New York's Rockland County sells muni bonds to repay taxes
Dec 28 (Reuters) - Rockland County, rated the lowest of all counties in New York state by Moody's Investors Service, sold $5 million of general obligation bonds this week in a bid to improve its cash flow.
The proceeds will be used to pay tax settlements to taxpayers who challenged their assessments. About $3.5 million of the proceeds will go to Pfizer, a big county taxpayer, Stephen DeGroat, Rockland's finance and budget commissioner, said on Friday.
The county is repaying Pfizer what will amount to about $15 million to $20 million over five years, DeGroat said.
This is the second year of the Pfizer settlement. The county is also likely to sell about $5 million of the bonds annually for the next three years as it continues to pay this and other tax settlements, DeGroat said.
"This really helps us in a cash flow sense," he said of the bond sale.
Other New York counties have also sold tax-exempt bonds to pay for tax refunds after taxpayers successfully argued that they were assessed incorrectly.
Nassau, another affluent but fiscally challenged New York City suburban county on Long Island, has sold such bonds worth hundreds of millions of dollars over the past decade.
Moody's rates Rockland lower than all other New York counties at Baa3 -- one notch above speculative -- with a negative outlook.
In June, Standard & Poor's Ratings Services downgraded the county's long-term credit rating two notches to BBB-minus with a negative outlook on concerns about weakening finances and the county's use of its reserves.
The county, just north of the New Jersey state line northwest of New York City, is a wealthy one, with more than 315,000 residents and a median household income of about $84,600.
Like other local governments, Rockland has had to cut expenses and raise revenues because of the recession.
It had been facing a 50 percent property tax hike next year to pay for $33 million in state mandated costs, including $16.7 million in increased pension payments, County Executive C. Scott Vanderhoef has said.
Instead, the county will trim spending in fiscal 2013, which begins Jan. 1, and will hike property taxes by 18.4 percent.
The county ranks sixth in the United States for high property taxes, which consume nearly 7.9 percent of household income in Rockland, according to a report by the New York state comptroller. The national average is just under 2.9 percent.
The county's bonds were offered in serial maturities from 2014 through 2022 with a top yield of 3.33 percent with a 5 percent coupon for bonds due in 2022, according to a draft of the final official statement.