December 23, 2013 at 12:11 PM
SUMMIT, NJ - The city is issuing a general obligation bond as part of a comprehensive strategy to manage municipal debt. The bond sale follows a thorough analysis by the city of its debt capacity, which provides assurance that the amount of debt acquired by the municipality will be affordable and cost effective.
“The use of long-term debt is a common and often necessary way for a community to address major equipment and infrastructure needs,” explained City Administrator Christopher Cotter. “It is also an effective means of spreading the capital expenditures over the expected life of the projects. ”
Earlier this year, the City of Summit was awarded a AAA bond rating – the highest rating – by analysts Moody’s, Standard & Poor’s and Fitch. The bond rating is considered important because it determines the rate of interest being charged as well as the level of market participation or number of bidders during the sale. Cotter worked closely with City Treasurer and Chief Financial Officer Scott Olsen, as well as the municipality’s financial advisor, bond counsel and auditor, to ensure that all legal requirements are met and the lowest possible interest rate would be obtained.
“We are very pleased that the City’s AAA bond rating has been affirmed by all three of the ratings agencies,” Summit Mayor Ellen Dickson said. “In fact, Standard & Poor’s raised our outlook from stable to good, viewing the Merck campus sale as an opportunity rather than a liability. This is an excellent outcome.”
The sale of general obligation bonds requires approval by Common Council. Summit’s governing body has established guidelines for the use of long-term debt and to demonstrate the municipality’s commitment to full and timely repayment of all debt issued. “Summit continually strives to maintain its excellent bond rating through sound financial management, accounting, financial reporting and increased reserves,” explained Common Council President Rich Madden. “Engaging in the bond sale process is one way that Council is able to help keep taxes lower while allowing the City to maintain the level of improvements that citizens expect.”
The sale of the City of Summit’s general obligation bond is expected to take place in early 2014.