NEW YORK - Moody's Investors Service said it has downgraded the Borough of North Arlington, N.J.'s rating to A2 from A1 and assigned a negative outlook, affecting $20.1 million of outstanding general obligation debt. The bonds are secured by the borough's unlimited property tax pledge.
The downgrade reflects the borough's narrowing financial position with an increased reliance on deferred charges and practice of current fund drawdowns since fiscal 2009. The A2 rating incorporates the borough's moderately sized tax base with above average wealth levels, proximity to regional employment centers, and moderate debt burden.
The negative outlook reflects outstanding tax appeal with the borough's largest taxpayer that may result in a material liability to the borough, which it is planning to pay with bond proceeds.
The outlook additionally reflects the possibility of continued weakening to the borough's financial and debt positions, driven in part by the potential for additional appeals as a result of a recent revaluation.