Moody’s Investors Service upgraded the Village of Floral Park’s bond rating to Aa2 from Aa3 this month, citing the village’s “improved financial position” and “manageable debt burden” of $8.7 million.
The village’s conservative fiscal management has helped balance its budgets and maintain a healthy reserve despite pressure from the state, indicating it is highly capable of paying off its debt, Moody’s said in its Aug. 8 report.
Getting the third-highest bond rating from the credit agency means the village can finance regular road repairs and other capital projects at better interest rates and at lower costs to taxpayers, village Administrator Gerry Bambrick said.
“We’ve been getting great interest rates, but this should affect it positively every time we renew,” Bambrick said.
Debt payments accounted for 3.4 percent of village expenditures in 2015, a “manageable” number, Moody’s said.
The bulk of Floral Park’s debt comes from a $6.75 million bond for its renovated pool complex, which opened last year. Other outstanding debt includes regular five-year bonds for equipment purchases and a small portion of a $2 million bond used to purchase the village’s Centennial Hall in 2005, Bambrick said.
The higher bond rating will get the village lower interest rates for bond anticipation notes, the short-term bonds it uses to fund road repair projects, Bambrick said. The village took out this year’s bond anticipation notes at an interest rate just above 1 percent, he said.
Moody’s gave Floral Park a “positive outlook” on its Aa3 bond rating, which it had for at least three years, when the village took out bonds for its pool project in 2014, Bambrick said. The upgrade indicates the village has stayed financially strong since then, he said.
The rating upgrade shows the village is being fiscally responsible, which is “always a positive for any taxpayer, given the taxes that we’re paying,” said Nadia Holubnyczyj-Ortiz, president of Floral Park’s Hillcrest Civic Association.
Floral Park has a stable, wealthy tax base and has shown it can boost revenue if necessary by overriding the state cap on property tax increases, as it has in four of the last five years, Moody’s said.
The tax base does not have much room to grow and property values have followed a regional downward trend, but “modest new construction is expected to stabilize the built out suburban community,” Moody’s said.
A nine-home subdivision on Cisney Avenue is under construction, and a 36-apartment, two-building complex is being planned for South Tyson Avenue at the former site of Koenig’s Restaurant.
Such brick-and-mortar construction in the village’s tax base and $5.5 million reserve fund could lead to another bond upgrade, Moody’s wrote.
There’s a “difficult balance” between the financial benefits of new residential development and residents’ concerns about congestion, Holubnyczyj-Ortiz said.
“It’s either don’t develop it and raise the taxes or develop it and maybe not raise the taxes so quickly,” she said. “… But definitely residents are concerned that this area’s becoming more and more congested. Everyone’s becoming very possessive of their space.”
