It was announced Monday that Standard & Poor's Ratings Services has lowered its long-term rating from 'AAA' to 'AA+' on the Town of Westfield's existing general obligation bonds.
The bonds, general obligations of the town, are secured by a pledge of the full faith and credit of the town for the payment of principal and interest thereon.
Simultaneously, S&P's has assigned its 'AA+' long-term rating to the town's GO . Proceeds from the series 2012 issue will be used to refund two prior bond issuances of the town. At the of the Westfield Town Council, the council approved a special ordinance that will provide for the refunding of outstanding bonds which will save the town and the swimming pool utility just over $182,000
In spite of this savings, the outlook is negative, according to the ratings service.
"The town of Westfield had several years of financial challenges that caused the fund balance to erode," said Standard & Poor's credit analyst Steve Tencer.
The unreserved fund balance, which represents available and expendable resources, has declined 95 percent to $198,494 in fiscal 2011 from $3.89 million in fiscal 2007, according to S&P's data.
"Finances for the town have been strained in our opinion," the attached report states. "The town has experienced a net operating loss each year since 2006."
Tencer referred to Westfield's new , which will generate $1.7 million in anticipated revenue, as "a step in the right direction," but noted that expenses have been exceeding revenue for the past several years.
The new rating will be placed on future bond issuances as well, Tencer confirmed.
Other rating factors include S&P's opinion of the Westfield's:
- Affluent, mature, residential community that has a lower-than-average unemployment rate stemming from access to the diverse labor markets in New Jersey and New York City;
- Extremely strong wealth levels;
- Large tax base with no concentration, although there has been some slight declines;
- low debt burden with limited future capital needs.
Town Administrator Jim Gildea and Councilman Sam Della Fera, finance committee chair, were unavailable for comment.