CNBNews

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: