Town Supervisor Christopher Koetzle’s persistence in reducing fund balance usage appears to have paid off.
Moody’s Investors Services upgraded the Town of Glenville’s general obligation bond rating to Aa3 from A1 on Tuesday, April 3, which moved the town’s rating from the top upper-middle grade rating to the bottom of the high quality ratings. Both ratings hold a low credit risk. The upgrade comes shortly after the Glenville Town Board approved refinancing of public improvement serial bonds from 2002 totaling more than $3.3 million.
“It is going to really impact our about $16.5 million of outstanding debt,” Koetzle said. “It is going to impact the $3.3 million that we are refinancing; we are going to get a lower rate on it, saving more money.”
Through refinancing with the upgraded bond rating, Koetzle estimated the town would save around $320,000 over the remaining 10 years of bond payments.
Koetzle applauded town officials for efforts to control spending during the Town Board’s Wednesday, April 4, meeting. After the meeting, he added the town has never been rated this high.
“What we have done over the past two and a half years are starting to come and pay dividends,” Koetzle said. “Generally speaking, I think they were very happy with the Town of Glenville’s financial position.”
Moody’s report said the rating increase was due to the town’s “strong financial position, favorable tax base and a manageable debt burden with minimal future borrowing planned.” Maintaining and continuing to increase reserves could lead to another upgrade, Moody’s said.
“How our fund balance holds up is going to be really an indicator of what our bond will be,” Koetzle said. “The investments that we’ve made in the town in economic development (figure) into that rating.”
Strengths for the town were holding substantial operating reserves and a “favorable” socioeconomic makeup, according to Moody’s. All three of the town’s fund reserves (highway, general and town outside village) were said to be “relatively stable.” The reserves collectively represent 30 percent of revenues, according to the report.
“Our revenues aren’t where they used to be and they are not going to be,” Koetzle said.
The majority of the town’s revenues come from property taxes at 51 percent, with the county assuring complete collections by providing the town with remittance for delinquencies.
The town’s second largest revenue source comes from sales tax, totaling 27.4 percent of revenue, according to the report. In fiscal 2008, sales tax revenue declined 7.4 percent, but increases over the past three years have returned revenue to near 2008 figures.
Property values have grown by 0.5 percent over the last five years. The town is in a “desirable housing sector” and its proximity to employment opportunities in Schenectady and Albany is a benefit, according to Moody’s.
Operating within the state mandated tax cap was the only challenge marked by Moody’s. The town is projected to have a general fund operating deficit of $181,000 next year.
The upgrade places Glenville’s bond rating equal to Niskayuna’s rating, which was downgraded from Aa2 to Aa3 in October. The reason given for the downgrade was a decline in operating fund reserves over the past three fiscal years with an additional decline in fiscal year 2011. Also, mortgage tax receipts coming in under budget and recent storm damage were a factor in that downgrade.
“It is very rare for an upgrade for a municipality in this environment,” Koetzle said.
