According to a release issued last week by Moody’s Investors Service, the credit rating agency has upheld Weston’s top Aaa rating with a stable outlook.
Last August, town officials fought Moody’s downgrading of Weston’s financial outlook to “negative” until it was removed in December.
Moody’s had assigned negative outlooks to five Aaa-rated states and 161 Aaa-rated local governments — including Weston — that it said were indirectly linked to the U.S. government after Moody’s assigned a negative outlook to the federal government’s Aaa sovereign rating.
However, on Dec. 7, 2011, Moody’s determined that Weston has an adequate degree of financial independence from the federal government and therefore could be rated higher than the sovereign.
The latest Aaa credit rating and positive outlook, issued April 9, reiterate that recognition of Weston’s continued strong financial footing.
Moody’s assigned a Aaa rating to the town’s $2.8-million 2012 general obligation refunding bonds, as well as on the town’s parity debt, affecting $56.7 million.
According to Moody’s, “The Aaa rating reflects the town’s high wealth levels, sound financial position and low debt levels.”
The stable outlook on Weston’s Aaa rating is due in part to Moody’s determination that the town “has no indirect linkages to the weakened credit profile of the U.S. government.”
Moody’s cited Weston’s “conservative financial management practices, which have resulted in a history of sound reserve levels,” as well as a stable underlying economy due to above-average wealth levels as financial strengths.
Lower assessed property valuations are cited as the town’s primary financial challenge.
Overall, Moody’s determined Weston’s financial position to be sound.
“Moody’s expects Weston’s well managed financial position will remain healthy over the near term given the town’s history of conservative budgeting practices and satisfactory reserve levels guided by a formal fund balance target,” the agency said in its release.
In looking at the town’s total fund balance — $9.8 million, or 14.1% of revenues, of which $8.1 million or 11.7% is unassigned — Moody’s said it was roughly comparable to years past.
Moody’s pointed out that “consistent with the town’s prudent financial management practices, use of reserves in fiscal 2009 and 2010 were limited to capital or unanticipated events.”
Wealth and location
Weston’s location and its overall wealth were cited as positives in Moody’s analysis.
“Moody’s believes that the town’s $3.5 billion tax base will continue to derive strength from its extremely wealthy residential sector and its location in proximity to the New York City (Aa2/stable outlook) metropolitan area. Weston’s prime location, 50 miles from mid-town Manhattan, makes it attractive for commuters to the metropolitan employment centers and fosters value appreciation of the town’s residential sector,” Moody’s said.
“Equalized net grand list declined slightly by 2.4% over the past five years reflecting changes in the state equalization rates as well as softening of the regional housing market. However, taxable grand list continues to experience growth… The town’s wealth indices and housing values far exceed state and national levels… As of the most recent U.S. Census median family income was an impressive $242,361 which equaled 288% of the state-wide median and 339% of the national level,” the Moody’s release stated.
Manageable debt position
Moody’s analysts expect the town’s direct debt burden “to remain manageable given the town’s continued practice of pay-as-you-go capital funding and the absence of future borrowing plans.”
Moody’s also pointed out that Weston’s debt profile consists entirely of fixed rate borrowing and the town has not entered into any derivative agreements.
Moody’s said the two key factors that could make Weston’s credit rating drop would be:
• A protracted structural budget imbalance leading to a depletion of the general fund balance;
• Deterioration of the town’s tax base and demographic profile.