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TOB Put On ‘Credit Watch’

Recent S&P Report May Affect Referendum

With the referendum on the Town of Oyster Bay’s proposed sale of its DPW complex to Simon Property Group and its partners, the Albanese Organization and Castagna Properties, set for August 20, a recent development concerning the Town’s bond rating has generated more concerns.

Late last month, Standard & Poor’s Rating Services placed the Town of Oyster Bay on “credit watch.” S&P analyst Lindsay Wilhelm said the move “reflects our view that if a voter referendum for a property sale fails to pass, or the sale does not otherwise proceed as planned, the town could have difficulty meeting its financial obligations if it further fails to receive state approval to issue deficit bonds on a timely basis.”

The Town of Oyster Bay responded with an official statement that “any statement about the potential of a compromised cash flow is premature,” and the most recent report from Standard & Poor’s “reiterates what we’ve known to be true with respect to our financial recovery process—while maintaining our ‘A’ general obligation credit rating.”

The statement said the town has “developed a plan to see us through these difficult times, and to help keep the burden off the backs of our already hard-pressed tax-paying residents.  The plan included cutting expenses, enacting a retirement incentive to reduce (our) The Town’s payroll and obtaining helpful union concessions, all of which have been completed.”

The town’s 2013 budget identified the surplus land for sale as the DPW Complex in Syosset, which “…is reaching the end of its useful life.”

“If this land sale is approved by the residents through a ‘yes’ vote, the property will provide a significant cash infusion to the Town, which will help stabilize the Town’s cash reserve position,” the Town said in its statement.  “There are ongoing negotiations on a variety of fronts to bring in a significant cash infusion.”

The Town of Oyster Bay Democratic Committee released a reaction statement via e-mail, opening with: “The fiscal insanity in the Town of Oyster Bay continues.”

“The gross mismanagement and incompetence of Team Venditto has led to two bond downgrades in the last 18 months and S&P is now threatening a third if the upcoming referendum on the sale of public property fails,” the committee said.  “Democratic candidate for supervisor John Capobianco has been sounding the alarm for months, pointing out that Town of Oyster Bay is nearly $1 billion in debt; taxes have been raised 49 percent in the last few years and the cost of borrowing has become prohibitive as a result of the recent bond downgrades.”

Spokesperson for Long Island Jobs Now, Kyle Sklerov, an organization incorporated by Taubman Centers Inc., indicated the downgrade is “proof of what we already know: the Town of Oyster Bay has been consistently mismanaged and poorly run.”

“That’s why quality of life in Oyster Bay keeps declining, it’s why taxes keep going up, and it’s no wonder the Town is now facing over $800 million in debt.  What’s clear from all of this is that the Town’s judgment and ethics simply cannot be trusted—by anyone,” Sklerov said.  “That’s why we believe the taxpayers will vote ‘no’ on the referendum and send a strong message to these people.”

Taubman Centers Inc. is seeking to build a mall on the former Cerro Wire property, adjacent to the DPW site.  According to Taubman, the company would pay more than the Simon Property Group for the land, and has collected signatures on a petition to force a referendum vote.