MAHOPAC, N.Y. - While the town of Carmel’s per capita income is not strong enough to warrant an Aaa1 rating from Moody’s Financial Services—its highest possible rating—it is too strong to qualify for many grants from the state’s Consolidated Funding Application (CFA) program.
At last week’s Town Board meeting, Supervisor Ken Schmitt announced that the town had once again received an Aa1 rating after he and town comptroller Mary Ann Maxwell recently underwent a review with the financial services company.
“And I am pleased to report that we have maintained our Aa1 rating for the town of Carmel. We will continue to be an Aa 1 community,” he said.
Schmitt read a letter from Moody’s that stated in part, “The community shows growth in its local economy due to ongoing commercial development in the area.
“The town’s resident wealth and income levels are strong compared to the state and nation,” the letter continued. “Overall, its financial position is strong and will remain healthy due to management’s ability to manage operations. The debt burden of the town is low and should remain low despite continuing capital improvement plans, specifically for its water and sewer infrastructure.”
Schmitt noted that Moody’s pleased to hear about the distillery that will be coming to town at the old Guideposts site.
“We spoke about the distillery during the review, and they were pleased to hear a large distillery was opening in the Carmel community,” Schmitt said. “That will do a lot for our local economic development.”
Schmitt noted that while the town’s credit strength is healthy and financially strong, there is still a vexing problem. He said he asked Moody’s agents what the town would have to do to receive the highest rating—Aaa1—and they told him that wouldn’t likely happen.
“We are an Aa1-rated town, which means when we go to borrow money for capital projects, we pay very low interest on our loans, which is great news because it all translates into taxpayer dollars when you are paying back debt service,” he said. “So, I asked, how do we become an Aaa town? They told me the characteristics they look at are tied to wealth indicators. We are not strong enough to be an Aaa-rated community. When they look at wealth per capita, unfortunately, we don’t meet that [wealth indicator criteria]. The towns that get Aaa ratings are towns like Scarsdale that have very strong wealth indicators. So, this Aa rating is really the highest rating the town of Carmel can receive from Moody’s.”
But while the Aa rating is still excellent and means lower interest rates for the town’s bonds and loans, it is also stymieing the town’s ability to obtain grant money.
Councilman Jonathan Schneider noted the apparent irony. “Think about this: Moody’s says we don’t have enough per capita income [for an Aaa rating], yet the CFA (Consolidated Funding Application) just told us again recently that we were rejected [for a grant] because we have too much per capita income to qualify,” he said.
“And therein lies to the problem,” Schmitt said, citing a recently rejected grant application the town made for a repair project for Sewer District No. 5.
Schmitt read the letter from the CFA that rejected the grant application:
“Application 9307 was found ineligible for an engineering planning grant because the town of Carmel’s median household income exceeds the requirements for the grant.”
Schmitt said that the household income threshold should be equal to or less than $90,000 in the mid-Hudson region.
“It’s sad,” Schmitt said of the quandary the town finds itself in.
Schneider said the town has an array of grant applications in the CFA pipeline.
“Unfortunately, we’ve received a lot of rejection notices,” he said.