The City of Ocean City will pay an interest rate of just 1.87 percent on $9.9 million in bonds sold today to permanently finance various capital improvements.
The bonds were bought by UBS Financial Services in a competitive process that included 11 bids from three companies across the country.
The outstanding interest rate was a result of stable and conservative financial management practices, which led Standard and Poor’s Rating Services of New York to affirm the city’s outstanding bond rating of “AA.”
Ocean City had received an upgraded long-term rating from “A+” to “AA” prior to their last bond sale in July 2010. Following a complete review of the city’s financial condition and other factors, last week Standard and Poor’s again assigned an “AA” rating. Ocean City’s bond rating is among the highest of any shore community in the State of New Jersey.
As justification of the rating, Standard and Poor’s report cited their positive views of the City’s:
- Sizable tax base and strong income levels;
- Strong and consistent finances;
- History of maintaining a strong and level fund balance;
- Good management practices; and
- Low overall debt compared to market value.
Standard and Poor’s report also concludes that recent damages sustained by the effects of Hurricane Sandy will not negatively affect the long-term financial position of the city. The report states: “Finances remain, in our opinion, strong and consistent.”
“This is outstanding news for Ocean City," Mayor Jay Gillian said. "The taxpayers have been well served by the fact that the administration and City Council continue to follow the professional advice of our CFO, Frank Donato, and our auditor, Leon Costello. The taxpayers of this community will save hundreds of thousands of dollars over the life of these bonds as a result of sound financial management. We are also now in a better position to more aggressively pursue the long-term capital improvements needed to our infrastructure.”
The administration recently presented a five-year capital plan to City Council that includes an average of $10 million per year in infrastructure investment, with nearly half earmarked for much needed road and drainage improvements.
— News release from the City of Ocean City