Town’s bonds again highly rated
Under Pianese and Pittfield’s direction, fiscal situation improves over the years
by Stephen LaMarca
Reporter Staff Writer
Mar 25, 2012 | 1176 views | 0 0 comments | 3 3 recommendations | email to a friend | print
REDUCING DEBT – Chris Pianese and Robert Pittfield (far right) have led the way in reducing North Bergen’s debt.
REDUCING DEBT – Chris Pianese and Robert Pittfield (far right) have led the way in reducing North Bergen’s debt.
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North Bergen’s net debt has dropped approximately $12 million dollars since the late 1990s, a decrease that can partially be attributed to an improved bond rating, proper debt management, and a diminished reliance on state aid according to Township Administrator Chris Pianese. He said that the township, which currently has $56 million in net debt, has been able to steadily decrease their credit through a simple principle they apply each year.

“On an annual basis, make sure that you incur less debt than you’re paying off,” said Pianese. “Over the years, by doing that, net debt is now lowered by an upwards of $12 million dollars.”

“That’s a program we really took on,” Pianese continued, “and it’s proven to work.”

In fact, Pianese said that Moody’s Investors Services, a bond rating agency, once again affirmed North Bergen’s Aa3 rating Tuesday. The rating, which was bestowed upon the town in 2010, is one of the highest the firm offers, and indicates that the township carries a low credit risk.

Town spokesman Phil Swibinski said that although the town maintained the same rating, they are now closer to receiving an upgrade. He also said that the report listed three challenges for North Bergen, including a lack of state aid, an abolition of the UEZ program, and a 2.5 percent property tax cap. All are the result of policy decisions by the Christie administration.

“The way we see it, we’re doing everything we can,” added Swibinski.

Indeed, under the direction of Pianese and Chief Financial Officer Robert Pittfield, the town has been able to decrease their debt, raise their bond rating, and achieve lower owed interest ratings.

“It’s an overall effort with the cooperation of the elected officials,” said Pianese. “[They permitted] us to make moves financially that allowed North Bergen [to improve] the entire fiscal picture over the last decade.”

Pianese added, “You don’t do that without a tremendous finance staff, tax collector, and the cooperation of the elected officials who are voting on the things you are recommending to put in place”

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“The way we see it, we’re doing everything we can.” – Phil Swibinski

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Refunding efforts

Another year-to-year effort Pianese and Pittfield have initiated is a bond refunding practice that allows the town to issue bonds at lower interest rates.

An ordinance was adopted at a Board of Commissioner’s meeting earlier this month that authorized the payment of all or most of an owed amount of $3.2 million. The amount was owed from bonds issued in 2003 that carried a 4 percent interest rate.

The township will make the payment by issuing new bonds in an amount not exceeding $3.12 million. The new bonds carry a lower interest rate, thereby allowing the town to save money in the long term.

“Municipal bonds are at historic lows,” said Pianese, earlier this month. “We think we can get below 2 percent [interest rate] on the same bonds.”

According to Pianese, the 2 percent interest rate is down from a 4 percent rate on the bonds the town issued in 2003.

“The bottom line is that we’ll save about $200 thousand dollars, which we’re going to spread out over nine years.”

“By doing this [bond] issue there’s nothing to lose,” added Pianese. “It’s all a total win.”

“Without any increase in state aid and with many costs increasing every year, we need to get creative in order to keep property taxes stable while continuing to deliver the services North Bergen residents expect,” said Mayor Nicholas Sacco.

“I applaud the efforts of Chris Pianese and our finance team for continually finding ways to bring new revenues to the township,” added Sacco.

Bond ratings steadily increase

In the early 1990s, North Bergen had a Baa2 rating, or a moderate credit risk. This rating is five ranks below the current rating.

Pianese said that because of the low rating, the town had to rely on a separate state rating to raise bonds. This rating, however, comes with additional scrutiny, which makes it tougher to issue bonds.

“It’s a totally different policy,” said Pianese, “[so] we made a big effort after the nineties to get upgraded.”

Pianese said that the town was able to steadily improve their rating by closely following Moody’s suggestions. In 2010, they achieved an Aa3 rating.

“The only other community I believe that has [an Aa3 rating] in Hudson [County] is Secaucus,” said Pianese.

According to officials, the Aa3 rating – which was just reaffirmed last week – allows the town to issue short and long-term debt at lower interest rates.

“I’m proud to report today that North Bergen has retained its AA3 bond rating with Moodys,” said Sacco last week, “which allows the township to sell bonds at a much lower interest rate than many neighboring communities, saving taxpayers hundreds of dollars.”

Stephen LaMarca may be reached at slamarca@hudsonreporter.com.

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