KBRA Affirms AA Rating with Stable Outlook for Township of Pennsbury, PA - G.O.
23 Oct 2024 | New York
KBRA affirms the long-term rating of AA with a Stable Outlook for the Township of Pennsbury, PA Guaranteed Revenue Notes. The Notes are payable first from the Township’s open space property tax revenues and ultimately guaranteed by the full faith, credit, and taxing power of the Township.
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
Credit Positives
- Substantial General Fund balance and cash position provide strong level of financial flexibility.
- Manageable fixed cost burden coupled with well-funded pension plans and the full amortization of direct debt within ten years.
- Strong underlying resource base, evidenced by high income and wealth levels, with good commuter access to major employment hubs.
Credit Challenges
- Absence of a formal reserve policy and less formal financial policies and procedures.
- General Fund revenue base is somewhat dependent on earned income taxes, which are economically sensitive.
The Stable Outlook reflects KBRA’s expectation that the tax base will remain stable, and that the Township will manage expected, year over year cost increases associated with fire protection services to achieve structurally balanced operations and maintain its financial flexibility. Incorporated in the Outlook is KBRA’s expectations that open space taxes will continue to generate sufficient revenues to service 100% of ongoing payments on the Notes.
Rating Sensitivities
For Upgrade
- Adoption of a formal reserve policy and other written financial policies and procedures.
For Downgrade
- Trend of operating deficits leading to significant deterioration in fund balance and liquidity position.
- Material deterioration in the municipal resource base.
To access ratings and relevant documents, click here.