OFFICIAL STATEMENT DATED SEPTEMBER 19, 2018
NEW ISSUE SERIAL BONDS Rating: S&P: “AAA” (See “RATING” herein)
In the opinion of McManimon, Scotland & Baumann, LLC, Bond Counsel, assuming compliance by the Township (as defined herein) with certain tax covenants described herein, under existing law, interest on the Bonds (as defined herein) is excluded from gross income of the owners thereof for federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and interest on the Bonds is not an item of tax preference under Section 57 of the Code for purposes of computing alternative minimum tax; however, interest paid to certain corporate holders of the Bonds indirectly may be subject to alternative minimum tax under circumstances described under “TAX MATTERS” herein. Based upon existing law, interest on the Bonds and any gain on the sale thereof are not included in gross income under the New Jersey Gross Income Tax Act. See “TAX MATTERS” herein.
TOWNSHIP OF WEST WINDSOR, In the County of Mercer, New Jersey
$10,500,000 GENERAL IMPROVEMENT BONDS, SERIES 2018 (Book-Entry Issue) (Callable)
Dated Date: Date of Delivery Due: October 1, as shown on the inside front cover hereof
The $10,500,000 General Improvement Bonds, Series 2018 (the “Bonds”) of the Township of West Windsor, in the County of Mercer, New Jersey (the “Township”), will be issued in the form of one certificate for the principal amount of the Bonds maturing in each year and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as the “securities depository”. See “THE BONDS - Book-Entry-Only System” herein.
Proceeds from the sale and issuance of the Bonds will be used by the Township to (i) finance various capital improvements described herein, and (ii) pay the costs in connection with the authorization, sale and issuance of the Bonds.
Interest on the Bonds will be payable semiannually on the first day of April and October in each year until maturity or earlier redemption, commencing April 1, 2019. The principal of and the interest due on the Bonds will be paid to DTC by the Township as paying agent. Interest on the Bonds will be credited to the Participants (as defined herein) of DTC as listed on the records of DTC as of each next preceding March 15 and September 15 (the “Record Dates” for the payment of interest on the Bonds).
The Bonds are subject to redemption prior to their stated maturities as described herein. See “THE BONDS – Redemption” herein.
The Bonds are valid and legally binding obligations of the Township of and, unless paid from other sources, are payable from ad valorem taxes levied upon all the taxable real property within the Township for the payment of the Bonds and the interest thereon without limitation as to rate or amount.
This cover page contains information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement, including the Appendices, to obtain information essential to the making ofan informed investment decision. The Bonds will be offered when, as and if issued and delivered to the Underwriter (as defined herein), subject to prior sale, to withdrawal or modification of the offer without notice and to approval of legality by the law firm of McManimon, Scotland & Baumann, LLC, Roseland, New Jersey and certain other conditions described herein. Phoenix Advisors, LLC, Bordentown, New Jersey, has served as Municipal Advisor to the Township in connection with the issuance of the Bonds. Delivery is anticipated to be at the offices of the Township’s Bond Counsel, McManimon, Scotland & Baumann, LLC, Roseland, New Jersey or at such other place as agreed to with the Underwriter on or about October 4, 2018.
TOWNSHIP OF WEST WINDSOR, In the County of Mercer, New Jersey
$10,500,000 GENERAL IMPROVEMENT BONDS, SERIES 2018 (BOOK-ENTRY ISSUE) (CALLABLE)
MATURITIES, INTEREST RATES, YIELDS OR PRICES AND CUSIP NUMBERS
Principal Interest Yield or CUSIP Year Amount Rate Price Number** 2019 $ 500,000 5.00% 1.75% 956887MS9 2020 1,000,000 5.00 1.91 956887MT7 2021 1,000,000 5.00 2.01 956887MU4 2022 1,000,000 5.00 2.09 956887MV2 2023 1,000,000 5.00 2.18 956887MW0 2024 1,000,000 5.00 2.25 956887MX8 2025 1,000,000 5.00 2.34* 956887MY6 2026 1,000,000 4.00 2.52* 956887MZ3 2027 1,000,000 3.00 2.80* 956887NA7 2028 1,000,000 3.00 2.90* 956887NB5 2029 1,000,000 3.00 3.00 956887NC3
* Priced to the first optional redemption date of October 1, 2024. ** Registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, which is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. The CUSIP numbers listed above are being provided solely for the convenience of Bondholders only at the time of issuance of the Bonds and the Township does not make any representation with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.
TOWNSHIP OF WEST WINDSOR IN THE COUNTY OF MERCER, NEW JERSEY
MAYOR
Hemant Marathe, Ph.D.
TOWNSHIP COUNCIL MEMBERS
Alison Miller, Council President Virginia Manzari, Council Vice President Jyotika Bahree Linda Geevers Ayesha Hamilton
BUSINESS ADMINISTRATOR
Marlena Schmid
CHIEF FINANCIAL OFFICER
Joanne R. Louth
TOWNSHIP CLERK
Gay M. Huber
TOWNSHIP ATTORNEY
Michael W. Herbert, Esquire Parker McCay P.A. Hamilton, New Jersey
AUDITOR
Suplee, Clooney & Company Westfield, New Jersey
BOND COUNSEL
McManimon, Scotland & Baumann, LLC Roseland, New Jersey
MUNICIPAL ADVISOR
Phoenix Advisors, LLC Bordentown, New Jersey
No broker, dealer, salesperson or other person has been authorized by the Township to give any information or to make any representations with respect to the Bonds other than those contained in this Official Statement, and, if given or made, such information or representations must not be relied upon as having been authorized by the foregoing. The information contained herein has been provided by the Township and other sources deemed reliable; however, no representation or warranty is made as to its accuracy or completeness and such information is not to be construed as a representation or warranty by the Underwriter or, as to information from sources other than itself, by the Township. The information and the expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale hereunder under any circumstances shall create any implication that there has been no change in any of the information herein since the date hereof or since the date as of which such information is given, if earlier.
References in this Official Statement to laws, rules, regulations, resolutions, agreements, reports and documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein, and copies of which may be inspected at the offices of the Township during normal business hours.
For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or amended by the Township from time to time (collectively, the “Official Statement”), may be treated as a “Final Official Statement” with respect to the Bonds described herein that is deemed final as of the date hereof (or of any such supplement or amendment) by the Township.
This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which it is unlawful for any person to make such an offer, solicitation or sale. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations other than as contained in this Official Statement. If given or made, such other information or representations must not be relied upon as having been authorized by the Township.
McManimon, Scotland & Baumann, LLC has not participated in the preparation of the financial or statistical information contained in this Official Statement nor have they verified the accuracy or completeness thereof, and, accordingly, they express no opinion with respect thereto.
TABLE OF CONTENTS
INTRODUCTION ...... 1 THE BONDS ...... 1 General Description ...... 1 Redemption ...... 1 Notice of Redemption ...... 2 Book-Entry-Only System ...... 2 Discontinuance of Book-Entry-Only System ...... 4 SECURITY AND SOURCE OF PAYMENT ...... 4 AUTHORIZATION AND PURPOSE OF THE BONDS...... 4 MUNICIPAL FINANCE - FINANCIAL REGULATION OF COUNTIES AND MUNICIPALITIES ..... 5 Local Bond Law (N.J.S.A. 40A:2-1 et seq.) ...... 5 The Local Budget Law (N.J.S.A. 40A:4-1 et seq.) ...... 6 Tax Assessment and Collection Procedure ...... 8 Tax Appeals ...... 9 The Local Fiscal Affairs Law (N.J.S.A. 40A:5-1 et seq.) ...... 9 TAX MATTERS ...... 9 Exclusion of Interest on the Bonds From Gross Income for Federal Tax Purposes ...... 9 Original Issue Discount ...... 10 Original Issue Premium ...... 11 Additional Federal Income Tax Consequences of Holding the Bonds ...... 11 Changes in Federal Tax Law Regarding the Bonds ...... 11 State Taxation ...... 12 LITIGATION ...... 12 SECONDARY MARKET DISCLOSURE ...... 12 MUNICIPAL BANKRUPTCY ...... 14 APPROVAL OF LEGAL PROCEEDINGS ...... 14 MUNICIPAL ADVISOR ...... 14 UNDERWRITING ...... 15 RATING ...... 15 FINANCIAL STATEMENTS ...... 15 PREPARATION OF OFFICIAL STATEMENT ...... 15 ADDITIONAL INFORMATION ...... 16 MISCELLANEOUS ...... 16
CERTAIN ECONOMIC AND DEMOGRAPHIC INFORMATION ABOUT THE TOWNSHIP OF WEST WINDSOR ...... Appendix A
FINANCIAL STATEMENTS OF THE TOWNSHIP OF WEST WINDSOR FOR YEAR ENDED DECEMBER 31, 2017 ...... Appendix B
FORM OF APPROVING LEGAL OPINION OF BOND COUNSEL...... Appendix C
[ THIS PAGE INTENTIONALLY LEFT BLANK ] OFFICIAL STATEMENT Relating to
TOWNSHIP OF WEST WINDSOR, In the County of Mercer, New Jersey
$10,500,000 GENERAL IMPROVEMENT BONDS, SERIES 2018
INTRODUCTION
This Official Statement, which includes the cover page, the inside front cover page and the appendices attached hereto, has been prepared by the Township of West Windsor (the “Township”), in the County of Mercer (the “County”), New Jersey (the “State”), in connection with the sale and the issuance of $10,500,000 General Improvement Bonds, Series 2018 (the “Bonds”). This Official Statement has been executed by and on behalf of the Township by its Chief Financial Officer and may be distributed in connection with the sale of the Bonds described herein.
