Moody's Investors Service said it has downgraded to Aa3 from Aa2 the Borough of Glen Rock, N.J.'s general obligation rating, affecting $5.7 million of outstanding rated debt.
Concurrently, Moody's downgrades to Aa3 from Aa2 the Glen Rock Senior Citizen Housing Corporation's bonds with $2.8 million debt outstanding. The bonds are first secured by revenues of the corporation but are ultimately secured by Glen Rock's general obligation unlimited tax pledge through a standby assistance agreement, upon which the rating is based.
The Aa3 rating reflects the moderately-sized $2.5 billion tax base with robust resident wealth levels, manageable debt, and narrowed finances that are no longer aligned with the former rating category.
The downgrade incorporates the borough's structurally imbalanced operations over the past five years that resulted in a narrow fund balance of $749,000 (or 4.74% of revenues) in 2011. The rating also considers the satisfactory protections of the standby assistance agreement, where the borough commits its unlimited property tax pledge.
