Township Earns High Credit Rating on Campus Bond
NEW YORK NY – If you had the money and inclination to invest in general obligation municipal bonds, the internationally known Moody’s Investors Service says buying bonds issued by Lower Pottsgrove Township would be a safe bet.
New York-based Moody’s this month issued a five-page statement analyzing the township’s ability to borrow money and repay debt, and confirmed its earlier and highly favorable rating of “Aa3.” The rating is the fourth highest level among 10 available for investment-grade instruments, and labels Lower Pottsgrove as a “very low credit risk.”
It also “reflects the township’s healthy finances, manageable leverage, and strong resident income,” Moody’s said.
Moody’s began its latest review of township credit-worthiness last November, and issued its report Jan. 10 (Tuesday). It continues to follow the Board of Commissioners’ December 2020 decision to sell $9 million in bonds to finance construction of a proposed municipal campus that so far remains unbuilt after years of study and planning.
Efforts to create the campus (at top and above), at the southeast corner of Pleasant View Road and East High Street, have been on an indefinite hold ordered by commissioners since February 2022. Several rounds of bids for the project, intended to house both its administrative offices and police department, came in substantially over its roughly $8 million budget.
Before that, a contractor whose bid was initially accepted by commissioners was later rejected because the builder could not provide sufficient insurance to guarantee the project would be satisfactorily completed.
Both the Moody’s rating, and commissioners’ frustration with a lack of progress on the delayed campus, were topics of discussion during the board’s Thursday (Jan. 19) meeting.
What Moody’s told investors
Investors often rely on services such as Moody’s and their ratings to determine where they will put their money to earn more money.
Moody’s “ratings rationale” (at right) confirmed Lower Pottsgrove “irrevocably has pledged its full faith, credit and taxing power to bondholders, which taxing power presently includes the power to levy ad valorem taxes on all taxable property within the township.” The language guarantees bondholders they will be repaid.
For that purpose, Lower Pottsgrove enacted a Capital Reserve Fund Tax as part of its 2021 budget.
The tax during 2023 is rising to 0.75 mil, meaning owners of an “average” township home with an assessed value of $125,000 will annually pay about $94 in taxes to the fund. Each mil raises a total of $600,000 in revenue, according to township budget notes. Tax bills are expected to be mailed Feb. 1.
The review also stated the township:
- “Expects to end fiscal 2022 with a modest surplus, driven by conservative budgeting practices and a return to pre-pandemic business activity;”
- Has “no plans to issue additional debt in the near future;”
- “Pension liabilities are expected to remain relatively level;”
- Enjoys a “fixed costs ratio (that) is exceptionally low at under 5 percent in most years;” and
- Is home to residents whose “median household income adjusted for regional price parity” is 20 percent higher than the national level.
Township Manager Ed Wagner said Thursday the township was “very pleased” that Moody’s “thought very highly of us.” Lower Pottsgrove leaders wouldn’t mind achieving an even better rating in the future, he added, but what it has earned so far “is pretty good.”
Local decisions yet to be made
Moody’s review also addresses future declines in township fund balances and liquidity as the bond proceeds are eventually spent on “planned capital projects and the purchase of a new municipal building.”
With the municipal campus stalled, however, the bulk of that money seems unlikely to be needed until the township Infrastructure Committee determines how to move it ahead. A decision might be reached later this year, board President Ray Lopez indicated Thursday.
Commissioners have already spent substantial sums to buy properties on East High Street, and hired an architect to design (above) a unified campus for police and administration. The board has said in the past, though, that it would consider renovating an existing property available on the real estate market now or in the future if it met township needs.
To date, Lopez acknowledged, the committee hasn’t found one.
Photos by The Post
Other coverage of the Lower Pottsgrove Board Jan. 19 meeting:
Moody’s Confirms Favorable Township Credit Rating
A rating company that advises investors on the credit-worthiness of local governments this month gave Lower Pottsgrove high marks. Its approval focuses on a township bond issued to finance its still unbuilt municipal campus.
East High Street Paving Project to Resume This Year
State-owned East High Street is expected to be repaved during 2023 from North Pleasant View Road in Sanatoga along most, but not all, of its length to the Berks County line, Lower Pottsgrove commissioners learned.
Three Residents Reappointed to Township Boards
As part of its 21 minutes of municipal business Thursday at Sunnybrook Ballroom, the Lower Pottsgrove Board of Commissioners reappointed three volunteers to expiring terms on township municipal boards.
Board’s Sunnybrook Meeting Unexpected, Necessary
Lower Pottsgrove commissioners met Thursday night at The Sunnybrook Ballroom because the Buchert Road municipal building conference room could not be occupied. It and other areas were being repaired.
Township Seeks New Solution for its Municipal Campus
The estimated cost of building a Lower Pottsgrove municipal campus on East High Street has soared out of reach. The township’s problems with overcrowding remain. Its Infrastucture Committee hopes to hit the “reset button.”
Township Moves Thursday Meeting to Sunnybrook
With the conference room at the Lower Pottsgrove municipal building on Buchert Road receiving minor repairs, the township Board of Commissioners has moved its Thursday night meeting to Sunnybrook Ballroom.