Montclair's AAA Bond Rating Is Huge Leap For Town, Official Says

MONTCLAIR, NJ — For the third straight year, Standard & Poor’s Global Rating Services has assigned a “AAA” rating to Montclair Township’s 2018 general obligation (GO) improvement and school refunding bonds.

According to a statement from town officials, fewer than three percent of New Jersey’s 565 municipalities have received a AAA rating. Of those that do, “very few are able to maintain the top score for several consecutive years.”

During a presentation to the Town Council last week, Montclair Chief Financial Officer Padmaja Rao said the achievement was a “huge leap” from 2012, when the town had an AA- rating.

“This year’s rating is especially strong because Standard & Poor's awarded us AAA status with a two-year outlook, which means S&P is unlikely to lower the rating over the two-year period,” Rao said.

According to town officials, there’s more good news when it comes to the municipality’s finances: “Through a highly competitive bidding process, the township was able to secure very low interest rates of 2.368% on its 10-year GO bonds and 2.340% on 10-year school refunding bonds.”

Ultimately, Montclair’s AAA bond rating will help the town to lower the cost when it comes to borrowing for capital projects, Rao said.

While earning the S&P designation, the township issued $14,385,000 of bonds: $9,000,000 in General Improvement Bonds, $2,385,000 in Water Utility Bonds and $3,000,000 in school bonds, officials said.

“The reaffirmed AAA rating is a testament to the strong fiscal management policies the council adopted from the time they came to office in 2012,” Rao said.

According to municipal officials, in 2017, the Montclair Township Council “formalized a commitment to conservative fiscal policies” in an attempt to “enhance the township’s financial position and stabilize taxes” by adopting debt management and fund balance resolutions. The first reduces net debt by a minimum of $2,000,000 each year; the second limits the use of the fund balance to the amount generated in the preceding fiscal year.

“The council’s objective was to lower its debt to $170 million by 2019,” Rao said. “It recently lowered outstanding debt to $168 million – a $55 million decrease since 2012 and a goal achieved a year ahead of schedule.”

Standard & Poor's cited the township’s “strong economy, strong management with good financial policies and practices, strong budgetary performance, strong budgetary flexibility, and very strong liquidity” as some of the reasons the agency awarded Montclair its highest rating.

“This prestigious rating is an affirmation that the township manages the taxpayers' money responsibly,” Montclair Mayor Robert Jackson said. “Our unyielding focus on reducing the overall debt while at the same time attending to infrastructure needs, means making smart fiscal decisions to strengthen the local economy to make the community a desirable place to live.”

According to municipal officials, the Town Council is embarking on a plan to “eliminate all debt within a ten- to 15-year period,” which will provide Montclair with additional funds that can be used for infrastructure projects or reducing taxes.

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