Finance Board OKs $33M

New Jersey’s Local Finance Board last week approved more than $33 million of state-qualified bonding for local governments, with West New York poised to sell $11.5 million of long-term debt to help address increasing health care and workman’s compensation costs.

While the panel approved the $33 million of borrowing, it deferred a $385 million proposed refunding deal for the North Hudson Sewerage Authority as state officials asked to see more details of the transaction before voting on the bonds.

With the LFB approval, West New York can now move forward with the $11.5 million sale. With state-qualified bonding, local governments opt to have the state Treasury Department apply their municipal aid funds towards debt service costs.

City officials anticipate that the financing strategy will garner New Jersey’s double-A rating for the deal. Moody’s Investors Service rates the state Aa3. Fitch Ratings and Standard & Poor’s rate it AA-minus and AA, respectively.

In late April, Standard & Poor’s dropped its rating on West New York to BBB-minus from BBB and placed the credit on negative watch, affecting roughly $25 million of outstanding debt.

The rating change reflects the city’s limited liquidity and a $64 million budget for fiscal 2008, which ends June 30, that the state still has yet to approve. The current fiscal plan relies upon an upcoming $7.8 million sale of a public works building that West New York officials anticipate will close within the next month. Once the city has the property sale proceeds in place, the LFB can then sign off on the budget.

Other towns approved for state-qualified borrowing include Orange City Township for $9 million, Bayonne for $10.5 million, and Jersey City for $2.2 million.

The LFB is a division of the Department of Community Affairs and authorizes local borrowing and municipal operating budgets.

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