Wellfleet, Massachusetts, the affluent outer Cape Cod beach town that in April lost its AAA credit rating because the high cost of living led to turnover in its financial staff, is tapping the municipal market next week to help finance affordable housing.
(Bloomberg) — Wellfleet, Massachusetts, the affluent outer Cape Cod beach town that in April lost its AAA credit rating because the high cost of living led to turnover in its financial staff, is tapping the municipal market next week to help finance affordable housing.
The town is selling $11.5 million in general obligation bonds, $5.7 million of which are being used to retire notes sold last year to buy the 21-acre Maurice Campground. The town said it intends to maintain the property as a campground for the next six years and then build affordable housing at the site. Many seasonal and local workers rent space at the campground.
The bonds will be offered through a competitive auction on Aug. 29.
Wellfleet, which was incorporated in 1763 and lies 108 miles south of Boston on Cape Cod, has a year-round population of 3,004, which swells to 20,000 during the summer, according to the bond offering documents. Its market value per capita, or the amount of taxable property divided by population, is about $1.2 million. The US median, according to Moody’s Investors Service, is $97,657. Outsize market value per capita like this is relatively common in resort communities with small populations and a preponderance of pricey second homes.
In a table in the offering documents for the notes sold last year to finance acquisition of the campgrounds, only 12% of “owner-occupied housing units” in Wellfleet were valued at under $300,000.
In downgrading Wellfleet to AA+ from AAA in April, S&P Global Ratings said “Wellfleet is an affluent vacation town on outer Cape Cod that has faced persistent challenges in retaining financial management staff. The issue has spanned the last decade due to rapidly rising housing costs, a shortage of public finance professionals on Cape Cod, and its significant commuting distance from the Cape’s larger, year-round population centers.”
“The town was unable to close its books in a timely manner for fiscals 2020 and 2021 due to discrepancies between the accountant, treasurer, and collector’s records that were caused by frequent turnover and lack of interdepartmental coordination,” S&P said.
S&P rated the new issue AA+ and retained a negative outlook on the issuer, saying Wellfleet’s “high cost of living and home prices have challenged affordability for full-time residents, including town employees.”
S&P noted that the town’s administrator, Richard Waldo, who joined in March of 2022, has been restoring financial operations, “including developing plans for a sustainable staffing model and completion of tis 2021 and 2022 audit.”
Calls and emails to Waldo and to interim treasurer Alexander Williams, weren’t returned.
“We’re finding it [turnover] in every part of finance teams,” said Lynne A. Foster-Welsh, vice president of UniBank Fiscal Advisory Services Inc., the town’s financial adviser. “With Covid, it seems like so many people decided to retire,” she said in a call on Wednesday.
“You’re going to see a lot of Cape communities come up with some very innovative ways” to finance affordable housing, she added.
S&P in March said that municipalities across the US were at risk of having their credit ratings downgraded or withdrawn because staffing shortages, particularly of accountants, have delayed the production of financial disclosure documents. According to the Bureau of Labor Statistics, job openings in state and local government in June totaled a record 970,000.
The Massachusetts Division of Local Services prepared a financial management review of the town in January, and said that in the last 10 years, Wellfleet has had six town administrators, six assistant town administrators, nine town accountants, six treasurers, and two collectors.
“Staffing municipal finance positions, particularly on the Cape, has been difficult,” the report said. “The recent spike in housing costs coupled with limited inventory across Cape Cod has only exacerbated a shortage of qualified local municipal officials. Without expanding the potential hiring pool, the current trend of shuffling employees from one community to the next intensifies this problem by creating recurring vacancies.”
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