This Official Statement is “deemed final,” as of its date, within the meaning of Rule 15c2- 12 of the Securities and Exchange Commission.
THE BONDS
General Description
The Bonds shall be dated their date of issuance and will mature on October 1, in the years and in the principal amounts as set forth on the inside front cover page hereof. The Bonds shall bear interest from their date, payable semiannually on each April 1 and October 1 (each, an “Interest Payment Date”), commencing April 1, 2019, in each year until maturity or earlier redemption, at the interest rates shown on the inside front cover page hereof. Interest on the Bonds shall be computed on a 30-day month/360-day year basis.
The Bonds are issuable as fully registered book-entry bonds in the form of one certificate for each maturity of Bonds and in the principal amount of such maturity. The Bonds may be purchased in book-entry only form in the amount of $5,000, or any integral multiple in excess thereof, required through book-entries made on the books and records of The Depository Trust Company, New York, New York (“DTC”) and its participants. So long as DTC or its nominee, Cede & Co. (or any successor or assign), is the registered owner for the Bonds, payments of the principal of and interest on the Bonds will be made by the Township directly to Cede & Co. (or any successor or assign), as nominee for DTC. Interest on the Bonds will be credited to the participants of DTC as listed on the records of DTC as of each next preceding March 15 and September 15 (the “Record Dates” for the payment of interest on the Bonds). See “Book-Entry- Only System” herein.
Redemption
The Bonds maturing prior to October 1, 2025 are not subject to redemption prior to their respective maturity dates. The Bonds maturing on or after October 1, 2025 are subject to redemption in whole or in part on any date on or after October 1, 2024 at the option of the Township, at one hundred percent (100%) of the principal amount of the Bonds being redeemed (the “Redemption Price”), plus in each case accrued interest thereon to the date fixed for redemption. 1
Notice of Redemption
Notice of redemption shall be given by first class mail in a sealed envelope with postage prepaid to the registered owners of such Bonds at their respective addresses as they last appear on the registration books kept for that purpose by the Township, at least thirty (30) but not more than sixty (60) days before the date fixed for redemption. However, so long as DTC (or any successor thereto) acts as securities depository for the Bonds, notice of redemption shall be sent to such securities depository and shall not be sent to the beneficial owners of the Bonds, and will be done in accordance with DTC procedures. Any failure of such securities depository to advise any of its participants or any failure of any participant to notify any beneficial owner of any notice of redemption shall not affect the validity of the redemption proceedings. If the Township determines to redeem a portion of the Bonds of a maturity, such Bonds shall be selected by the Township by lot. If notice of redemption has been given as described herein, the Bonds, or the portion thereof called for redemption, shall be due and payable on the date fixed for redemption at the Redemption Price, together with accrued interest to the date fixed for redemption. Payment shall be made upon surrender of the Bonds redeemed.
Book-Entry-Only System
The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal of and interest, and other payments due on the Bonds to DTC Participants or Beneficial Owners (each as defined below), confirmation and transfer of beneficial ownership interests in the Bonds and other related transactions by and between DTC, DTC Participants and Beneficial Owners, is based on certain information furnished by DTC to the Township. Accordingly, the Township does not make any representations concerning these matters.
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully- registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered global Bond certificate will be issued for each maturity of each series of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant,
2 either directly or indirectly (“Indirect Participants” and, together with the Direct Participants, the “DTC Participants”). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Township or its paying agent, if any, as soon as possible after the applicable record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the applicable record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, if applicable, and distributions on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Township or paying agent, on payable date in accordance with their respective holdings shown on DTC's records.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the paying agent, if any, or the Township, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, if applicable, and distributions to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Township or its paying agent, if any, disbursement of such payments to Direct Participants will be the responsibility of DTC, and
3 disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Township or its paying agent, if any. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Township believes to be reliable, but the Township does not take any responsibility for the accuracy thereof.
THE TOWNSHIP AS PAYING AGENT WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO SUCH DTC PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE PAYMENTS TO OR PROVIDING OF NOTICE FOR THE DTC PARTICIPANTS, OR THE INDIRECT PARTICIPANTS, OR BENEFICIAL OWNERS.
SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE BONDS, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE BONDHOLDERS OR REGISTERED OWNERS OF THE BONDS (OTHER THAN UNDER THE CAPTION “TAX MATTERS”) SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS.
Discontinuance of Book-Entry-Only System
If the Township, in its sole discretion, determines that DTC is not capable of discharging its duties, or if DTC discontinues providing its services with respect to the Bonds at any time, the Township will attempt to locate another qualified securities depository. If the Township fails to find such a securities depository, or if the Township determines, in its sole discretion, that it is in the best interest of the Township or that the interest of the Beneficial Owners might be adversely affected if the book-entry-only system of transfer is continued (the Township undertakes no obligation to make an investigation to determine the occurrence of any events that would permit it to make such determination), the Township shall notify DTC of the termination of the book-entry-only system.
SECURITY AND SOURCE OF PAYMENT
The Bonds are valid and legally binding obligations of the Township, and the Township has pledged its full faith and credit for the payment of the principal of and the interest on the Bonds. The Township is required by law to levy ad valorem taxes upon all the real property taxable within the Township for the payment of the principal of and the interest due on the Bonds without limitation as to rate or amount.
AUTHORIZATION AND PURPOSE OF THE BONDS
The Bonds have been authorized and are being issued pursuant to the laws of the State, including the Local Bond Law (constituting Chapter 2 of Title 40A of the New Jersey Statutes, as amended) (the “Local Bond Law”), the bond ordinances adopted by the Township Council referred to in the chart below and by a resolution adopted by the Township Council on August 20, 2018 (the “Resolution”).
4
Principal Bond Description of Improvement and Date of Amount of Ordinance Adoption of Bond Ordinance Bonds #2008-26 Various sewer improvements, finally adopted $ 170,200 September 6, 2008. #2011-14 Various capital improvements, finally adopted 48,000 August 1, 2011. #2012-08 Various capital improvements, finally adopted 43,200 June 11, 2012. #2013-09 Various capital improvements, finally adopted 43,200 May 13, 2013. #2014-13 Various capital improvements, finally adopted 24,000 August 4, 2014. #2016-09 Various capital improvements, finally adopted 70,200 June 13, 2016. #2017-21 Various capital improvements, finally adopted 5,337,000 June 12, 2017. #2018-15 Various capital improvements, finally adopted 4,764,200 June 11, 2018. Total: $10,500,000
Proceeds from the sale and issuance of the Bonds will be used by the Township to (i) provide new money to finance the projects set forth in the bond ordinances described above, and (ii) pay the costs in connection with the authorization, sale and issuance of the Bonds.
MUNICIPAL FINANCE - FINANCIAL REGULATION OF COUNTIES AND MUNICIPALITIES
Local Bond Law (N.J.S.A. 40A:2-1 et seq.)
The Local Bond Law governs the issuance of bonds and notes to finance certain general municipal and utility capital expenditures. Among its provisions are requirements that bonds must mature within the statutory period of usefulness of the projects bonded and that bonds be retired in serial installments. A 5% cash down payment is generally required toward the financing of expenditures for municipal purposes. All bonds and notes issued by the Township are general full faith and credit obligations.
The authorized bonded indebtedness of the Township for municipal purposes is limited by statute, subject to the exceptions noted below, to an amount equal to 3½% of its average equalized valuation basis. The average for the last three years of the equalized value of all taxable real property and improvements and certain Class II railroad property within the boundaries of Township, as annually determined by the State Director of Taxation is $6,586,257,710.67.
Certain categories of debt are permitted by statute to be deducted for purposes of computing the statutory debt limit, including school bonds that do not exceed the school bond borrowing margin and certain debt that may be deemed self-liquidating. 5
The Township has not exceeded its statutory debt limit. As of December 31, 2017, the statutory net debt as a percentage of average equalized valuation was 0.544%. As noted above, the statutory limit is 3½%.
