New Jersey Gov. Chris Christie’s signing of a measure restoring $139 of transitional aid to 11 stressed municipalities has prompted Moody’s Investors Service to confirm the general obligation ratings of five and remove them from review for downgrade.
Moody’s confirmed Camden’s Ba2, East Orange’s A2, Paterson’s Baa1, Trenton’s A3, and Union City’s A3. It downgraded Passaic, which was also under review, to A2 from A1.
The bill, which Christie signed last week, adds $1.49 million for oversight of the cities. Christie had used a line-item veto to remove all but $10 million of the aid when the state passed its fiscal 2012 budget on June 30. Moody’s placed the cities under review 12 days later. Five months of negotiation ensued over how to pay for the oversight.
Camden, earmarked for $61 million, will receive much of the aid. Trenton and Paterson are in store for $22 million and $21 million, respectively. Union City, Asbury Park, Chesilhurst, Harrison, Lawnside, Maurice River, Penns Grove, and Prospect Park will split the rest.
Christie has termed the aid “transitional,” because grants will expire with the awards in fiscal 2014.
According to Moody’s, Passaic has neither budgeted nor applied for transitional aid in fiscal 2012, despite having received it in 2011. “Our review considered this restoration of transitional aid, possible cash flow implications as a result of the delayed disbursements as well as typical general obligation credit factors,” Moody’s said in a statement.
Separately, Moody’s downgraded both Clementon and Ewing Township to A2 from A1, citing similar problems such as several years of deficits.
On Tuesday, Moody’s upgraded Weehawken’s GO rating to Baa3 from Ba1, affecting $5.04 million of debt.
Moody’s cited improvement in the township’s structural operations, reduced reliance on tax anticipation notes for cash flow, continued tax-base growth, and commitment toward financial flexibility. The rating, it said, also factored in a heavy tax-base concentration from Hartz Mountain Corp., which has owned waterfront property for 30 years, and an above-average debt burden of 2.2% of equalized values.
Weehawken, where the Lincoln Tunnel exits on the New Jersey end, sits across the Hudson River from New York City.
Two weeks ago, Hartz Mountain, in conjunction with Roseland Property Co., announced plans to build a $200 million rental complex along the waterfront. Hartz Mountain bought a stake in Roseland three months ago.
Fitch Ratings and Standard & Poor’s rate New Jersey’s GOs AA-minus, while Moody’s assigns a Aa3.
