Rating Action: Moody's upgrades to Aaa Town of Hempstead, NY's ratingsGlobal Credit Research - 31 Aug 2022New York, August 31, 2022 -- Moody's Investors Service has assigned a Aaa rating to the Town of Hempstead, NY's estimated $57 million Public Improvement Serial Bonds - 2022 Series A $26 million Public Improvement Serial Bonds - 2022 Series B and $1.2 million Public Improvement Serial Bonds - 2022 Series C. Concurrently, Moody's upgrades to Aaa from Aa1 the town's issuer rating and general obligation limited tax (GOLT) rating. The issuer rating is equivalent to the town's hypothetical general obligation unlimited tax (GOULT) rating; there is no debt associated with the GOULT security. The town will have approximately $522 million in GOLT bonds outstanding post sale. The outlook is stable.RATINGS RATIONALEThe upgrade to Aaa reflects a significantly improved financial position. Governance is a driver of the rating given conservative budgeting and strong operational oversight. The rating additionally factors a substantial tax base located next to New York City that has seen a significant rebound in economic vitality. Local housing prices are at an all-time high while the labor force continues to expand and the unemployment rate declines. The town has an elevated long-term liability profile, largely driven by post-employment health care benefits, but fixed costs have remained manageable. Hempstead is exposed to the possibility of severe storms, such as hurricanes. This exposure is mitigated by strong management as well as a long history of state and federal assistance.We consider the outstanding debt to be GOLT because of limitations under New York State law on property tax levy increases. The lack of distinction between the Aaa GOLT rating and the Aaa issuer rating reflects the town board's ability to override the property tax cap and the faith and credit pledge in support of debt service.RATING OUTLOOKThe stable outlook reflects the expectation that reserves and liquidity will remain sound over the next two years given strong management.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGSN/AFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGSFailure to replenish reserves used to balance the budgetSignificant increase in long-term liabilitiesLEGAL SECURITYPayment of principal and interest on the town's general obligation bonds is backed by the town's faith and credit supported by the town's authority to levy such ad valorem property taxes as may be necessary to pay the bonds, 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).USE OF PROCEEDSThe Series A bonds will provide financing for various capital projects across the townThe Series B bonds will permanently finance bond anticipation notes issued to pay for a litigationThe Series C bonds will provide financing for the Franklin Square Water District.PROFILEThe town is situated in the southwest and south central portions of Nassau County (A1 positive), and covers 127 square miles representing approximately 41% of Nassau County's total land area. The town's boundaries are formed by The City of New York (Aa2 stable) to the west, the Town of North Hempstead (Aaa stable) to the north, the Town of Oyster Bay (A1 stable) to the east, and the City of Long Beach (Baa2 positive) and the Atlantic Ocean to the south. The town is the most populous town in the State, with a population of 766,765 as of 2020, according to the American Community Survey. The town accounts for approximately 57% of the total population of the county. There are 22 incorporated villages in the town and 33 unincorporated areas.METHODOLOGYThe principal methodology used in these ratings was US Local Government General Obligation Debt published in January 2021 and available at https://ratings.moodys.com/api/rmc-documents/70015. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor 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. 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