The Township may exceed its debt limit with the approval of the Local Finance Board, a State regulatory agency, and as permitted by other statutory exceptions. If all or any part of a proposed debt authorization would exceed its debt limit, the Township may apply to the Local Finance Board for an extension of credit. If the Local Finance Board determines that a proposed debt authorization would not materially impair the credit of the Township or substantially reduce the ability of the Township to meet its obligations or to provide essential public improvements and services, or if it makes certain other statutory determinations, approval is granted. In addition, debt in excess of the statutory limit may be issued by the Township to fund certain notes, to provide for self-liquidating purposes, and, in each fiscal year, to provide for purposes in an amount not exceeding 2/3 of the amount budgeted in such fiscal year for the retirement of outstanding obligations (exclusive of utility and assessment obligations).
The Township may sell short-term “bond anticipation notes” to temporarily finance a capital improvement or project in anticipation of the issuance of bonds if the bond ordinance or a subsequent resolution so provides. Bond anticipation notes for capital improvements may be issued in an aggregate amount not exceeding the amount specified in the bond ordinance creating such capital expenditure, as it may be amended and supplemented. A local unit’s bond anticipation notes may be issued for periods not greater than one year. Generally, bond anticipation notes may not be outstanding for longer than ten years. An additional period may be available following the tenth anniversary date equal to the period from the bond anticipation notes’ maturity to the end of the tenth fiscal year in which the bond anticipation notes mature plus 4 months (May 1) in the next following fiscal year from the date of original issuance. Beginning in the third year, the amount of bond anticipation notes that may be issued is decreased by the minimum amount required for the first year’s principal payment for a bond issue.
The Local Budget Law (N.J.S.A. 40A:4-1 et seq.)
The foundation of the New Jersey local finance system is the annual cash basis budget. Every local unit must adopt a budget in the form required by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the “Division”). Certain items of revenue and appropriation are regulated by law and the proposed budget must be certified by the Director of the Division (“Director”) prior to final adoption. The Local Budget Law requires each local unit to appropriate sufficient funds for payment of current debt service, and the Director is required to review the adequacy of such appropriations.
The local unit is authorized to issue “emergency notes” and “special emergency notes” pursuant to the Local Budget Law.
“Tax anticipation notes” are limited in amount by law and must be paid off in full within 120 days of the close of the fiscal year.
The Director has no authority over individual operating appropriations, unless a specific amount is required by law, but the review functions focusing on anticipated revenues serve to protect the solvency of all local units.
The cash basis budgets of local units must be in balance, i.e., the total of anticipated revenues must equal the total of appropriations (N.J.S.A. 40A:4-22). If in any year a local unit's
6 expenditures exceed its realized revenues for that year, then such excess must be raised in the succeeding year's budget.
The Local Budget Law (N.J.S.A. 40A:4-26) provides that no miscellaneous revenues from any source may be included as an anticipated revenue in the budget in an amount in excess of the amount actually realized in cash from the same source during the next preceding fiscal year, unless the Director determines that the facts clearly warrant the expectation that such excess amount will actually be realized in cash during the fiscal year and certifies that determination to the local unit.
No budget or budget amendment may be adopted unless the Director shall have previously certified his or her approval of such anticipated revenues except that categorical grants-in-aid contracts may be included for their face amount with an offsetting appropriation. The fiscal years for such grants rarely coincide with the municipality's calendar year. However, grant revenue is generally not realized until received in cash.
The same general principle that revenue cannot be anticipated in a budget in excess of that realized in the preceding year applies to property taxes. The maximum amount of delinquent taxes that may be anticipated is limited by a statutory formula, which allows the local unit to anticipate collection at the same rate realized for the collection of delinquent taxes in the previous year. Also the local unit is required to make an appropriation for a “reserve for uncollected taxes” in accordance with a statutory formula to provide for a tax collection in an amount that does not exceed the percentage of taxes levied and payable in the preceding fiscal year that was received in cash by December 31 of that year. The budget also must provide for any cash deficits of the prior year.
Emergency appropriations (those made after the adoption of the budget and the determination of the tax rate) may be authorized by the governing body of a local unit. However, with minor exceptions, such appropriations must be included in full in the following year's budget.
The exceptions are certain enumerated quasi-capital projects (“special emergencies”) such as ice, snow and flood damage to streets, roads and bridges, which may be amortized over three years, and tax map preparation, re-evaluation programs, revision and codification of ordinances, master plan preparation drainage map preparation for flood control purposes and contractually required severance liabilities, which may be amortized over five years. Of course, emergency appropriations for capital projects may be financed through the adoption of a bond ordinance and amortized over the useful life of the project.
Budget transfers provide a degree of flexibility and afford a control mechanism. Transfers between appropriation accounts may be made only during the last two months of the fiscal year. Appropriation reserves may also be transferred during the first three (3) months of the fiscal year, to the previous year’s budget. Both types of transfers require a 2/3 vote of the full membership of the governing body; however, transfers cannot be made from either the down payment account or the capital improvement fund. Transfers may be made between sub- account line items within the same account at any time during the year, subject to internal review and approval. In a “CAP” budget, no transfers may be made from excluded from “CAP” appropriations to within “CAPS” appropriations nor can transfers be made between excluded from “CAP” appropriations.
A provision of law known as the New Jersey “Cap Law” (N.J.S.A. 40A:4-45.1 et seq.) imposes limitations on increases in municipal appropriations subject to various exceptions. The payment of debt service is an exception from this limitation. The Cap formula is somewhat complex, but basically, it permits a municipality to increase its overall appropriations by the
7 lesser of 2.5% or the “Index Rate” if the index rate is greater than 2.5%. The “Index Rate” is the rate of annual percentage increase, rounded to the nearest one-half percent, in the Implicit Price Deflator for State and Local Government purchases of goods and services computed by the U.S. Department of Commerce. Exceptions to the limitations imposed by the Cap Law also exist for other things including capital expenditures; extraordinary expenses approved by the Local Finance Board for implementation of an interlocal services agreement; expenditures mandated as a result of certain emergencies; and certain expenditures for services mandated by law. Counties are also prohibited from increasing their tax levies by more than the lesser of 2.5% or the Index Rate subject to certain exceptions. Municipalities by ordinance approved by a majority of the full membership of the governing body may increase appropriations up to 3.5% over the prior year’s appropriation and counties by resolution approved by a majority of the full membership of the governing body may increase the tax levy up to 3.5% over the prior years’ tax levy in years when the Index Rate is 2.5% or less.
Additionally, legislation constituting P.L. 2010, c. 44, approved July 13, 2010 limits tax levy increases for those local units to 2% with exceptions only for capital expenditures including debt service, increases in pension contributions and accrued liability for pension contributions in excess of 2%, certain healthcare increases, extraordinary costs directly related to a declared emergency and amounts approved by a simple majority of voters voting at a special election.
Neither the tax levy limitation nor the “Cap Law” limits the obligation of the Township to levy ad valorem taxes upon all taxable real property within the Township to pay debt service on its bonds or notes.
In accordance with the Local Budget Law, each local unit must adopt and may from time to time amend rules and regulations for capital budgets, which rules and regulations must require a statement of capital undertakings underway or projected for a period not greater than over the next ensuing six years as a general improvement program. The capital budget, when adopted, does not constitute the approval or appropriation of funds, but sets forth a plan of the possible capital expenditures which the local unit may contemplate over the three years. Expenditures for capital purposes may be made either by ordinances adopted by the governing body setting forth the items and the method of financing or from the annual operating budget if the terms were detailed.
Tax Assessment and Collection Procedure
Property valuations (assessments) are determined on true values as arrived at by a cost approach, market data approach and capitalization of net income where appropriate. Current assessments are the results of new assessments on a like basis with established comparable properties for newly assessed or purchased properties. This method assures equitable treatment to like property owners. But it often results in a divergence of the assessment ratio to true value. Because of the changes in property resale values, annual adjustments could not keep pace with the changing values. A re-evaluation of all property in the Township was last completed in 1985.
Upon the filing of certified adopted budgets by the Township’s Local School District and the County, the tax rate is struck by the County Board of Taxation based on the certified amounts in each of the taxing districts for collection to fund the budgets. The statutory provision for the assessment of property, levying of taxes and the collection thereof are set forth in N.J.S.A. 54:4-1 et seq. Special taxing districts are permitted in New Jersey for various special services rendered to the properties located within the special districts.
Tax bills are mailed annually in June by the Township. The taxes are due August 1 and November 1 respectively, and are adjusted to reflect the current calendar year’s total tax
8 liability. The preliminary taxes due February 1 and May 1 of the succeeding year are based upon one-half of the current year’s total tax.
