Borough’s high bond rating, conservative financial approach results in tremendous savings
(Avalon, NJ)—The Borough of Avalon will save in excess of $87,000 over the next three budgetary years thanks to the refinancing of a 2001 bond issuance. Avalon was able to refinance the bonds and save taxpayers’ money thanks in part to an exemplary AA+ bond rating that the Borough was recently awarded by Standard and Poor’s Rating Services, a division of the McGraw-Hill Companies, Inc.
“Avalon’s conservative approaching to spending and our ‘pay as you go’ philosophy allowed us to enjoy these tremendous savings”, said Avalon Mayor Martin Pagliughi. “Every community in the state of New Jersey continually searches for ways to save money and generate new income. By refinancing old debt at lower interest rates, Avalon will save taxpayers significant money thanks to our careful approach to spending”.
Avalon made an application to the Local Finance Board in pursuit of the refinancing. The Local Finance Board requires that each refunding result in a net present value savings of at least 3%. These savings must be net of any costs of the issuance. The Borough waited for an optimal time to go into the market and as a result found net present value savings of 4.206% or a total of $87,178 in true budgetary savings from 2012 through 2014.
Roosevelt & Cross Incorporated of New York, New York was the company who served as underwriters for the pricing of the general improvement bonds issue. Pricing occurred on Tuesday, June 28th and the financing will close on July 20, 2011. McManimon and Scotland, L.L.C. of Newark, NJ and Ford-Scott & Associates, L.L.C. of Ocean City, NJ serve as the Borough’s bond counsel and auditor, respectfully.
Earlier this month Avalon learned that it achieved a rating of AA+ rating from Standard and Poor’s Rating Services. The AA+ rating is just one level lower than the highest grade that can be earned.
The Borough of Avalon is allowed to bond nearly $300 million which represents 3½% of the equalized valuation of the property within the Borough for various projects. Currently the Borough’s net debt as a percentage of equalized valuation of 0.44% or approximately $36.3 million.
“The entire Avalon Borough Council provides a tremendous amount of leadership in our community on every issue, including finances”, Pagliughi said. “Council’s finance committee led by council members Chuck Covington and Dr. Nancy Hudanich provide a great deal of oversight on every financial issue in our community”.