A Long Island township is close to paying off two deficit finance bonds issued after a financial crisis a decade ago.
Len Bernard, budget officer for the Town of East Hampton, New York, said last week that a $9.5 million deficit bond was paid off last fall eight years after it was issued in 2010. A second $11.7 million bond issuance in 2011 is also 80% paid off, Bernard told the East Hampton town board during his June 4 presentation.
The borrowings were needed because of a financial crisis following years of mismanagement. The town’s general obligation bonds were downgraded three notches from 2008 to 2010 down to a low of A1 by Moody’s Investors Service, but have since been upgraded up to triple-A thanks to conservative budgeting practices that boosted reserves.
“As we approach these repayment milestones, Moody’s I think was impressed by the fact that as we were paying off the deficit bonds, we were maintaining our good fund balance which was created by borrowing the money to begin with,” said Bernard, who noted that the town was devoting around $2.5 million annually toward paying off the debt. “I don’t think the town gets enough credit for being able to get out of the mess it was in and retain the kind of fund balances that Moody’s really wanted to see.”
East Hampton issued $5.5 million of refunding serial bonds this past April in a negotiated sale won by Fidelity Capital Markets. Moody’s assigned the deal a triple-A rating and projected that the town would have roughly $65.65 million of outstanding debt post-sale.
East Hampton is the easternmost township on Long Island and encompasses around 70 square miles. The town, which is part of the Hamptons area that draws numerous summer tourists, had an estimated 2016 population of 21,888, according to Moody’s.