Tax installments not paid on or before the due date are subject to interest penalties of 8% per annum on the first $1,500.00 of the delinquency and 18% per annum on any amount in excess of $1,500.00. These interest rates and penalties are the highest permitted under New Jersey Statutes. Delinquent taxes open for one year or more are annually included in a tax sale in accordance with New Jersey Statues. A table detailing tax title liens is included in Appendix “A”.
Tax Appeals
New Jersey Statutes provide a taxpayer with remedial procedures for appealing an assessment deemed excessive. Prior to February 1 in each year, the Township must mail to each property owner a notice of the current assessment and taxes on the property. The taxpayer has a right to petition the County Tax Board on or before April 1 for review. The County Board of Taxation has the authority after a hearing to decrease or reject the appeal petition. These adjustments are usually concluded within the current tax year and reductions are shown as canceled or remitted taxes for that year. If the taxpayer feels his petition was unsatisfactorily reviewed by the County Board of Taxation, appeal may be made to the Tax Court of New Jersey for further hearing. Some State Tax Court appeals may take several years prior to settlement and any losses in tax collections from prior years are charged directly to operations.
The Local Fiscal Affairs Law (N.J.S.A. 40A:5-1 et seq.)
This law regulates the non-budgetary financial activities of local governments. The chief financial officer of every local unit must file annually, with the Director, a verified statement of the financial condition of the local unit and all constituent boards, agencies or commissions.
An independent examination of each local unit’s accounts must be performed annually by a licensed registered municipal accountant. The audit, conforming to the Division of Local Government Services’ “Requirements of Audit”, includes recommendations for improvement of the local unit’s financial procedures and must be filed with the report, together with all recommendations made, and must be published in a local newspaper within 30 days of its submission. The entire annual audit report for the year ended December 31, 2017 for the Township is on file with the Clerk and is available for review during business hours.
TAX MATTERS
Exclusion of Interest on the Bonds From Gross Income for Federal Tax Purposes
The Internal Revenue Code of 1986, as amended (the “Code”), imposes certain requirements that must be met on a continuing basis subsequent to the issuance of the Bonds in order to assure that interest on the Bonds will be excluded from gross income for federal income tax purposes under Section 103 of the Code. Failure of the Township to comply with such requirements may cause interest on the Bonds to lose the exclusion from gross income for federal income tax purposes, retroactive to the date of issuance of the Bonds. The Township will make certain representations in its Arbitrage and Tax Certificate, which will be executed on the date of issuance of the Bonds, as to various tax requirements. The Township has covenanted to comply with the provisions of the Code applicable to the Bonds and has covenanted not to take any action or fail to take any action that would cause interest on the Bonds to lose the exclusion from gross income under Section 103 of the Code. Bond Counsel
9 will rely upon the representations made in the Arbitrage and Tax Certificate and will assume continuing compliance by the Township with the above covenants in rendering its federal income tax opinions with respect to the exclusion of interest on the Bonds from gross income for federal income tax purposes and with respect to the treatment of interest on the Bonds for the purposes of alternative minimum tax.
Assuming the Township observes its covenants with respect to compliance with the Code, McManimon, Scotland & Baumann, LLC, Bond Counsel to the Township, is of the opinion that, under existing law, interest on the Bonds is excluded from gross income of the owners thereof for federal income tax purposes pursuant to Section 103 of the Code, and interest on the Bonds is not an item of tax preference under Section 57 of the Code for purposes of computing the alternative minimum tax. For corporations with tax years beginning after December 31, 2017, the corporate alternative minimum tax was repealed by federal legislation, Public Law No. 115-97 (the “Tax Cuts and Jobs Act”) enacted on December 22, 2017, effective for tax years beginning after December 31, 2017. For tax years beginning before January 1, 2018, interest on the Bonds is not an item of tax preference for purposes of the corporate alternate minimum tax in effect prior to enactment of the Tax Cuts and Jobs Act; however, interest on Bonds held by a corporation (other than an S corporation, regulated investment company or real estate investment trust) may be indirectly subject to federal alternative minimum tax for tax years beginning before January 1, 2018 because of its inclusion in the adjusted current earnings of a corporate holder.
The opinion of Bond Counsel is based on current legal authority and covers certain matters not directly addressed by such authority. It represents Bond Counsel's legal judgment as to exclusion of interest on the Bonds from gross income for federal income tax purposes but is not a guaranty of that conclusion. The opinion is not binding on the Internal Revenue Service (“IRS”) or any court. Bond Counsel expresses no opinion about the effect of future changes in (i) the Code and the applicable regulations under the Code or (ii) the interpretation and enforcement of the Code or those regulations by the IRS.
Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Township or the owners of the Bonds regarding the tax status of interest thereon in the event of an audit examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine whether the interest thereon is includible in gross income for federal income tax purposes. If the IRS does audit the Bonds, under current IRS procedures, the IRS will treat the Township as the taxpayer and the beneficial owners of the Bonds will have only limited rights, if any, to obtain and participate in judicial review of such audit. Any action of the IRS, including, but not limited to, selection of the Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the market value of the Bonds.
Payments of interest on tax-exempt obligations, including the Bonds, are generally subject to IRS Form 1099-INT information reporting requirements. If a Bond owner is subject to backup withholding under those requirements, then payments of interest will also be subject to backup withholding. Those requirements do not affect the exclusion of such interest from gross income for federal income tax purposes.
Original Issue Discount
Certain maturities of the Bonds may be sold at an initial offering price less than the principal amount payable on such Bonds at maturity (the “Discount Bonds”). The difference between the initial public offering price of the Discount Bonds at which a substantial amount of each of the Discount Bonds was sold and the principal amount payable at maturity of each of the Discount Bonds constitutes the original issue discount. Bond Counsel is of the opinion that
10 the appropriate portion of the original issue discount allocable to the original and each subsequent owner of the Discount Bonds will be treated for federal income tax purposes as interest not includable in gross income under Section 103 of the Code to the same extent as stated interest on the Discount Bonds. Under Section 1288 of the Code, the original issue discount on the Discount Bonds accrues on the basis of economic accrual. The basis of an initial purchaser of a Discount Bond acquired at the initial public offering price of the Discount Bonds will be increased by the amount of such accrued discount. Owners of the Discount Bonds should consult their own tax advisors with respect to the determination for federal income tax purposes of the original issue discount properly accruable with respect to the Discount Bonds and the tax accounting treatment of accrued interest.
Original Issue Premium
Certain maturities of the Bonds may be sold at an initial offering price in excess of the amount payable at the maturity date (the “Premium Bonds”). The excess, if any, of the tax basis of the Premium Bonds to a purchaser (other than a purchaser who holds such Premium Bonds as inventory, as stock-in-trade or for sale to customers in the ordinary course of business) over the amount payable at maturity is amortizable bond premium, which is not deductible from gross income for federal income tax purposes. Amortizable bond premium, as it amortizes, will reduce the owner's tax cost of the Premium Bonds used to determine, for federal income tax purposes, the amount of gain or loss upon the sale, redemption at maturity or other disposition of the Premium Bonds. Accordingly, an owner of a Premium Bond may have taxable gain from the disposition of the Premium Bond, even though the Premium Bond is sold, or disposed of, for a price equal to the owner's original cost of acquiring the Premium Bond. Bond premium amortizes over the term of the Premium Bonds under the “constant yield method” described in regulations interpreting Section 1272 of the Code. Owners of the Premium Bonds should consult their own tax advisors with respect to the calculation of the amount of bond premium that will be treated for federal income tax purposes as having amortized for any taxable year (or portion thereof) of the owner and with respect to other federal, state and local tax consequences of owning and disposing of the Premium Bonds.
Additional Federal Income Tax Consequences of Holding the Bonds
Prospective purchasers of the Bonds should be aware that ownership of, accrual or receipt of interest on or disposition of tax-exempt obligations, such as the Bonds, may have additional federal income tax consequences for certain taxpayers, including, without limitation, taxpayers eligible for the earned income credit, recipients of certain Social Security and certain Railroad Retirement benefits, taxpayers that may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, financial institutions, property and casualty companies, foreign corporations and certain S corporations.
Bond Counsel expresses no opinion regarding any federal tax consequences other than its opinion with regard to the exclusion of interest on the Bonds from gross income pursuant to Section 103 of the Code and interest on the Bonds not constituting an item of tax preference under Section 57 of the Code. Prospective purchasers of the Bonds should consult their tax advisors with respect to all other tax consequences (including, but not limited to, those listed above) of holding the Bonds.
