Fitch Rates Old Bridge, New Jersey GOs 'AA-'; Outlook Stable

2008-06-24 20:56:08 -

- Fitch Ratings assigns Old Bridge Township, NJ's $19.1 million general obligation (GO) bonds, series 2008 an 'AA-' rating. The bonds are scheduled to sell competitively on June 25 and will mature serially July 1, 2009-2017. The bond proceeds will be used to pay outstanding bond anticipation notes (BAN) principal and finance general capital improvements. Fitch also affirms the 'AA-' rating on the township's $45.6 million outstanding GOs. The Rating Outlook is Stable.

The 'AA-' rating reflects the township's strong financial management, moderate debt burden with manageable capital needs, rapid amortization of principal, historically strong tax collection rates and above-average income levels. Some concerns surround the slower than average assessed value (AV) growth and potential upward pressure on property tax rates given the dependence on the property tax. Fitch believes the weakened housing market may ultimately affect property tax revenue growth.

Located in Middlesex County, 36 miles south of New York City, Old Bridge encompasses approximately 42 square miles. The township is primarily residential and approximately one-third built-out. Several large retail commercial projects have been completed in the township since 2003. With a population of over 65,600 people in 2006, the township expects a moderate growth to 70,000 by 2010. The township's above-average wealth levels and low unemployment rates continue to be a credit strength. Unemployment in the township trended slightly upward in April of 2008 to 3.2% compared to 2.6% for the same time period in 2007, but remains well below the levels for the county, state and nation. Although there are some employment opportunities in the township, lead by services, retail trade and manufacturing, the bulk of residents are employed in New York City and the surrounding suburbs. AV has grown an average of 2% over the last seven years and the township is actively working to enhance its commercial sector through the acquisition of prime real estate on the major roadways surrounding the township.

The township's financial position remains strong, characterized by ample reserve and liquidity levels. Financial management and controls are strong and have been successful. The drawdown of reserves and reliance on one-time revenue sources for several years in the earlier part of this decade were reversed as the township built-up its unreserved fund balances and continued to rely less on prior-year surpluses for future budgets. The township ended fiscal 2007 with an unreserved general fund balance of $9.8 million, or 20% of expenditures and transfers; these results are comparable to the prior fiscal year.

The township's debt position is quite favorable with a low direct debt burden and manageable capital infrastructure needs. Overall net debt is $2,273 per capita, or 4.5% of market value, including overlapping county debt. The township has a policy of rapid amortization (85% of outstanding debt retired in 10 years) and historically has not issued debt in excess of what it retires.

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Fitch Ratings, New York
Ann G. Flynn, +1-212-908-9152
Christopher Hessenthaler, +1-212-908-0773
Christopher Kimble, +1-212-908-0226 (Media Relations)