Once again, Bloomfield Township has received a AAA-bond rating, this time from Standard & Poor's (S&P) Global Rating service.
S&P Global Ratings assigned its 'AAA' rating and stable outlook to Bloomfield Township's series 2018 special-assessment limited-tax general obligation (GO) bonds and affirmed its AAA rating, with a stable outlook, on the township's existing GO debt.
Bloomfield Township officials are issuing the series 2018 bonds in anticipation of collecting certain special assessments against lands in special-assessment districts. The township’s full-faith-credit-and-resources pledge and agreement to levy property taxes are what secure the bonds. S&P said they rate the limited-tax GO debt at the same level as their view of the township's general creditworthiness “because the township collects taxes from the entire property tax base, coupled with a lack of limitations on the fungibility of resources available for debt service. While officials use utility revenue and other special assessments to repay or secure some of the township’s debt, we base the rating on the township’s GO pledge.”
They also said they do not expect the township's cash reserves on hand, which they classified as “very strong,” to decrease.
S&P said the AAA rating reflects their opinion of the township's very strong economy and very strong management, with good financial policies and practices. They also praised the township's adequate budgetary performance, with an operating surplus in the general fund, but “an operating deficit at the total government-fund level in fiscal 2018.” They did like the township's very strong budgetary flexibility and strong liquidity, “with total government available cash at 95.3 percent of total governmental-fund expenditures and five-times governmental debt service, access to external liquidity we consider strong.”
They also noted that Bloomfield Township's economy is very strong.
While they praised a lot about Bloomfield Township, S&P did criticize the township's debt-and-contingent liability profile as very weak.
“In our opinion, a credit weakness is Bloomfield's large pension and OPEB obligation. Bloomfield’s combined required pension and actual OPEB contribution totaled 8.7 percent of total governmental-fund expenditures in fiscal 2018: 100 percent represented required pay-as-you-go OPEB payments.”
While they noted they have no plans to change their rating during their two-year outlook period “because we believe management will likely maintain very strong reserves, coupled with, at least, adequate budgetary performance,” S&P did provide a final cautionary note: “If OPEB and pension costs were to pressure the budget, significantly weakening budgetary performance, we could lower the rating.”
“We've got issues on the horizon with defined benefits and OPEB that we will have to address with the community and we will be doing that within the next six to 12 months,” said township supervisor Leo Savoie.