Changes in Federal Tax Law Regarding the Bonds
Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and may also be considered by the State of New Jersey. Court proceedings may also be filed, the outcome of which could modify the tax treatment of obligations such as the Bonds. There can be no assurance that legislation enacted or proposed, or actions by a court,
11 after the date of issuance of the Bonds will not have an adverse effect on the tax status of interest on the Bonds or the market value or marketability of the Bonds. These adverse effects could result, for example, from changes to federal or state income tax rates, changes in the structure of federal or state income taxes (including replacement with another type of tax) or repeal (or reduction in the benefit) of the exclusion of interest on the Bonds from gross income for federal or state income tax purposes for all or certain taxpayers.
State Taxation
Bond Counsel is of the opinion that, based upon existing law, interest on the Bonds and any gain on the sale thereof are not included in gross income under the New Jersey Gross Income Tax Act.
THE OPINIONS EXPRESSED BY BOND COUNSEL WITH RESPECT TO THE BONDS ARE BASED UPON EXISTING LAWS AND REGULATIONS AS INTERPRETED BY RELEVANT JUDICIAL AND REGULATORY CHANGES AS OF THE DATE OF ISSUANCE OF THE BONDS, AND BOND COUNSEL HAS EXPRESSED NO OPINION WITH RESPECT TO ANY LEGISLATION, REGULATORY CHANGES OR LITIGATION ENACTED, ADOPTED OR DECIDED SUBSEQUENT THERETO. PROSPECTIVE PURCHASERS OF THE BONDS SHOULD CONSULT THEIR OWN TAX ADVISERS REGARDING THE POTENTIAL IMPACT OF ANY PENDING OR PROPOSED FEDERAL OR STATE TAX LEGISLATION, REGULATIONS OR LITIGATION.
LITIGATION
To the knowledge of the Township Attorney, Michael W. Herbert, Esquire, Parker McCay P.A., Hamilton, New Jersey, there is no litigation of any nature now pending or threatened, restraining or enjoining the issuance or the delivery of the Bonds, or the levy or the collection of any taxes to pay the principal of or the interest on the Bonds, or in any manner questioning the authority or the proceedings for the issuance of the Bonds or for the levy or the collection of taxes, or contesting the corporate existence or the boundaries of the Township or the title of any of the present officers. Moreover, to the knowledge of the Township Attorney, no litigation is presently pending or threatened that, in the opinion of the Township Attorney, would have a material adverse impact on the financial condition of the Township if adversely decided.
SECONDARY MARKET DISCLOSURE
The Township, pursuant to the Resolution, has covenanted for the benefit of the Bondholders and the beneficial owners of the Bonds to provide certain secondary market disclosure information pursuant to the Securities and Exchange Commission Rule 15c2-12 (the “Rule”). Specifically, for so long as the Bonds remain outstanding (unless the Bonds have been wholly defeased), the Township will:
(a) On or prior to 270 days from the end of each fiscal year, beginning with the fiscal year ending December 31 of the year in which the Bonds are issued, to the Municipal Securities Rulemaking Board through the Electronic Municipal Market Access Data Port (the “MSRB”), annual financial information with respect to the Township consisting of the audited financial statements (or unaudited financial statements if audited financial statements are not then available, which audited financial statements will be delivered when and if available) of the Township and certain financial information and operating data consisting of (i) the Township and overlapping indebtedness including a schedule of outstanding debt issued by the Township, (ii) property valuation information, and (iii) tax rate, levy and collection data. The audited financial
12 information will be prepared in accordance with modified cash accounting as mandated by State statutory principles in effect from time to time or with generally accepted accounting principles as modified by governmental accounting standards as may be required by State law and shall be filed electronically and accompanied by identifying information with the MSRB;
(b) in a timely manner not in excess of ten business days after the occurrence of the event, to the MSRB, notice of any of the following events with respect to the Bonds:
(1) Principal and interest payment delinquencies; (2) Non-payment related defaults, if material; (3) Unscheduled draws on debt service reserves reflecting financial difficulties; (4) Unscheduled draws on credit enhancements reflecting financial difficulties; (5) Substitution of credit or liquidity providers, or their failure to perform; (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (7) Modifications to rights of security holders, if material; (8) Bond calls, if material, and tender offers; (9) Defeasances; (10) Release, substitution, or sale of property securing repayment of the securities, if material; (11) Rating changes; (12) Bankruptcy, insolvency, receivership or similar event of the obligated person; (13) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
(c) in a timely manner to the MSRB, notice of failure of the Township to provide required annual financial information on or before the date specified in the Resolution. In the event that the Township fails to comply with the above-described undertaking and covenants, the Township shall not be liable for any monetary damages, remedy of the beneficial owners of the Bonds being specifically limited in the undertaking to specific performance of the covenants.
The undertaking may be amended by the Township from time to time, without the consent of the Bondholders or the beneficial owners of the Bonds, in order to make modifications required in connection with a change in legal requirements or change in law, which in the opinion of nationally recognized bond counsel complies with the Rule.
The Township has previously entered into continuing disclosure undertakings under the Rule. The Township appointed Phoenix Advisors, LLC, Bordentown, New Jersey in October of 2014 to serve as continuing disclosure agent.
There can be no assurance that there will be a secondary market for the sale or purchase of the Bonds. Such factors as prevailing market conditions, financial condition or
13 market position of firms who may make the secondary market and the financial condition of the Township may affect the future liquidity of the Bonds.
MUNICIPAL BANKRUPTCY
The undertakings of the Township should be considered with reference to Chapter IX of the Bankruptcy Act, 11 U.S.C. Section 901, et seq., as amended by Public Law 94-260, approved April 8, 1976, and as further amended on November 6, 1978 by the Bankruptcy Reform Act of 1978, effective October 1, 1979, as further amended by Public Law 100-597, effective November 3, 1988, and as further amended and other bankruptcy laws affecting creditor’s rights and municipalities in general. The amendments of P.L. 94-260 replace former Chapter IX and permit the State or any political subdivision, public agency, or instrumentality that is insolvent or unable to meet its debts to file a petition in a court of bankruptcy for the purpose of effecting a plan to adjust its debts; directs such a petitioner to file with the court a list of petitioner’s creditors; provides that a petition filed under said chapter shall operate as a stay of the commencement or continuation of any judicial or other proceeding against the petitioner; grants priority to debt owed for services or material actually provided within three months of the filing of the petition; directs a petitioner to file a plan for the adjustment of its debts; and provides that the plan must be accepted in writing by or on behalf of creditors holding at least two-thirds in amount or more than one-half in number of the listed creditors. The 1976 Amendments were incorporated into the Bankruptcy Reform Act of 1978 with only minor changes.
Reference should also be made to N.J.S.A. 52:27-40 et seq., which provides that a municipality has the power to file a petition in bankruptcy provided the approval of the Municipal Finance Commission has been obtained. The powers of the Municipal Finance Commission have been vested in the Local Finance Board. The Bankruptcy Act specifically provides that Chapter IX does not limit or impair the power of a state to control, by legislation or otherwise, the procedures that a municipality must follow in order to take advantage of the provisions of the Bankruptcy Act.
APPROVAL OF LEGAL PROCEEDINGS
All legal matters incident to the authorization, the issuance, the sale, and the delivery of the Bonds are subject to the approval of McManimon, Scotland & Baumann, LLC, Roseland, New Jersey, Bond Counsel to the Township, whose approving legal opinion will be delivered with the Bonds substantially in the form set forth as Appendix “C”. Certain legal matters will be passed on for the Township by its Township Attorney, Michael W. Herbert, Esquire, Parker McCay P.A., Hamilton, New Jersey.
MUNICIPAL ADVISOR
Phoenix Advisors, LLC, Bordentown, New Jersey has served as Municipal Advisor to the Township with respect to the issuance of the Bonds (the “Municipal Advisor”). The Municipal Advisor is not obligated to undertake and has not undertaken, either to make an independent verification of, or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Official Statement and the appendices hereto. The Municipal Advisor is an independent firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities.
14 UNDERWRITING
The Bonds have been purchased from the Township at a public sale by Raymond James & Associates, Inc., New York, New York (the “Underwriter”) at a price of $11,240,920.00 (consisting of the par amount of the Bonds plus a bid premium of $740,920.00). The Underwriter has purchased the Bonds in accordance with the Notice of Sale. The Bonds are being offered for sale at the yields or prices set forth on the inside front cover of this Official Statement.
RATING
S&P Global Ratings, acting through Standard & Poor’s Financial Services LLC (the “Rating Agency”) has assigned a rating of “AAA” to the Bonds based upon the creditworthiness of the Township.
