Mt. Laurel Township permanently finances $25.5 million in current debt to secure better long-term interest rate
The township’s financial advisors and bond counsel suggested the move after recently studying current and long-term market trends.
Mt. Laurel Township Council has taken steps to permanently finance about $25.5 million in debt the township has already borrowed to secure a better long-term interest rate in an attempt to save taxpayers money moving into the future.
According to Mt. Laurel Township manager Meredith Tomczyk, the township’s financial advisors and bond counsel suggested the move after recently studying current and long-term market trends.
Tomczyk said the township’s professionals determined interest rates in the short term to be rising, while long-term rates tend to be falling.
“They’ve advised us to save money for the taxpayers to go ahead and do permanent financing of the bonds so that it’s less interest that we would be paying over time,” Tomczyk said.
Officials believe the township could lock in somewhere between a 3.1 to 3.15 interest rate on the 16-year life of the bonds, as opposed to the current one-year rate of 2.1 to 2.25 percent, which officials say is expected to continue to rise.
According to information presented by Tomczyk and the township’s financial professionals at last week’s council meeting, another reason why the township was advised to make the move now involves last year’s budget.
According to officials, the township paid off its 2011 bonds in the 2018 budget, creating a small window of opportunity to layer debt without an increase in the township’s budget or taxes.
Officials also note that permanently financing the debt now would also factor into ratings from those at Standard and Poor’s, which currently has the township marked with an AA credit rating.
Tomczyk said Standard Poor’s officials were also pleased with the amount of revenue the township generated in 2017, which officials anticipate will be similar to the amount generated in 2018 when all figures are finally calculated.
“They do like to see us do this long-term financing,” Tomczyk said.
Township professionals said there are only about 20 or so municipal governments in New Jersey with higher ratings than Mt. Laurel, and Mt. Laurel has one of the highest in South Jersey.
Overall, Mayor Kurt Folcher said it was significant for the township to be able to consolidate its debt.
“Personally, as a homeowner in Mt. Laurel for 20 years with 10 more years on my mortgage, the debt being cut means property taxes aren’t going to go up because of that debt,” Folcher said.
All five members of township council approved the resolution permanently financing the bonds.