ROTTERDAM — The town of Rotterdam has had its credit rating upgraded from A1 to Aa3 by Moody's Investor Services, a major credit rating agency.
The improved rating should mean lower interest rates when the town borrows money. The town currently has $12.5 million in general obligation debt, so the new rating could also benefit the town if it refinances that debt.
Moody's also gave the town a "positive" outlook, meaning a further credit upgrade is possible in the next couple of years. Such ratings are typically issued annually.
"Overall, it's a big positive for the town," Town Supervisor Steven A. Tommasone said.
The upgrade "reflects the town's strong and improving financial position supported by conservative budgeting and expenditure controls, as well as the town's above-average income levels with significant local employment opportunities and manageable, fixed costs," Moodys said in a ratings statement on Tuesday.
Moody's considers an A1 grade the highest on its "upper-medium" ratings, and a low risk investment for bond investors. An Aa3 rating is at the bottom of Moody's "high quality" investment rating, which tops out at Aa1.
Moody's also said it considered the stability of the town's major employers and taxpayers, which include General Electric, SI Group and Golub Corp.
"The positive outlook reflects our expectation that the town's conservative budgeting and careful expense management will result in further growth in financial reserves," the statement continued.
The Moody's review goes back to 2012, and Tommasone, who took office in 2016, said some of the credit for conservative budgeting should go to former Supervisor Harry Buffardi and his deputy, Wayne Calder, as well as to town department heads.
"The departments themselves, whether the police department or town administration or public works, they seem to always be under-budget," Tommasone said. "The philosophy is we're not going to spend money unless we have to. Our professional civil servants have done a very good job for the town."
Tommasone said there are no immediate plans for additional borrowing, though the $4.2 million in bond anticipation notes taken out for the Hamburg Street sewer project could be converted into long-term bonds if interest rates are favorable.
The 2018 town budget totals about $24 million.