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Gloucester City's Bonds and Loans Total $24,266,276; City's Bond Rating A+

 By Bill Cleary

(cnbnews.net)Last week Moody's Investors Service said the Borough of Collingswood was unwise about how it financed one of its highly praised revitalization projects known as the LumberYard.  After the story broke in area newspapers a number of people asked about Gloucester City’s bond rating. Some people pointed to the City’s purchase of Chatham Square in 2008 suggesting that it too was a bad idea by Gloucester City officials. 

For those not familiar with the Chatham Square project the City passed a resolution to purchase the 100-unit complex in December 2007. The cost $4.3 million. For several years the City was tied up in Court trying to settle legal problems with the tenants, some of who were living in the apartments rent free. In 2010 the City hired Orens Brothers of Philadelphia to develop those apartments into 50 townhouses. Once those papers were signed the developer borrowed $1.1 million from the City’s UDAG program, to be used for construction.  The outside of eight townhouses are finished however the inside of those units remain gutted. The properties will be finished as they are purchased.  Not one property has been sold. Sixteen of the 100 apartments are still being rented. The City hired Labbree Realty as their rental agent on a commission basis.

As for Gloucester City’s bond rating, City Administrator Jack Lipsett said, “the City’s rating is A+. In fact the City actually got an increase in its rating which is unheard of in today’s market.” 

Curious to know how much Gloucester City has in outstanding bonds/loans the question was put forth to Frank Robertson, the City’s Chief Financial Officer.

Robertson responded with a written statement, 

 

"The Water Plant 2008 issue of $4,765,000 Bonds and $4,562,738 Loan are included in the balances of $5,710,000 for New Jersey Environmental Infrastructure Trust (NJEIT) Bonds and $4,663,339 NJEIT Loans. Robertson noted the NJEIT financing results in a 50% savings to the City in interest expense, since the loan portion is 0% interest and the bond portion is at market rates.

 

"The issued debt balances presently open are:

  •        Recent Bond Issue                                 $7,075,000  (see breakdown bottom of article-includes 2011 and prior projects)
  •        NJEIT Bonds                                           5,710,000
  •        NJEIT Loans                                           4,663,339
  •        Bond Anticipation Note                            4,290,000 (Chatham Square Acquisition)
  •        Bond Anticipation Note                               570,000 (Freedom Pier Walkway-will be reimbursed from Green Acres)
  •        Green Trust Loans                                   1,334,281
  •        EDA Infrastructure Loans                                20,400
  •        NJ Water Resources Loans                             603,256

 

      TOTAL                                                          $24,266,276

 

 

The $5,000,000 note issued by the Camden County Improvement Authority for Southport Improvements and guaranteed by the City is not included in the above numbers. 

Robertson said the City’s bond anticipation note is rolled over each year, with a minimum principal reduction  required after 3 years. Bond anticipation notes must be paid off or permanent debt (bonds) issued  to replace them after 10 years..

 

    Other debt issuances through State agencies have predetermined payoff schedules.

 

    In 2011, the City will pay down General Capital Fund debt principal of $511,714.44 and Water and Sewer Utility Capital Fund debt principal of $952,437.67.

 

 Municipalities are permitted to issue debt up to 3.50% of their “equalized valuation basis”, which is a 3-year average of the assumed true value of taxable property within the municipality. For Gloucester City, the debt limit is $23,316,324.05.

 

    The City still has a borrowing capacity of $13,289,813.62. The City’s percentage of net debt to equalized valuation basis is 1.50%. 

 

Earlier this year the City passed a $7,075,000 million bond to used for various items/projects. The bond is to be paid off over 10 years and the net interest cost to the City is 2.85% said Robertson.

 

A breakdown of the 2011 bond reveals:  

 

Improvements to be Included in 2011 Bond Issue

 

 

 

 

 

 

 

 

 

 

Included in

 

 

Ordinance No.:

Improvement Description

Bond Issue

 

 

General Capital:

 

 

 

 

20-2005:

 

 

 

 

  (a)

Acquisition of Various Vehicles

$ 131,000.00

 

 

  (b)

Acquisition of Fire Pumper Rescue Unit

  250,000.00 

 

 

  (c)

Acquisition of Fire Department Equipment

  18,000.00 

 

 

  (g)

Reconditioning of Jogging Track

  5,000.00 

 

 

17-2002:

 

 

 

 

  (a)

Emergency Generators

  65,000.00 

 

 

  (b)

Emergency Alert System

  65,000.00 

 

 

24-2005

Redevelopment Ordinance (Amspec)

  1,896,000.00 

 

 

12-2006

Reconditioning of 2 Emergency Response Vehicles

  90,000.00 

 

 

23-2010

Acquisition of a Front End Loader

  63,650.00 

 

 

6-2011:

 

 

 

 

  (a)

Reconstruction/Resurfacing Monmouth Street

  1,081,540.00 

 

 

  (b)

Resurfacing of Various City Streets

  142,500.00 

 

 

  (c)

Acquisition of Sport Utility Vehicle for Police

  33,250.00 

 

 

  (e)

Acquisition of a Street Sweeper for Public Works

  33,060.00 

 

 

  (f)

Acquisition of a Bucket Truck for Public Works

  76,000.00 

 

 

  (g)

Acquisition/Installation Bay Doors for Fire Department

  28,500.00 

 

 

  (h)

Acquisition/Installation HVAC System for Library

  161,500.00 

 

 

 

 

 

 

 

Utility Capital:

 

 

 

 

21-2005:

 

 

 

 

  (a)

Acquisition of Various Vehicles

  90,000.00 

 

 

  (d)

Reconstruction/Improvements to Various City Facilities

  160,000.00 

 

 

25-2006:

 

 

 

 

  (a)

Replacement Water/Sewer Mains Essex Street Phase I

  110,000.00 

 

 

  (b)

Extension of Water and Sewer Mains

  190,000.00 

 

 

  (c)

Reconstruction of Water and Sewer Mains

  623,767.00 

 

 

2-2007

Design New Water Treatment Plant

  337,383.00 

 

 

24-2006:

 

 

 

 

  (a)

Redevelopment-Replace Various Water/Sewer Mains

  490,000.00 

 

 

24-2010

Acquisition of a Utility Vehicle

  74,100.00 

 

 

7-2011:

 

 

 

 

  (a)

Improvements to Chestnut Street Pumping Station

  266,000.00 

 

 

  (b)

Improvements to Broadway Water Tank

  593,750.00 

 

 

 

 

 

 

 

Total for 2011 Bond Issue

 

$ 7,075,000.00

 

 

 

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