Town Awarded AAA Bond Rating

Standard & Poor's has awarded Westfield a AAA bond rating in advance of Thursday's refinancing of $8.27 million in short term debt into long term debt.

The rating was done in preparation for Thursday's refinancing sale of the general improvement bonds along with an additional $3 million in swimming pool improvement bonds. The town will be using proceeds from the sale to refund bond anticipation notes issued for renovations at Memorial Pool and other capital improvement projects. The new bonds will come due on July 15, 2023. The town's previous bond rating was AA- from Moody's.

In the rating report, S&P cited the town's financial management practices, including maintaining cash reserves as part of the municipal budget, the amount of debt maintained by the town government and compared to debt maintained by the Board of Education and Union County, the town's capital budget, along with other budget practices. The other financial management policies include utilizing a historical trend analysis in writing the annual budget, rarely amending the budget, comparing the budgeted amounts to actual totals, adopting a debt management plan to reduce town debt and the town's professional staff providing regular investment updates to the Town Council.

Last year, S&P assigned a AAA bond rating to Summit in advance of a general obligation bond sale and a AA+/stable bond rating to Union County.

Councilman Sal Caruana, the chairman of the council's finance policy committee, said the report recognizes individuals who have served on the council over the past several decades for creating the town's financial policies. He noted the current environment for ratings from bond agencies.

"The rating agencies have become stricter than ever," he said.

In the bond report, S&P said the AAA rating reflects several aspects of the town including being an affluent, mature community with a good downtown near two major economic bases in Newark and New York, having continued growth in the property tax base, having a solid financial position with cash reserves and having a low debt burden.

The report singles out the downtown as a key part of the community's appeal and why it is a solid investment risk. The report touches on the chain stores downtown along with the historic 99-percent occupancy rate for downtown retail space, noting that the rating has dropped to 94-percent in the current economic conditions. The report also noted that while May 2009 unemployment numbers were at 5.5%, it remains below county, state and national unemployment rates.

The report also cites growth in assessed values of real estate in town. The report says that the assessed value has increased by 3.4% since fiscal year 2004 to $1.896 billion in fiscal year 2009. It noted that there is no concentration in the community among leading taxpayers. The report also said that during the current real estate downturn, home sales have declined but values have remained comparable to recent years.

In the area of cash reserves, the report does note that the town has been spending out of the reserve fund to assist with balancing the budget in recent years, which Caruana has previously noted is a way to avoid raising taxes or making further cuts. S&P wrote in the report that while the reserves have declined that the town has indicated a plan to increase the cash reserves through increasing various fines and fees in the budget.

"The stable outlook reflects the local economy's strength and the town's proximity and participation in the diverse regional economies," the report reads. "The stable outlook also reflects Standard & Poor's expectation that the town will maintain solid financial operations and good reserves, coupled with a manageable debt burden."

Town officials applauded the news with Caruana reading a several minute statement during the council meeting celebrating the bond rating and reiterating fiscal policies he has pushed in the past, including a desire to reduce budgetary expenditures in the current economic climate. He also noted that the AAA bond rating will be a boon to property values and real estate sales as buyers prefer being in communities with high bond ratings. Caruana's comments were echoed by other elected officials.

"In this day and age to get a AAA bond rating in any municipality is a great success," Mayor Andy Skibitsky said.