Mahwah has been given a Standard & Poor’s AAA bond rating – the highest rating given by the agency – based on its financial past and outlook in 2012, Mahwah Business Administrator Brian Campion said at a town council budget hearing last Thursday. Campion called the rating, which was an upgrade from the township’s previous AA1 Moody’s rating, a “very positive thing.”
According to a release S&P issued Friday, the long-term rating is reflective of the township’s current and projected financial stability. "The rating reflects the township's participation in the New York City metropolitan area, which contributes to very strong economic indicators, large and very diverse property tax base, very strong financial position, and a low to moderate debt burden," Standard & Poor's credit analyst Hilary Sutton, said in the release. Sutton was reported to be the primary S&P analyst determining the rating.
Mahwah’s Chief Financial Officer Ken Sesholtz said he “had to submit all of our financial information,” including data from the past five years, projected financial information for 2012, and the proposed municipal budget, to S&P to get the rating. “They are very thorough.”
Because Mahwah had previously utilized the Moody’s rating company for bond ratings, “we were worried about keeping our AA1 rating,” Sesholtz said. “It is rare to get a AAA rating with a new agency, and the fact that we did that puts the township in a very positive light.”
According to Campion, Mahwah is in a somewhat unique position with the new rating. “Other municipalities are drifting downward, but we have been able to prove that our financial situation is stable,” he said Thursday.
Similar to an individual’s credit score, S&P says its ratings reflect the agency’s opinion about the “ability and willingness” of the municipal government to “meet its financial obligations in full and on time.” The AAA rating means Mahwah has an “extremely strong capacity to meet financial commitments,” S&P reports.
Mahwah’s CFO and Business Administrator say they may use the new rating to refinance a portion of Mahwah’s $11.5M debt. “If the rates are good, we could save $400K to $450,000 over the life of the bond,” Sesholtz said.
According to Mayor Bill Laforet, Mahwah’s debt is “actually low. We are very pleased with the rating, as it validates our fiscal position and projected budget for this year,” he said.
S&P’s review of Mahwah says “the township's financial position [remains] at a level the ratings agency considers very strong, despite newly implemented revenue-raising restrictions. The township's stable economy and very strong wealth and income levels further support the outlook.”