Somehow, for the entirety of its 96-year existence, Fair Haven a town with more than its share of Wall Street workers among its 6,000 or so residents has managed to get by without having to go to the bond market.
Which isn’t to say it hasn’t rung up debt. In fact, even as some of his ferry-riding neighbors were singing the praises of the borough’s fiscal health a few years back, then-mayoral candidate Mike Halfacre was complaining that the cost of debt service on short-term borrowing was eating up nearly a third of the annual budget.
But after two years of what Halfacre characterizes as relentless belt-tightening, the borough is making its first trip to Wall Street next week with a $6.3 million portfolio of paper to sell.
And it’s doing so in the shiny new shoes of an AA+ rating from Standard and Poor’s, which puts the town in the elite company of only about 26 of New Jersey’s 566 municipalities.
With the sale, Halfacre said the borough stands to knock as much as
$200,000 off its annual debt-service nut. That’s $200,000 that can be
spent on modest-sized capital projects or banked to help pay for a big
one down the line, he says.
“It’s part of the transition to pay-as-you go,” he tells redbankgreen.
The bonds would be used to refinance almost 90 percent of the town’s debt, which is now in the form of bank anticipation notes, or short-term bank borrowings that are set to new interest rates each year.
The 10-year notes are being sold at a time when the borough has no major capital plans on its books, having wrapped up a multi-year road program that left the worst of the town’s streets in good shape, Halfacre says.
Coming off a presentation to the borough council earlier this week by the town’s bond counsel, Halfacre calls the rating “a big deal” and quotes from S&P on his blog:
In our opinion, Fair Havens financial position has improved significantly over the past two years. In fiscal 2007, the current fund generated an operating surplus that added $1 million to fund balance. The resulting unreserved current fund balance of $1.98 million is, in our opinion, a very strong 27% of expenditures. Unaudited fiscal 2008 results indicate a second consecutive operating surplus in excess of $1.0 million, bringing the unreserved current fund balance to $3.2 million, or roughly 38% of unaudited expenditures. The Borough attributes its marked financial improvement to a new management team that took office at the beginning of fiscal 2007 and made it a priority to have a structurally sound and lean budget and build and maintain reserves at a level at about 30% of expenditures.
Halfacre gives credit for the the borough’s financial health largely to Councilman Jon Peters, head of the council’s finance committee, as well as borough Administrator Mary Howell and CFO Denise Jwadzik.
As for particular money-saving or revenue-generating moves, he cites bringing the engineering operation in-house after years of contracting it out (“the gift that keeps on giving,” Halfacre calls the change) and the cell tower deal that this year will put $83,000 in rental income into the town coffers.
“That’s almost a penny off the tax rate right there,” he says.
So what’s the outlook for taxes?
The budget for the coming year is all but set, Halfacre says, and depending on how much cash the state returns to the borough from franchise and other taxes collected, could remain flat or even decrease.
Last year, the borough managed to reduce the municipal (non-school, non-county) tax rate by a penny per $100 of property valuation, even after Gov. Jon Corzine’s administration slashed so-called state aid by $140,000.
