Jackson gets good news from financial advisers
BY DAVE BENJAMIN Staff Writer

JACKSON — A report from the township's financial advisers has indicated that Jackson's municipal bond rating is in excellent shape.

"It is always nice to bring really good news," David B. Thompson, lead founder and chief executive officer of Phoenix Advisors LLC, Bordentown, told the Township Council at a recent meeting. "Our little trip together started back in August, and in September the council authorized us to move forward with a $19 million bond sale."

Thompson said he and Anthony P. Inverso, managing director of Phoenix Advisors, went through the Local Finance Board process and then, along with that process, switched from the Moody's Investors Service rating system, used previously, to a Standard & Poor's system.

Thompson said Jackson's bond now carry an AA+ rating.

"That is just a smidgen below what we would call a natural triple A [rating]," he told the council. "There are probably not more than 20 municipalities in the state with an AA+ rating, and only five have a triple A rating."

Thompson said that in its report, Standard & Poor's indicated that Jackson has a strong local economy with strong wealth indicators, which are coupled to direct access to broader labor markets in the Philadelphia and New York metropolitan areas.

He said the report indicated there is a strong residential property tax base growth that continues to make for a consistent solid financial position with strong reserves, a low debt burden and locally modest additional capital needs.

"When you put these things together, you come out with an AA+," Thompson told the members of the governing body.

On Nov. 20, Jackson representatives were selling $19.84 million in bonds.

He said there was $16.1 million in general improvement bonds for capital, which go until 2020, and $3.73 million in general improvement bonds for open space, which go until 2028.

Inverso said, "The market has been tumultuous and brutal. As a working group we went to the Local Finance Board on Nov. 12, and we saw an opportunity where the rates started to decrease and the credit market seemed to be opening up again. So, we made a decision to go ahead on Nov. 20."

Inverso said they lucked out at that time, and since then rates have started to climb about 10 to 12 points since the bonds were sold. The bids were received from three underwriting firms, and it was an Internet auction sale.

He explained that a bidder puts in a bid for the bonds at a particular rate and as other bids come in, they know their position: first, second or third. Inverso said that since each bidder does not know exactly what the other bids are, they have the opportunity to improve or increase their bids.

He compared it to buying an item on the Internet auction site eBay.

"That's what happened here," Inverso said. "We had seven total bids from the three firms. So UBS Financial Services, the winning bidder on the transaction, started out in first place, then moved back to second place for a while, and then jumped back into first place. They improved their bid about five points, which is a pretty good increase in a tough market."

Jackson received an average yield of 4.05 percent on the bonds, which is excellent in the current market, he said. Inverso said he thought the favorable outcome of the bond sale was mostly related to Jackson's strong credit rating, the fact that it was a good day in the market, and the fact that people liked the credit and the way the transaction was structured.

"Just as a point of reference, a weaker credit issue sold at almost 5.5 percent. So, it shows you how well the township did," he told the council members.

Inverso said there will be a savings of more than $340,000 over the life of the bond issue, so township officials should be extremely pleased with the transaction.

Thompson praised Jackson's administrative staff for helping to move the sale of the bonds forward.

"Your administrative staff and finance professionals must be credited with lifting the heavy end of the stick on that," Thompson said. "The entire team worked very well together.

Township Administrator Phil Del Turco praised bond counsel Megan Clark, Chief Financial Officer Sharon Pinkava and all those who participated in the sale of the municipal bonds.

Council President Michael Kafton thanked the finance and administration employees for their efforts on behalf of the township.

"Apparently it was a good choice to hire your firm," Kafton told Thompson and Inverso. "That's $340,000 saved, and we hope you continue to save the taxpayers more money."