Forks Refinances Debt

 

By a 5 to 0 vote, Forks Township BoS approved restructuring its $7.7M in debt and added $3.7M in new debt. The township issued $11.3M in new General Obligation bonds with a net interest cost of 3.258%.

In refinancing its debt, Forks Township saved $766,623 (NPV Savings of $5145,128) and only extended its debt servicing period by 4 years.

Forks Township received a AA rating and a stable outlook from Standard and Poor’s (S&P). In S&P’s opinion, the rating reflects the township’s:

• Very Strong wealth and income levels
• Good amount of available reserves, which are expected to increase in the coming years according to management’s fund balance target of $1.0M by fiscal year-end 2011.
• Moderate overall net debt burden.

The Standard & Poor's rating scale is as follows, from excellent to poor: AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC-, CC, C, D. Anything lower than a BBB- rating is considered a speculative or junk bond.

The S&P analyst report stated Forks is primarily a residential in nature; and it has approximately 2,000 lots available for residential growth and another 75 to 100 lots available at an industrial park in the township. In S&P’s opinion, income levels are very strong: Media household effective buying income is currently 162% and 154% of commonwealth and nationals levels, respectively.

The Assessed Value (AV is the valuation placed on property by a public tax assessor for purposes of taxation) of the Forks tax base is $484M in fiscal year 2008 and have increased by an average of 7% annually since fiscal year 2004. Furthermore, market value (is the agreed upon price between a willing and informed buyer and a willing and informed seller under usual and ordinary circumstances) is currently $1.2B; it has increased by an average of 16% annually since fiscal year 2004, yielding a very strong $84,364 per capita (person).

Finally, the S&P report states the township’s overall net debt is a moderate $4,266 per capita, or 5.1% of the market value.  The township is planning to retire 51% of it’s total debt over 10 years and 100% by 2027.

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