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MARGATE Standard and Poors has increased the city's long-term bond rating to AA+/Stable from AA. It is the second-highest rating available, Chief Financial Officer Lisa McLaughlin said at the July 18 Board of Commissioners meeting.
McLaughlin said the improved rating, which could reduce the amount of interest the city pays on future bond issues, is a testament to the work of the commissioners, department heads city employees and residents.
McLaughlin said 11% of municipalities in NJ have the top rating, including Avalon in South Jersey, while 20% had AA+, including Longport and Cinnaminson, she said.
You all should be very proud we were able to accomplish this, McLaughlin said, recommending the city strive for the best rating of AAA. The city's last bond rating increase was in 2017 when it improved to AA from AA-.
It's because of our strong economy, our financial management, stability, increasing surplus and ratables, growth in our community, budgetary performance and other factors that we were able to achieve this, McLaughlin said.
In its rationale for issuing the new rating, S&P Ratings Direct said the action reflects the organization's view of substantial income indicators as a wealthy, coastal community, noting the city has increased its reserves to insulate its financial position against unexpected events.
The city will permanently refinance all short-term bond anticipation notes on July 23, which will allow room for funding various capital improvement projects, including those used for the city and its utility.
S&P cited strong management, good financial policies, strong budgetary performance as some of the reasons for the improved rating.
With 6,083 year-round residents, which rises to 32,000 in summer, the projected per-capita buying income is 185% of the national level. The city had a 2.9% increase in market value to $4.1 billion, and its 4.4% unemployment rate is well below the county average of 5.9%, the report states.
Private investment in the marina district, along with bulkhead improvements and a planned promenade will attract additional development, the report said. Margate is conservative when drafting its budgets, with expenditures reflecting settled employee contracts that account for a large portion of the budget.
After the bond refinancing, the city will have about $50 million in outstanding debt. The city also fully funds its pension contributions, which totaled 7.3% of its general fund.
It is obvious nothing can impair a bond rating more than bonded indebtedness, resident John Sewell said during the public portion of the meeting.
Having several major projects under consideration, such as dredging the back bay and building a boardwalk with no dollar amount attached, could imperil future bond ratings, Sewell said.
If you were fiscally responsible, you would already be getting working estimates, he said.
Sewell also said consolidation to one school would provide revenue to undertake the pipe dreams that are floating about Margate.
McLaughlin said the city is allowed by state law to bond as much as 3.5% of its equalized tax base.
We are at .98% and we can borrow a lot more. We are fiscally responsible when it comes to that, she said.
City Administrator Richard Deaney said he was pleasantly surprised about the rating.
The S&P summary will be posted on the city's website for public review, he said
McLaughlin also reported that the city's tax rate has declined slightly. The new total tax rate is $1.542, and a property owner with the average assessment should see a $50 a year decrease in taxes, she said.