The rating reflects only the views of the Rating Agency and an explanation of the significance of such rating may only be obtained from the Rating Agency. The Township provided the Rating Agency with certain information and materials concerning the Bonds and the Township. There can be no assurance that the rating will be maintained for any given period of time or that they may not be raised, lowered or withdrawn entirely if, in the Rating Agency’s judgment, circumstances so warrant. Any downward change in, or withdrawal of such rating, may have an adverse effect on the marketability or market price of the Bonds.
FINANCIAL STATEMENTS
The audited financial statements of the Township for the year ended December 31, 2017 are presented in Appendix “B” to this Official Statement (the “Financial Statements”). The Financial Statements have been prepared by Suplee, Clooney & Company, Westfield, New Jersey, an independent auditor, as stated in its report appearing in Appendix “B” to this Official Statement. The Auditor has not participated in the preparation of this Official Statement, nor has such firm verified the accuracy, completeness or fairness of the information contained herein (except for the audited financial statements appearing in Appendix “B” hereto) and, accordingly, will express no opinion with respect thereto. See “APPENDIX B - Financial Statements of the Township of West Windsor”.
PREPARATION OF OFFICIAL STATEMENT
The Township hereby states that the descriptions and statements herein, including financial statements, are true and correct in all material respects and it will confirm to the purchasers of the Bonds, by certificates signed by the Chief Financial Officer of the Township, that to such officer’s knowledge such descriptions and statements, as of the date of this Official Statement, are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein, in light of the circumstances under which they were made, not misleading.
All other information has been obtained from sources which Township considers to be reliable and they make no warranty, guaranty or other representation with respect to the accuracy and completeness of such information.
15 Bond Counsel has not participated in the preparation of the financial or statistical information contained in this official statement, nor have they verified the accuracy, completeness or fairness thereof and, accordingly, expresses no opinion with respect thereto.
ADDITIONAL INFORMATION
Inquiries regarding this Official Statement, including information additional to that contained herein, may be directed to Joanne R. Louth, Chief Financial Officer, Township of West Windsor, 271 Clarksville Road, P.O. Box 38, West Windsor, New Jersey 08550, telephone (609) 799-2400 or by email [email protected] or the Municipal Advisor, Phoenix Advisors, LLC at 625 Farnsworth Avenue, Bordentown, New Jersey, New Jersey 08505, (609) 291-0130.
MISCELLANEOUS
This Official Statement is not to be construed as a contract or agreement between the Township and the purchasers or holders of any of the Bonds. Any statements made in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as opinions and not as representations of fact. The information and expressions of opinion contained herein are subject to change without notice and neither the delivery of this Official Statement nor any sale of Bonds made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Township since the date hereof. The information contained in the Official Statement is not guaranteed as to accuracy or completeness.
TOWNSHIP OF WEST WINDSOR
By: /s/ Joanne R. Louth Joanne R. Louth, Chief Financial Officer
Dated: September 19, 2018
16 APPENDIX A
CERTAIN ECONOMIC AND DEMOGRAPHIC INFORMATION ABOUT THE TOWNSHIP OF WEST WINDSOR
[ THIS PAGE INTENTIONALLY LEFT BLANK ] INFORMATION REGARDING THE TOWNSHIP
The following material presents certain economic and demographic information of the Township of West Windsor (the “Township”). Additional information is included in Appendix B and such information is derived from certain certified audits and financial documents and should be used in conjunction with the audit from which they are derived. Unless otherwise stated, all information is from the Township.
The financial statements have been prepared in conformity with accounting practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. These practices differ in certain respects, which in some instances may be material, from generally accepted accounting principles applicable to local government units. The Synopsis of Audit for years ending December 31, 2017 and December 31, 2016 are provided in Appendix B.
General Information
The Township, incorporated in 1797, is comprised of 26 square miles and is primarily a suburban/exurban and rural community. The Township is located in the northeasterly section of Mercer County (the “County”) and bordered by Princeton, Lawrence Township, Hamilton Township and Robbinsville Township in the County, and Plainsboro Township in Middlesex County.
History
The Township was initially established in 1682 when William Penn signed a treaty with the Delaware Indians. In 1731, the area was known as New Windsor Township and it included Princeton Township, Princeton Borough, and East Windsor. In 1737, the area was sold by Penn’s heirs to the Schenck and Covenhoven families who were Dutch farmers. In 1751, it became the Township of Windsor and in 1797, West Windsor Township became incorporated and then included half of the Princetons. In 1838, the County was established and in 1855, the current borders for the Township were defined containing 26.84 square miles. Today, the Township can still identify the six farming villages that were a part of the area (Clarksville, Dutch Neck, Edinburg, Grovers Mill, Penns Neck, and Port Mercer) and a seventh hamlet, Princeton Junction, which was established in 1865 when the train station was situated in the Township. Today, the Township is home to over 28,000 residents.
Each of the seven villages has its own history and evolution over the years but one village, Grovers Mill, deserves particular mention. While the Grovers Mill pond was frequently visited by presidents Grover Cleveland and Woodrow Wilson, friends of the Grover family, the most famous visitors were the fictional Martians from the radio drama Orson Welles produced based on the book The War of the Worlds by H.G. Wells. In this drama, the audience was told that an alien spacecraft had landed on a farm near Grovers Mill, located in the Township. Many people, believing the newscast was real, were driven into hysteria. Today there is a monument installed near Grovers Mill Pond at Van Nest Park to commemorate the radio broadcast.
A-1 Governmental Structure
The form of government was changed by referendum, effective July 1, 1993, from Township Committee to Mayor-Council under the Faulkner Act. The Township is governed by the Mayor who is elected at large and a five (5) member Township Council the members of which are elected at large for four (4) year staggered terms. The professional management team is headed by an appointed Business Administrator. The Business Administrator position is established by ordinance and recognized by the International City/County Management Association (ICMA).
The Township is a full-service municipal entity. An organizational chart is provided below which shows the primary departments, divisions and offices of the Township. All services with the exception of Public Works are provided at a single location. The Township campus has a Police/Court Facility, a Fire and Emergency Services Facility, an administrative services facility, a Health, Parks and Recreation Facility, and a Senior Center, which was the first municipal senior center in the State of New Jersey (the “State”) to be nationally accredited by the National Council on Aging/National Institute of Senior Centers. In addition, the Police recently completed their 4th accreditation with the New Jersey State Association Chief of Police (NJSACOP).
Mayor Council
Business Clerk Administrator
Community Administration Human Services Law Public Safety Public Works Development
Const./Code Finance Health Police Enforcement
Parks and Emergency Tax Assessor Engineering Recreation Services
Senior/Social Tax Collector Land Use Services
The Township has a significant number of active volunteer boards, committees, and commissions with over 97 members serving the Township’s interests without salary. These working bodies have been instrumental in, among other things, developing and implementing land use policies and promoting the Township and related events.
Boards, Committees, Commissions
Affordable Housing Committee
A-2 Agricultural Advisory Committee Board of Health Board of Recreation Commissioners Cable TV Advisory Board Environmental Commission Human Relations Council Parking Authority Planning Board Shade Tree Commission Zoning Board Of Adjustment Stony Brook Regional Sewerage Authority Emergency Management Council
Transportation
Area commercial and industrial establishments are served by U.S. Highway Route 1 and County Route 571 (Princeton-Hightstown Road). These arteries go directly through the Township. Other major arteries are Interstate Routes 95 and 295 a few miles south on Route 1 and Exits 9 (New Brunswick), 8A (Cranbury), and 8 (Hightstown) of the New Jersey Turnpike.
Area commuters are served by the Northeast Corridor Rail system via Amtrak and NJ Transit with excellent service to New York/Boston and Philadelphia/Washington DC from the Princeton Junction at West Windsor rail station located within the Township. There is also excellent service to New York City for bus commuters via Suburban Transit Co.
Area roadways lead quickly to most popular deepwater ports with extensive terminals and warehouses. Within 50 miles are the ports of New York, Philadelphia, Newark, and Elizabeth with the world’s largest containerization facilities.
Newark and Philadelphia Airports are both within one hour of the Township. Kennedy and LaGuardia Airports are only ninety minutes away. In addition, Mercer County and Robbinsville airports also serve the area.
Higher Education Institutions
Situated in the center of the State, the Township has the advantage of having the following universities and colleges located within a short distance:
Princeton University The College of New Jersey Rutgers University Westminster Choir College Rider University Princeton Theological Seminary Mercer County Community College
Public Schools
The West Windsor-Plainsboro Regional School District (the “Regional School District”) geographically includes the Township, located in the central northeastern section of the County, and
A-3 the Township of Plainsboro, located in the southeastern corner of Middlesex County, New Jersey. It provides a comprehensive program for students in kindergarten through grade 12. The Regional School District was formed pursuant to Chapter 13 of Title 18A of State Statutes, which authorizes two or more municipalities to create a regional school district upon approval of the voters of each said municipalities. The voters approved the formation of the Regional School District on April 22, 1969, and it became a functioning entity on July 1, 1969.
