Moody’s Upgrades Asbury Park’s Credit Rating
Investor Service Cites Growing Tax Base And Improved Financials For Low Risk Assessment
The city’s credit rating received its highest upgrade to date from Moody’s Investment Services, Mayor John Moor announced Friday.
Moody’s has given the 1.4 square mile community an A2 rating, meaning Asbury Park now moves into a low credit risk category for investors who purchase municipal bonds.
“In the 14 years that Moody’s has been rating the City, this is the highest ever rating,” Moor said.
When asked to define the importance of the credit rating , Moor likened it to an individual’s credit score.
“The higher your score, the less interest you pay, and the more banks will want to lend you money,” he said. “It is a really huge deal for the City to be upgraded.”
An analysis report provided by the risk assessment agency, credits the City for fostering a healthy tax base growth over the past five years, and for establishing itself as a vibrant Jersey Shore community.
“The city’s waterfront redevelopment area is in high demand and is expected to continue in the near term,” according to the report.
“We would like to congratulate the governing body, and all members of the City staff, on this tremendous accomplishment,” said Brian Cheripka, senior vice president of iStar, the city’s master waterfront redeveloper. “We are also pleased that Moody’s recognizes the positive impact that the successful redevelopment of the waterfront is having on the growth in tax revenue. Our investment in infrastructure, and the development of projects like The Asbury, Monroe and Vive, are now providing stability to the broader community. We are pleased to be part of helping Asbury Park turn the page and eager to continue our partnership with the City.”
The Moody’s report also credits the City for improving its financial position despite reductions in transitional state aid, a contrast to the 2015 Baa2 rating which reflected a heavy reliance on the state aid, a moderately-sized seasonal tax base, high unemployment, and elevated debt and pension obligations.
Transitional Aid is a program that the City has been on for numerous years, City Manager Michael Capabianco said.
“It provides State funds to balance municipal budgets,” he said. “It’s is a three step increase to go from the ratings of Baa2 to A2; an increase that will result in financial savings and include reduced interest rates when obtaining debt financing.”
The City remains challenged by weak wealth indicators and high poverty and unemployment on the westside of the city, according to the report. Additionally, the City’s long-term liabilities, included elevated debt and pensions.
With regard to the Moody’s upgrade in spite of the City’s large amount of debt, Capabianco said it relates to the City’s sewer utility, which “ran at a deficit for numerous years. In 2016 & 2017 it was self-liquidating but Moody’s needs to see three consecutive years of it being in the black before they remove it from their calculation. So while the statement is about the ‘amount of debt outstanding’ it is really that the sewer utility only recently ‘made’ money. And this was done with no increase in the sewer rates or fees.”
Depsite the weak socioeconomic and demographic profile, elevated long term liabilities, and an above average reliance on non property tax revenues, Moody’s did spotlight the City’s ‘proactive nature’ in addressing workforce development through a comprehensive Workforce Development Plan.
“Moody’s response to how we are addressing the socio-economic needs of the City’s residents was positive and demonstrated that we are moving in the right direction,” Councilwoman Eileen Chapman said.
In the end, the Moody’s report credit’s the City’s for managing costs to ensure revenues are matching expenditures.
“While revenues are growing due to development and tourism activity, management is not adding new government spending programs unless there is a true need,” analysts said in the report.
Moor said improving the City’s rating has been a personal goal since he first took office in January 2015.
“All members of the governing body made improving the City’s financial condition priority number one and this upgrade is the fruits of these labors,” Moor said. “What I am most proud of is that Moody’s identified that management is active in managing costs to ensure revenues are matching expenditures.”
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