WHITE PLAINS, NY (November 28, 2022) — Moody’s Investors Service announced on November 21, 2022 it had assigned an AA+ rating to the County of Westchester’s (NY) General Obligation Bonds – 2022 Series A, 2022 Series B (Green Bonds) and 2022 Series C (Federally Taxable). The bonds have anticipated par values of $142.3 million (Series A), $27.4 million (Series B) and $71.6 million (Series C).
Moody’s also affirmed the county’s AA+ issuer rating, the AA+ rating on the county’s outstanding general obligation limited tax (GOLT) bonds and the AA+ appropriation lease rating. The issuer rating is equivalent to the county’s hypothetical general obligation unlimited tax (GOULT) rating; there is no debt associated with the GOULT security. The outlook is stable.
The AA+ rating assignment reflects the county’s diverse and resilient economy, which is highlighted by strong resident wealth, a sizeable corporate base, and healthy full value per capita. The county’s economy also continues to benefit from its proximity to New York City, which pre- pandemic, allowed it to serve as a desired hub for workers commuting into the city. Since the pandemic, the county has benefitted from county commuters who now allocate more time working and spending within the county. In addition, the post-pandemic changes to work patterns have further boosted the competition for housing in what was already a very competitive residential market. Though this strength will be somewhat dampened by heightened interest rates, the county’s comparative value relative to Manhattan will likely allow it to maintain a resilient housing market.
The rating also reflects financial performance that has continued as anticipated at the time of Moody’s last review in November 2021, when Moody’s expected balanced operations and moderate surpluses for fiscal 2021 and 2022. This expectation has been realized as a result of a combination of conservative revenue budgeting, disciplined expenditure controls and the receipt of federal monies.
Consequently, the county’s fund and cash balance ratios, while still well below the median for the sector, nonetheless reflect continued improvement and will likely remain stable in fiscal 2023.
The county’s fixed costs inclusive of debt, pensions and OPEB remain manageable despite modestly above the average as a percentage of operating revenue.
RATING OUTLOOK
The stable outlook reflects the likelihood that the county will continue to produce balanced operations in 2022 and 2023 resulting in moderate increases to cash and reserves. The outlook also anticipates that the county’s economy and debt profile will remain consistent with the rating despite potential headwinds in the form of rising interest rates and elevated inflation, which could slow the housing market and increase the costs associated with the county’s sizeable capital program.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Consistent operating surpluses
- Structural balance across all funds
- Material and sustained growth of cash and reserves
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Substantive deterioration of reserves or cash
- Inability to maintain operational balance across funds
LEGAL SECURITY
All general obligation debt is secured by a general obligation pledge as limited by New York State’s legislative cap on property taxes (Chapter 97 (Part A) of the Laws of the State of New York, 2011) as well as the pledge of the county’s faith and credit.
The lease revenue bonds are special obligations of the Dormitory Authority of the State of New York payable solely from revenues, defined as basic rent paid by the county pursuant to a lease agreement, and, if necessary, amounts paid by the state comptroller from specific allotments of state aid. While subject to annual appropriation, Westchester County’s obligation to make lease rental payments, is otherwise absolute and unconditional.
USE OF PROCEEDS
Proceeds of the Series A Bonds will be used to fund a variety of projects including improvement to parks, golf and recreational facilities, rehabilitation of roads and bridges, affordable housing acquisition and improvement, and the renovation of various county buildings among other items.
Proceeds of the Series B Bonds will largely be used to purchase electric and hybrid buses and other equipment.
Proceeds of the Series C bonds provide original financing for various capital improvements including construction, renovation upgrades, modifications, and improvements to certain park assets.
PROFILE
Westchester County contains approximately 1 million residents and 48 municipalities. The county is bordered on the south by New York City, on the east by the State of Connecticut and Long Island Sound, on the north by Putnam County and on the west by the Hudson River. The county estimates that approximately 35% of residents are employed outside of the county, primarily in New York City.
METHODOLOGY
The principal methodology used in these ratings was US Cities and Counties Methodology published in November 2022 and available at https://ratings.moodys.com/api/rmc- documents/386953. Alternatively, please see the Rating Methodologies page on https:// ratings.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 on https://ratings.moodys.com/rating- definitions.
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 issuer/ deal page for the respective issuer on https://ratings.moodys.com.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.