was restored by Moody's Investors Service, at investment grade, a year after the firm removed the rating of New York's fourth largest township citing to a lack of audited financial statements.
Oyster Bay was assigned the lowest investment grade rating of Baa3 Tuesday, with a stable outlook, ahead of planned $29.4 million bond sale slated for Thursday.
That's three notches below the A3 rating Moody's assigned the town at the time of the January 2016 withdrawal.
Longtime town supervisor John Venditto resigned on Jan. 4 after he was indicted on federal corruption charges after the town allegedly provided a Long Island restaurateur $20 million in loan guarantees in exchange for bribes and benefits.
Moody's analyst Cristin Jacoby noted that the town's operating fund balance deficit jumped 15% in 2015 to $73.7 million due largely to "poor budgeting practices," unexpected costs and transitioning to a new accounting software that didn't work property in 2014 "leading to very poor transparency."
S&P Global Ratings slashed Oyster Bay two notches to junk-level BB-plus in April citing weak financial management that led to negative fund balances.
Town officials said next week's $29.4 million bond sale will be used to redeem outstanding bond anticipation notes, pay for various litigation settlements and provide retirement incentive payments. The large suburban municipality, which is part of Long Island's Nassau County, had a population of 298,766, according to the 2015 American Community Survey.
Moody's Jacoby noted that while Oyster Bay has demonstrated "recently improved operating results," uncertainty remains surrounding pending litigation related to loan guarantees and what the priorities will be for the new town supervisor.
Town Councilman Joseph Muscarella has filled in as acting supervisor since Venditto's resignation.
"The ship is continuing to move in the right direction and we remain focused upon the continued improvement of our fiscal position," said Muscarella in a statement. "I believe we are on track to come out of this stronger than ever."
