Carteret, NJ – Mayor Dan Reiman’s administration has announced that Moody’s Investor Service has assigned the much coveted A1 rating to the borough’s $4.5 million refunding bonds, as of July 18th, 2011.
“This rating and the Moody’s report reflects our fiscally conservative approach to the local budget and government spending, and the broad range of redevelopment projects under construction in Carteret,” Mayor Reiman stated. “You would be hard pressed to find another town in the state of New Jersey that has actually reduced its debt during this ongoing financial crisis; yet Carteret has. We are very pleased with this upgraded credit rating, as it is a testament to the hard work of our administration and staff.”
Moody’s Investors Service is a credit rating agency which performs international financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized ratings scale. It is one of the “big three” credit rating agencies and has a 40% share of the world market.
The Moody’s report lauds the borough’s “…sound financial position supported by strong management, moderately-sized and expanding tax base…,”  and emphasizes the town’s redevelopment efforts as a defining contributor to its A1 standing:
- Net savings of $231,794.00 over 8 years
- 2.1% net yield interest rate
- Bonds mature in 2018
- This was debt originally issued from 1998-2002, during the construction of the Carteret Library & Community Center
“Moody’s anticipates that Carteret’s financial operations will remain sound given conservative management practices and a history of stable Current Fund balance levels, with more recent fund balance growth driven by larger-than-anticipated Payments in Lieu of Taxes (PILOTs). Between fiscal 2005 and 2008, Current Fund balance remained stable at an average of 7.7% of Current Fund revenues with little variation. Positive financial operations in fiscal 2009 augmented Current Fund balance for a third consecutive year by a significant $767,000, after the replenishment of $2.5 million of surplus utilized as revenue. The primary drivers includes larger-than-anticipated PILOTs ($622,000), as well as over-performing construction code fees ($185,000) and other fees and permits ($199,000) following an increase in fees. In fiscal 2010 (unaudited) financial operations posted another large operating surplus of $900,000 after the replenishment of $2.5 million of fund balance appropriated as revenue. Current Fund balance increased to $4.3 million, or 10.8% of revenues from $3.4 million in fiscal 2009, or 8.9% of revenues. The positive financial performance was driven largely by $1.3 million of miscellaneous revenues in excess of budget and approximately $500,000 of added and omitted taxes, which are generated by increases in the ratable tax base.
The borough’s fiscal 2011 (December 31) budget remains essentially flat over the prior year’s budget, and includes a $2.5 million surplus appropriation (as in previous years). Notably, the anticipated municipal property tax levy decreased modestly over the previous year ($200,000). Management reports that growth in assessed valuation and PILOT payments have increased revenues sufficiently to offset fiscal 2011 expenditures, which were controlled by employee attrition, without the need for property tax levy growth. Given year-to-date results, management projects near-replenishment of appropriated fund balance at year-end. Future rating reviews will factor the borough’s ability to maintain reserves at least at current levels in a more stringent regulatory environment. The borough maintains a solid property tax collection rate (97.5% in 2010). Favorably, Carteret does not defer the payment of the school tax levy and did not defer 50% of its 2009 pension contribution, as was allowed by the state.” 
“This study reflects a financially conservative use of surplus, and a stabilized budget that we’ve pledged ourselves to since the beginning of this administration,” Mayor Reiman added. “When we engage in local improvements and new projects, we’re going the extra mile to bring in outside funding sources and making sound capital investments, rather than further committing our town to debt as has been the habit of previous administrations. This has been seen within our stabilized tax rate, and has certainly been manifested within our commercial corridors where new businesses have contributed both to our revitalization and our revenue streams.”
The Moody’s report suggests that the borough’s $2.6 billion tax base has an increasing potential for growth given improved transportation access and multiple redevelopment projects underway.
Moody’s noted Carteret’s increased integration with the regional infrastructure and business community as playing a prominent role in its improved credit rating. The recently completed Turnpike Interchange 12 now allows for greater immediate access to the New Jersey Turnpike, and to and from the town’s business districts and industrial areas. Consumer incentives such as those allowed by the Urban Enterprise Zone program (UEZ), and progress in the Borough’s many redevelopment zones have also been cited as key factors in building Carteret’s appeal to investors as well as consumers. I-PORT 12, the Washington Avenue Redevelopment Zone, and the Carteret Waterfront were major focuses of Moody’s analysis.
KEY STATISTICS FOR CARTERET:
- 2008 Population: 23,367 (12.7% increase since 2000)
- Total debt has been reduced by over $2 million since 2005
- % debt to credit limit has been reduced from 68% to 30%
- % debt to valuation has been reduced from 2.4% to less than 1%
- Annual debt service has been reduced from 3.8 million to 2.5 million
- The boroughs available credit has increased from 37 million to 93 million
- 2010 Equalized value: $2.6 billion
- 2009 Equalized value per capita (as % of NJ and US): $110,807
- 1999 Per Capita Income (as % of NJ and US): $18,967 (70% and 88%)
- 1999 Median Family Income (as % of NJ and US): $54,609 (84% and 109%)
- Direct debt burden: 1.3%
- Payout of principal (10 years): 100%
- 2009 Current Fund balance: $3.4 million (8.9% of Current Fund revenues)
- 2010 Current Fund balance (unaudited): $4.3 million (10.8% of Current Fund revenues)
- Post-sale Parity Debt Outstanding: $8.5 million
2007 – 2011
 Moody’s Credit Rating Analysis, Carteret Borough Refunding Bonds, July 18, 2011
Moody’s Investor Service, Inc.
250 Greenwich St.
New York, NY 10007