Hempstead's $68M surplus, COVID-19 funding cited in credit upgrade
A Wall Street credit rating agency boosted Hempstead Town's credit rating. Credit: Howard Schnapp
Moody’s Investors Service upgraded the Town of Hempstead’s bond rating, citing a $68 million surplus bolstered by $70 million in federal COVID-19 funding the town is using to cover payroll.
Moody’s last week gave the town its second highest bond rating — upgrading from Aa2 to Aa1 — based on conservative budgeting for the past five years and a surge of suburban housing during the pandemic. The review includes past budgets by the Republican majority under former Supervisors Anthony Santino, a Republican, and Laura Gillen, a Democrat.
The Wall Street credit rating agency cited the $133 million in federal CARES Act money the town received as a major factor in its credit rating. Hempstead was the only town in the country to receive funding based on its population of nearly 800,000, which makes up about 57% of Nassau County’s 1.3 million population. The county received $103 million in CARES money.
The U.S. Treasury inspector general is investigating how the town allocated its funding after Nassau County elected officials raised questions.
"The town will finish the year with a surplus of approximately $68 million, largely the result of having an additional $70 million in CARES Act funding it will use for COVID-related expenses in 2021," Moody's analysts wrote.
Hempstead Supervisor Don Clavin said the town has been transparent in its use of funding with Treasury guidance.
"We made permissible and proper drawdowns to benefit the health and safety of residents, but this is an acknowledgment these funds are benefiting town residents in various ways," Clavin said.
Moody’s noted the town used funding for personal protective equipment, infrastructure, colleges, villages and hospitals, but also put $70 million toward payroll in the general services and sanitation departments.
The town balanced its 2021 budget using $20 million from its reserve fund balance, which is unrelated to CARES funding.
Hempstead Town Board members at its last meeting of the month approved $160 million in bonds, mainly to upgrade water systems to filter 1,4 dioxane and meet state regulations.
Clavin said the town expects to save $1 million in interest payments based on the bond rating upgrade when the town looks to issue bonds this spring.
"I think it signifies the town is in a great financial place under the leadership of myself and all town board members," he said.
Moody’s said they "did not see any immediate credit risks for the town," including the pandemic, which has led to a housing boom. Moody’s also cited developments with the Nassau Coliseum HUB and the new Islanders arena in Belmont, which could bring new jobs, building and sales tax revenue.
"The town's tax base is benefiting from the pandemic as city residents look to move out to the suburbs," according to Moody’s. "This has resulted in a significant turnover in houses with homes staying on the market for very few days and most receiving at or above asking price."
John Asbury is a breaking news and general assignment reporter. He has been with Newsday since 2014 and previously worked at The Press-Enterprise in Riverside, California.
'No one wants to pay more taxes than they need to' Nearly 20,000 Long Islanders work in town and city government. A Newsday investigation found a growing number of them are making more than $200,000 a year. NewsdayTV's Andrew Ehinger reports.
'No one wants to pay more taxes than they need to' Nearly 20,000 Long Islanders work in town and city government. A Newsday investigation found a growing number of them are making more than $200,000 a year. NewsdayTV's Andrew Ehinger reports.
