By LINDA MOSS
Standard & Poor’s Global Ratings has reaffirmed the township’s stellar AAA bond rating, which municipal officials claim helped lead to a successful sale of $17.7 million in refunding bonds last week.
The bond sale will end up saving Montclair more than $972,000 in principal and interest, and was the result of the Township Council passing a refunding bond ordinance in November. That ordinance provided for the advance refunding of 2011 series general improvement and school bonds, the municipality said in a press release Tuesday.
“The refunding ordinance let us position ourselves to act quickly and refund the bonds for a lower interest rate when market conditions become favorable,” Township Chief Financial Officer Padmaja Rao said in a statement. “Such significant savings reduce the township’s borrowing costs, thereby allowing us to allocate the savings to infrastructure projects.”
The successful bond sale follows Montclair’s AAA bond rating reaffirmation last month by S&P. In a five-page report dated July 20, the rating agency once again assigned its AAA rating to Montclair Township’s 2017 general-obligation improvement refunding bonds and general-obligation school refunding bonds.
The rating service also affirmed the township’s AAA rating on existing general obligation debt, marking the second year in a row the municipality has received the highest issuer credit rating that the financial services company assigns.
The S&P AAA bond rating reaffirmation helped make the township’s recent bonds attractive to buyers, according to Rao.
The ratings agency cited seven credit factors for reaffirming the AAA rating, including what it called Montclair’s “very strong” economy in the New York metro region that is broad and diverse with “ample” job opportunities.
“Although primarily residential, the township maintains a healthy retail and commercial component,” S&P said. “Although mature, we expect the tax base to increase modestly over the near term as re-development occurs. There are no significant tax appeals pending that could be a detriment to the township’s financial position.
The ratings service also credited the township with having strong financial management policies in place.
“Highlights include conservative budgeting practices that look back to the prior year and monthly monitoring of budget-to-actuals with monthly reports provided to the council,” according to the report.
S&P cited the township’s strong budgetary performance, as well, “with operating surpluses in the general fund and at the total governmental fund level” in 2016.
“We believe that the township is likely to maintain its strong budgetary performance given the current lack of budgetary pressures and its track record of financial sustainability,” S&P said. “Management has continued its conservative budgeting practices that have contributed to its consecutive operating surpluses over the past four fiscal years.”
The township also benefits from “very strong liquidity, with total government available cash at 36.5 percent of total governmental fund expenditures” and an “adequate debt and contingent liability” profile, according to the ratings service.
“Our upgrade from AA- to AAA in a little more than four years is unprecedented,” Mayor Robert Jackson said in a statement.
“The rating affirmation and bond sale validate our position as a top community nationwide for financial strength, credit worthiness and fiscal management,” he said. “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.”
The mayor expects the township’s total debt will be reduced by $3 million in 2017, approaching $175 million.