In the State, regional school districts are supported, in part, by real estate taxes based primarily upon the proportion of taxable property located in each participating municipality. In 2018, the Township’s school tax levy represented 58% of the required school tax with the Plainsboro share at 42%.
On April 17, 2007, based on a majority vote of both the Township and Plainsboro, West Windsor/Plainsboro Regional School District Public Question No.2 was approved changing the method of apportioning all Regional School District taxes between the two municipalities to a per pupil basis which took effect for the 2009-2010 school year.
School Year Enrollment 2017-18 9,759 2016-17 9,710 2015-16 9,721 2014-15 9,762 2013-14 9,730 2012-13 9,819
Other Schools
In addition to its public schools, the students of the Township have access to numerous private schools including the following:
Names of Schools Grades Type of School Chapin School Pre-K through 8 Private Elementary School Hun School of Princeton 6 through 12 Private Middle and High School Lawrenceville School 8 through 12 College Preparatory High School Mercer County Vocational - Technical School 11 and 12 Vocational High School Peddie School 9 through 12 College Preparatory High School Princeton Day School K through 12 Private Elementary and High School The Wilberforce School Pre-K Through 12 Private Elementary and High School
Also, a number of Township children attend parochial schools in Princeton and Hamilton Township.
A-4 Open Space
In 1993, the Township voters passed a referendum allowing a municipal open space levy of $0.01 cent per $100 of assessed value of real property. In 1995, an additional levy of $0.01 cent was supported by the voters. In 1998, voters supported a third levy of $0.05 cents, resulting in a total tax levy of $0.07 cents per $100 of assessed value for open space acquisition and maintenance. In anticipation of the revaluation in 2006, the open space tax rate was decreased from $0.07 to $0.05. As a result of the revaluation, the tax rate was further decreased to $0.03 in 2007 to maintain the current level of dollars collected for open space purposes. This municipal open space tax fund has allowed Township officials to proceed with land acquisition, slow residential sprawl, provide for future Township recreational needs, and maintain a level of farming business in the Township. Additional funding from organizations like the Friends of West Windsor Open Space (FOWWOS), the NJ Department of Environmental Protection, Mercer County, the D&R Greenway Land Trust and other public donations has resulted in the Township’s preservation of approximately 50 percent of its 26.84 square miles as open space.
To date the Township has received $18.3 million in grants from the State, County, and non- profit preservation programs. $1,550,000 in open space grants were received in 2017.
The Township developed an Open Space and Recreation Plan and an Open Space Acquisition Plan based in part on an Open Space Utilization Report developed in 1998 and presented to the Planning Board in 1999. This report articulated the Township’s vision of open space and recreation for the community for a six-year window and beyond. This became the basis for the Open Space and Recreation Plan Element of the Township Master Plan. With its open space funding through the open space tax levy and grants, the Township has undertaken an aggressive approach to acquiring open space and preserving farm land. In addition, the Township has developed Individual Parcel Plans (IPPs) for its open space to document the uses and maintenance for each. The Township acquired two (2) properties in 2018, which were 96 acres for $900,000 and 16.9 acres for $650,000.
Recreation
The Township provides neighborhood and municipal parks, open space areas and outdoor tennis courts in addition to the recreational facilities maintained by the Regional School District.
The Township is home to four 18-hole golf courses three of which are County golf courses. Mercer Oaks and Mercer Oaks East offer full-service banquet and clubhouse facilities and Princeton Country Club also has a clubhouse. The fourth course is the semi-private Cranbury Golf Club which offers the Bog Restaurant and lounge.
The Delaware and Raritan Canal State Park, located on the northerly boundary of the Township, provides a recreational corridor for canoeing, jogging, hiking, bicycling, fishing, and horseback riding. The canal and the park are part of the National Recreation Trail System. This linear park is also a valuable wildlife corridor connecting fields and forests.
A-5 The Mercer County Park, a 2,540-acre facility located in the southwest portion of the Township, offers local and county residents year round facilities for all ages and includes both active and passive recreational opportunities as well as boating on Lake Mercer. Mercer County Park offers a public tennis center with 23 courts, a boat marina, an ice skating center, and picnic areas as well as a Bark Park providing off-leash areas for both large and small dogs. The 100-acre Athletic Complex includes twelve softball fields, seven soccer fields, championship baseball fields and 7 basketball courts. In addition, there are 3 volleyball sand courts, 2 cricket pitches, 2 bocce courts, and numerous nature trails. This park is the home of the Olympic Men’s and Women’s Rowing team at the Caspersen Rowing Center and international rowing competitions are often held on Lake Mercer at the park. In addition, Mercer County Park is home to the Dragon Boat Festival which draws thousands of participants and attendees. Mercer County Park completed development of its Festival Grounds which encompasses over 200,000 square feet of venue space with a 2,200 square foot, state-of-the-art performing arts stage having a wide array of electrical, lighting, sound and rigging capabilities. This space has hosted numerous community events including cultural festivals, the largest dog show on the east coast, the National Special Olympics in 2014 and has attracted national events such as triathlons all of which benefits the hotels and restaurants in the Township. In addition, the County recently completed a $4.9 million renovation of the boathouse at Lake Mercer.
The jewel of the Township’s park system is the 128-acre West Windsor Community Park. This property was funded by a $3 million Green Acres low-interest loan and a $253,750 Green Acres grant, with the balance funded with general obligation bonds. The Community Park provides softball, soccer, lacrosse, football, and Babe Ruth baseball fields. The Township has also illuminated several of the fields so that they can be utilized for evening play. Other features at the park include a large children’s playground area, walking/jogging paths, two tennis courts, two basketball courts, a small amphitheater, a skate park, a dog park, and a picnic pavilion that is available for groups to reserve for outings. It is also the home of the Township’s community pool facility known as the WaterWorks Aquatic Center. The aquatic center includes a 9,000 square foot family leisure pool, an 8 lane 25-meter lap pool with diving board, a 1,700 square foot wading pool with spray features, a two story waterslide, a children’s play area, changing and shower facilities, and a full service concession stand. Most recently, a new Cricket Pitch Field was added to expand the recreational opportunities available at the park.
Duck Pond Park is another community-sized park located on the northwest side of the Township and is comprised of 123.48-acres. Duck Pond Park development thus far includes; illuminated and irrigated soccer fields, two tennis courts, two basketball courts, a sand volley ball court, one and a half miles of paved paths, as well as vehicular parking and a small pond. Future development anticipated at Duck Pond Park may include: a fishing pier, a picnic pavilion, playgrounds, more jogging/biking/walking paths, a comfort station, more field play areas, and a small amphitheater.
Zaitz Park, a 117.78-acre parcel located on Southfield Road is home to the Historic Schenck Farmstead (circa 1730’s). The property was donated to the Township by the late Max Zaitz. The farmhouse has been renovated and is the official residence of the Historical Society of West Windsor. In 2009, a major restoration of the 250-year-old English/Dutch barn was completed which will become a permanent exhibit to the Township’s farming history. In addition
A-6 to the farmhouse and barn, a one-room school house circa 1910 has been restored, which will serve as a living history museum and a carriage house circa 1912 was reconstructed on the site. Recreation opportunities at Zaitz Park include; five recreational soccer fields, a nature trail through the wooded portion of the park, and a small playground for children. In addition, the grounds of the Schenck Farmstead can be rented for private events.
Recreational playing fields at the Conover Fields Park include a football field, three soccer fields and four baseball fields. These fields are maintained by the Township and are utilized by the Junior Football Club, the West Windsor-Plainsboro Soccer Association, and the West Windsor Little League. The football field is illuminated for evening play. The Township recently took full ownership of these lands that were previously leased from the County.
The Township continues to develop its Ron Rogers Arboretum, a 25-acre arboretum named in memory of Ron Rogers, a longtime advocate of open space. This arboretum is located on the “Coward Tract,” which was the first property the Township purchased with Green Acre funds over 40 years ago. The arboretum consists of local tree species with information available on each tree. Walking trails are also available in the surrounding woods. In 2002, a memorial was developed in the arboretum to remember the tragic loss of life on September 11, 2001 where the Township lost seven of its sons. The Township was provided with a piece of steel from the Twin Towers to add to its memorial. The arboretum is also home to other memorials in the form of “bricks” and trees; and a gazebo surrounded by flowering shrubs was erected with funds raised in memory of a Township daughter. To the east of the arboretum is the Hendrickson Tennis complex with five lighted tennis courts, a practice wall, a playground, and a fountain.
