Avalon Achieves AA+ Bond Rating by Standard and Poor’s

AVALON – The Borough of Avalon has achieved a higher bond rating thanks to a recent review by Standard and Poor’s. Avalon’s new bond rating is AA+, which is only one step below the highest achievable rating of AAA. This reflects an improvement over Avalon’s last bond rating of Aa2 as determined by Moody’s.
“This high bond rating is a major achievement for the Borough of Avalon”, said Avalon Mayor Martin Pagliughi. “This bond rating shows that Avalon excels at managing its finances and provides long-term financial planning for our community. Borough Council and administration invests countless hours of financial oversight and constantly looks at various ways to save money. This new bond rating puts the Borough in an extraordinary financial position for many years to come”.
For comparison purposes, the Borough of Avalon now has a bond rating that is higher than ratings earned in Aspen, Colorado and Newport, Rhode Island. Avalon’s AA+ bond rating is equaled by communities like Palm Beach, Florida and Malibu, California.
The new bond rating was delivered to the Borough by the Avalon’s bond counsel McMannimon and Scotland. The new rating was determined after the Borough decided to refinance approximately $2.1 million in debt to achieve a lower interest rate. The new AA+ bond rating means that Avalon will save even more money when it needs to bond for a special project.
Avalon has saved millions of dollars recently thanks to various partnerships on various beach nourishment projects. This spring, the Borough partnered with the United States Army Corps of Engineers and the State of New Jersey for a multi-million dollar beach fill project that cost the Borough less than $150,000. Partnerships with the state and with neighboring Sea Isle City in previous beach fills have also saved millions of dollars for Avalon taxpayers.
“We are allowed to borrow up to $298 million, but Avalon carries only $36.3 million in debt service”, Pagliughi said. “Salaries and wages only account for 25 percent of our total budget. Currently our interest rate when refunding bonds is 4.5 percent and that will drop to about three percent thanks to the AA+ bond rating. This will save taxpayers more significant money in the future”.
The new AA+ bond rating is also a result of the very high ratable base in the community. Avalon recently initiated its own property revaluation which still resulted in approximately $7.1 billion in ratable for the community. The Borough has been successful in securing low to zero interest loans for infrastructure improvements. Avalon recently rehabilitated the water tower on 38th Street with a zero interest loan financing half of the project. The Borough also recently concluded an energy audit that will result in long term energy savings at public buildings. Avalon is also exploring solar energy options to reduce the energy bill even further.
Mayor Pagliughi, the Avalon Borough Council, and the Avalon administration continually keep a watchful eye on the fund balance for the Borough. Future projects are carefully scheduled so the Borough can finance as much of the project as possible while reducing the amount of money that needs to be borrowed. The “pay as you go” philosophy includes privatization and inter-local agreements with other communities, when applicable. Avalon currently privatizes its trash collection, water/sewer system, and landscaping services. Nearly two dozen inter-local service agreements are in place, ranging from animal control to management of the local public access television channel. The Avalon Department of Public Works has rebuilt a large section of the boardwalk which resulted in savings.
For more information, visit www.avalonboro.org.