Miles for Myeloma 5K Walk/Run April 28
NO TAX MONEY TO RESTORE CHURCHES, NJ HIGH COURT RULES

BAD FINANCIAL NEWS! Gloucester City's Debt Outlook Given a Negative Rating by S&P Global

 
William E. Cleary Sr. | CNBNewsnet Screen Shot 2017-07-27 at 3.38.59
 
 
 "The outlook revision reflects a deterioration in Gloucester City's overall credit profile following two years of diminished performance combined with weakening projected buying incomes."  
 
~Tiffany Tribbitt, S&P Global Ratings Credit Analyst
 
 
 
 
GLOUCESTER CITY NJ (April 19, 2018)(CNBNewsnet)—S&P Global Ratings announced
on April 2, that  Gloucester City’s General Obligation (GO) Debt outlook has been revised to Negative from Stable on weakening P 2018 GO Bonds Rated #AA-#.
 
When asked about the City's rating being downgraded, Paul Tully, certified financial planner from Eagle Wealth Strategies, West Deptford said, "This is not good news, but not all that unusual either. The state of NJ has had multiple downgrades in recent years. Basically it means that S&P feels the city's finances have weakened enough to call into question the city's ability to meet its obligations on various debt that it issued and that is still owed."

 

 
Yesterday, (Wednesday) CNBNews contacted Jack Lippsett, Gloucester City Administrator and Frank Robertson, the City's Chief Financial Advisor for a comment on the S&P Global Ratings announcement. As of this posting we still haven't received a response to our request.
 
"The outlook revision reflects a deterioration in Gloucester City's overall credit profile following two years of diminished performance combined with weakening projected buying incomes," said S&P Global Ratings credit analyst Tiffany Tribbitt. 
 
"We expect Gloucester City will return to its historically strong financial performance while seeing gradual growth in its economic base, which supports the current rating level," Ms. Tribbitt added. "However, should the city be unable to return to consistently strong operations and rebuild its fund balances, we could lower the rating. Furthermore, if economic metrics remain at current levels despite ongoing economic development, we could lower the rating.
          
"Gloucester City's full-faith-and-credit pledge and its agreement to *levy ad valorem property taxes without limitation as to rate or amount secure the series 2018 bonds and existing GO debt. Officials intend to use proceeds to permanently finance bond anticipation notes (BANs) outstanding, which funded various capital projects in the city. The taxable bonds will permanently finance BANs outstanding that funded the acquisition, remediation, and redevelopment of an apartment building project.
 
          
"The rating reflects our opinion of the following factors for Gloucester: Weak economy; Adequate management; Adequate budgetary performance; Strong budgetary flexibility; Very strong liquidity; Weak debt and contingent liability position; and Strong institutional framework score. 
          
"The negative outlook reflects our opinion there is at least a one-in-three chance we could lower the rating over our two-year outlook period. If the city's budgetary performance continues to weaken, causing liquidity or budgetary flexibility to deteriorate, we could lower the rating. We could also lower the rating if Gloucester City's economic indicators continue to weaken despite ongoing development in the city. However, if performance improves, leading to increases in fund balances, combined with no further deterioration to economic metrics, we could revise the outlook to stable."
 
NJ Media in a October 2016 article titled "Is your town considered a high credit risk? If so, it could hurt you", reported that a bad credit rating for your community can affect all taxpayers who live there.
 
According to the article, "A town that downgrades to a higher risk rating in their municipal bonds means that the town must pay higher interest rates to investors to compensate for the higher risk. Basically, taxpayers would have to pay more to attract investors to invest in their town."
 
In 2006, before the James administration took control of Gloucester City, taxpayers had a bond debt of $6 million. Mayor James and his minions have been in control of the city finances since 2007. CNBNews reported in July 2013, the last time we visited the city's bond and loan debt, taxpayers owed  $35,195,900.
 
EDITOR'S NOTE: We plan on submitting an Open Public Records Act (OPRA)request in the near future for the city's total loan and bond debt as of April 2018. However, in the meantime we took the time to scan the list of ordinances on the Gloucester City website that date from 2014 up to 2018.
 
Beginning in 2014 the City floated two bond ordinances totaling $1,464,000; in 2015 their bonds totaled $1,164,500; in 2016 the bonds totaled $5,311,730; and in 2017 the totaled amount was $609,840 for a grand total of $8,135,070. So far in 2018 mayor and council have controlled their spending but there is still 8 months left. Until we submit our OPRA request we wont know if that number above is correct since the city's site was missing the year 2013. The city may also have some outstanding loans that we are not aware of.  
 
 
 
 
*****
 
*Ad valorem (Latin for "according to the value") taxes are levied solely as a percentage of a property's market value without regard to quantity or intrinsic value. For instance, if the market value of a 2,000 square-foot home is $100,000, the ad valorem tax levied will be based solely on the home's $100,000 value, regardless of its relative physical size. Municipal property taxes are an example of an ad valorem tax. (Source http://www.investinganswers.com)
 

Comments