KBRA Upgrades Township of Tinicum, PA General Obligation Notes to AA- from A+; Outlook Stable
13 Dec 2023 | New York
KBRA upgrades the long-term rating to AA- from A+ on the Township of Tinicum, PA's general obligation notes. The Outlook is Stable.
The rating upgrade recognizes the Township’s solid level of financial flexibility afforded by the growing general fund balances and total governmental funds liquidity, coupled with the Township’s gradually declining debt burden.
The long-term rating reflects the Township’s strong and diverse underlying tax base, trend of consistently positive financial operating results, and favorable debt and continuing obligations profile, characterized by a descending debt schedule and well-funded pensions. Counterbalancing these strengths are the Township’s relatively informal financial management policies and procedures, the utilization of cash-basis financial reporting, a gradually declining resident population, and the Township’s strict land use restrictions, which in KBRA’s view may temper prospects for future economic and tax base growth.
Key Credit Considerations
Credit Positives
- Trend of favorable general fund operating performance, supporting growing general fund balances and total governmental funds liquidity.
- High per capita income and wealth levels, coupled with low poverty levels.
- Manageable debt and fixed costs burden.
Credit Challenges
- Absence of formal codified policies governing the maintenance of general fund reserves, cash balances, and other financial management practices.
- Continued utilization of cash-basis financial reporting, which, in KBRA’s view, provides a less comprehensive view of operations.
- Township’s prioritization of land preservation efforts temper outlook for tax base growth.
Rating Sensitivities
For Upgrade
- Change in basis of financing reporting from cash to modified or full accrual.
- Adoption of formal policy for maintenance of general fund cash reserves and other financial practices.
For Downgrade
- Sustained negative operating margins.
- Significant deterioration in cash reserves
To access rating and relevant documents, click here.