MONTCLAIR, NJ – Montclair Township Council has announced that Montclair sold $17,720,00 in refunding bonds last week, saving the Township more than $972,000. The successful sale came as a result of Council’s November refunding bond ordinance which provided for advance refunding of 2011 series General Improvement and School bonds.
“The refunding ordinance let us position ourselves to act quickly and refund the bonds for a lower interest rate when market conditions become favorable,” said township CFO Padmaja Rao. “Such significant savings reduce the Township’s borrowing costs, thereby allowing us to allocate the savings to infrastructure projects.”
The successful bond sale comes on the heels of Montclair’s AAA bond rating reaffirmation -- last month Standard & Poor’s Global Rating Services once again assigned its AAA rating to Montclair Township’s 2017 general obligation (GO) improvement refunding bonds and GO school refunding bonds. The agency also affirmed the Township’s “AAA” rating on existing GO debt. This is the second year in a row the Township has received the highest issuer credit rating the financial services company assigns.
“Standard & Poor’s AAA bond rating reaffirmation contributed to making our bonds attractive to buyers,” said CFO Rao.
“Our upgrade from AA- to AAA in a little more than four years is unprecedented,” said Mayor Robert Jackson. “The rating affirmation and bond sale validate our position as a top community nationwide for financial strength, credit worthiness and fiscal management. This could only be achieved through efficient and effective fiscal policies put in place from the beginning of this Council’s tenure, in order to ensure the responsible management of taxpayers’ finances. “
“I’d like to thank S&P for its continued confidence in the Township of Montclair. My Council colleagues and township staff make me truly proud of their hard work toward these remarkable accomplishments. Parenthetically, we anticipate that total debt will be reduced by $3 million in 2017, approaching the once unimaginable $175 million mark,” said the Mayor.
The 'AAA' GO rating reflects S&P’s assessment of the following credit factors, specifically the township's:
- Very strong economy, with access to a broad and diverse metropolitan statistical area (MSA);
- Strong management, with "good" financial policies and practices under our Financial Management Assessment (FMA) methodology;
- Strong budgetary performance, with operating surpluses in the general fund and at the total governmental fund level in fiscal 2016;
- Strong budgetary flexibility, with an available fund balance in fiscal 2016 of 13.5% of operating expenditures;
- Very strong liquidity, with total government available cash at 36.5% of total governmental fund expenditures and3.7x governmental debt service, and access to external liquidity we consider strong;
- Adequate debt and contingent liability position, with debt service carrying charges at 9.9% of expenditures and net direct debt that is 94.7% of total governmental fund revenue, as well as low overall net debt at less than 3% of market value; and
- Strong institutional framework score.
“Clearly this second consecutive year of an exemplary credit rating of Montclair’s bonds is paying off for the Township, thanks to strong financial management and stewardship of taxpayer dollars on the part of the governing body,” said acting Township Manager Timothy Stafford. “Moving forward, Council’s recent resolutions establishing municipal debt and municipal fund balance policies will help ensure the Township’s fiscal strength.”
The municipal debt resolution establishes reduced year-end debt targets through 2023; the municipal fund balance policylimits the surplus fund balance anticipated as revenue in the current annual budget to an amount that is no more than the surplus generated in the preceding fiscal year.