Rating Action: Moody’s assigns initial Aa3 to West Sayville-Oakdale FD, NY’s GOLT Bonds
Global Credit Research – 11 Dec 2020
New York, December 11, 2020 — Moody’s Investors Service has assigned an initial Aa3 rating to the West Sayville-Oakdale Fire District, New York’s $3.2 million Fire District Serial Bonds – 2020. Concurrently Moody’s has assigned a Aa3 issuer rating. The issuer rating is a represents the equivalent of a general obligation unlimited tax rating and there is no debt associated with this rating.
RATINGS RATIONALE
The Aa3 issuer rating reflects the district’s modestly sized tax base, average wealth levels for the region, sound reserves and minimal debt burden. Governance is a primary driver of the rating and management has historically shown strong budget performance. Coronavirus is not a major driver of the rating given that the majority of the district’s revenues are property taxes which have not seen any delays.
We consider the new issuance to be GOLT because of limitations under New York State law on property tax levy increases. The lack of distinction between the Aa3 GOLT rating and the Aa3 issuer rating reflects the district board’s ability to override the property tax cap and the faith and credit pledge in support of debt service.
RATING OUTLOOK
Moody’s does not usually assign outlooks to local government issuers with this amount of debt outstanding.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
Growth in the district tax base
Material improvement in available reserves
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
Decline in reserves or financial flexibility
Significant increase in debt burden
LEGAL SECURITY
The 2020 bonds are secured by the district’s general obligation pledge as limited by New York State’s Property Tax Cap-Legislation (Chapter 97 (Part A) of the Laws of the State of New York, 2011).
USE OF PROCEEDS
The proceeds will provide new funding for improvements to current buildings and the purchase of vehicles and apparatus.
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PROFILE
The Fire District is located in the Hamlets of West Sayville and Oakdale within Suffolk County (Baa2 negative) and lies wholly within the Town of Islip (Aaa stable). The district is predominantly residential, consisting of primarily single-family homes.
METHODOLOGY
The principal methodology used in these ratings was US Local Government General Obligation Debt published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1230443. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
At least one ESG consideration was material to the credit rating action(s) announced and described above.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Robert Weber Lead Analyst Regional PFG Northeast Moody’s Investors Service, Inc. 7 World Trade Center 250 Greenwich Street New York 10007 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Eva Bogaty Additional Contact Regional PFG West JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody’s Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653
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