Van Nest Park is located in the Grovers Mill hamlet of the Township. This park features grills, picnic tables, and a playground alongside of the scenic Grovers Mill pond. Improvements in this area are a dam restoration project completed in 2005 and a pond restoration project which was completed in 2008. The restoration was accomplished through sediment removal from the existing pond to create better water depths for local fishery populations. In 2009, habitat structures for fish and turtles were placed into the pond to further enhance the existing habitat. In April of 2009, Governor Corzine joined a fifth grade student environmental group to stock the pond with indigenous fish including sunfish, largemouth bass, and catfish. This will encourage increased recreational use of this Township asset.
In 2004, the Township entered into an historic agreement to construct a pedestrian/bicycle path for public use on Public Service Electric and Gas (PSE&G) property. The pathway along PSE&G right-of-way was completed in 2007 including the construction of a new bridge across the Big Bear Brook which connected the east and west sides of the Township. Residents are now able to hike, jog, and bike on a hard surface pathway which is being integrated with bike lanes and sidewalks to ultimately connect West Windsor Community Park to the Mercer County Park. This pathway is accessible to residents with disabilities and allows families to walk and bicycle in safety away from any traffic.
Nash Park is the most recent addition to the Township Park system. This 2 acre, downtown, “Pocket Park” was dedicated to posthumously honor Township residents Dr. John and Alicia Nash. The Nash’s were long-time residents of this neighborhood made famous in the movie, “A Beautiful
A-7 Mind,” and through their Nobel Prize recognized contributions to the academic worlds of Mathematics and Economics. This park is designed as a traditional “Town Green” for the Township. However, the one-acre front lawn of the community will be bordered by a meandering walking path through gardens designed with Asian garden themes. The center piece of this park is the “Beautiful Pavilion,” a 15’ diameter by 30’ tall gazebo that has been crafted in China of traditional materials and design. This was donated to the Township by local artists to help fulfill the unique design themes of the park.
Farming
The Township currently owns approximately 926 tillable acres of farmland which it leases back to local farmers. The annual farm rent collected was approximately $80,000 in 2018 with a 2% annual increase every year. Current agreements with farmers run from 2017 to 2021. To-date, the Township has received $5.8 million in grants from the State and County farmland preservation programs.
Of the existing 926 tillable acres owned by the Township, approximately 430 are/or will be deed restricted for farming. The Township was successful in obtaining County and State Agricultural Board financing to acquire these seven sites. Of the remaining 430 tillable acres, 298 will continue to be farmed for the long term (more than five years). The remaining 132 tillable acres are planned to be developed into active recreation in the future. A comprehensive Farmland Report has been established documenting the results of inspections and monitoring and includes conservation plans and lease information.
A-8 Open Space Inventory Developed Parkland
Name Facilities Acres Mercer County Park Biking, Softball, Baseball, Soccer, Boating, Playgrounds, 2,540.00 Picnic Areas, Fishing, Ice Skating, Basketball, Volleyball, Cricket, Volleyball, Hiking Community Park Softball, Baseball, Jogging, Walking, Biking, Lacrosse, 128.00 Soccer, Tennis Courts, Playground, Aquatic Facility, Skate Park, Dog Park, Basketball Duck Pond Park Soccer, Tennis Courts, Basketball, Sand Volleyball, 123.48 Paved Paths, Small Pond Zaitz Park Historic Farmstead, Barn, One-Room Schoolhouse, 117.78 Carriage House, Museum, Soccer, Nature Trail, Playground Ron Rodgers Arboretum Arboretum, Nature Preserve, Jogging, Walking, Tennis 26.75 Courts, Playground, 9/11 Memorial – Twin Ponds, Twin Towers Steel Crawford Woods Nature Preserve, Jogging, Walking 8.63 Chamberlain Park Lacrosse, Playground, Touch Football, Soccer Practice 8.58 Van Nest Park Playground, Picnic Pavilion, Boating, Open Ball Fields, 5.05 War of the Worlds Memorial Dey Forest Park Passive Neighborhood Park 0.94 Dutch Neck Veteran’s Passive Neighborhood Park 0.48 Memorial Park Delaware and Raritan Canoeing, jogging, hiking, bicycling, fishing, and 34.10 Canal horseback riding Nash Park Gardens, Walking, Pavilion 2.00 TOTAL DEVELOPED PARKLAND 2,995.79
Open Space Inventory Farmland/Undeveloped Land Acres Open Space Properties – 56 acquired since establishment of Open Space Tax 1,985.00 Private Passive Recreation/Open Space 565.00 Township Parks – undeveloped 44.00 State Parkland – undeveloped 27.90 Township Conservation Areas – wildlife preservation areas, deed restricted 2,898.00 TOTAL UNDEVELOPED LAND 5,519.90
TOTAL PRESERVED 8,515.69
A-9 Development - Current
The Township is home to over 28,000 residents. According to the 2010 U.S. Census in Figure 2 shown below, the average age of residents is 35-54. The mean earnings per resident is $173,205.
The Township is attractive both residentially and commercially and residential growth is balanced with commercial growth. There is a major train station in the Township for commuters to New York and Philadelphia. The Township boasts “blue ribbon” schools in partnership with a neighboring municipality in a separate county. Its two high schools, West Windsor-Plainsboro High School North and West Windsor-Plainsboro High School South, ranked 13th and 17th respectively in the 2018 New Jersey Monthly rankings for public high schools in the State. The magazine reviewed data for 305 public high schools.
The Township has excellent accessibility from major airports like Newark Liberty International Airport and Philadelphia International Airport. It is accessible from major commutation routes like Routes 95 and 295 as well as the NJ Turnpike from exits 9, 8A, and 8 and County Route 571. Approximately four miles of the US Route One corridor run through the Township providing superior commercial ratables. The following paragraphs provide information on the existing climate of the Township.
The Township is centrally located within the State and the County and is home to the Princeton Junction at West Windsor train station. This station is one of the busiest train stations in the State serving both NJ Transit and Amtrak stops. For NJ Transit fiscal year 2017, there were 6,817 daily riders per day. A new parking lot has been added which brings total parking spaces to 4,194. The station is on the Northeast Corridor providing easy access to New York City and points north (including a convenient stop at the Newark Liberty International Airport); and to Philadelphia and points south. There is a shuttle train to Princeton called the “Dinky” or “PJ&B” (Princeton Junction and Back) which provides for great shopping, dining, and the arts. Many municipalities and developments in and around the Township have established shuttle bus services to and from the station.
A-10
Because of its central location, transit choices, and close proximity to Princeton and Princeton University, the Township attracts a number of notable firms to its Class A commercial space. Already the home of Sarnoff Corporation now known as SRI International, the Township is also the home of Tyco International, Otsuka Pharmaceutical, BlackRock Financial Management, and NRG Energy. In 2016, NRG Energy completed a three-floor, 130,000 square foot “ultra- green” headquarters building with a multitude of renewable and high-efficiency technologies making it one of the leading sustainable commercial sites in the country.
One measure of success for a municipality is the amenities that its commercial and residential environment attracts. The Township, because of its location, the quality of the businesses in the area, and its skilled workforce, offers numerous hotels, restaurants, and retail shopping. Hotels include the Hyatt Regency, the Palmer Inn, an Amerisuites hotel, Extended Stay America, and a Marriott Residence Inn. A new project by Toll Brothers is currently under construction and will provide 192 extended stay Corporate Suites.
Major retail destinations include Nassau Park which provides a mix of large stores such as Home Depot, Wal-Mart, and Target, with a Wegman’s supermarket, restaurants and retail stores. Another major retail center is MarketFair which has many lifestyle stores such as BoConcept, Brookstone, Villeroy and Boch, West Elm, Williams Sonoma, and Pottery Barn as well as apparel (Banana Republic, Chico’s and South Moon Under), entertainment (AMC Theatres), and restaurants. New restaurants which have recently joined Bobby Flay’s Burger Palace and others are Seasons 52 Fresh Grill and Bahama Breeze Island Grille.
There are a number of development projects that are currently underway or recently completed. In 2017, Artis Senior Living completed construction on a 64-bed Alzheimer/dementia facility. In addition, a 30,900 square foot Mosque was recently completed and is also close to residential developments for walkability. The Township approved a plan to build 443 apartments in an area which is walkable to both retail and commercial sites. A mixed-use project to provide 40 apartments, 51 townhouses, 20,000 square feet of retail, and the 192 extended stay Corporate Suites mentioned earlier, is currently under construction. As part of this development, property will be donated to construct 72 Project Freedom apartments which will help the Township meet its State-mandated affordable housing obligation.
The Township is also a leader in providing affordable housing. As the Township grows, both commercially and residentially, housing for low and moderate income families will continue to be provided. As with all municipalities in the State, the Township is working with the courts to determine the amount of affordable housing required going forward from the Council on Affordable Housing third round considerations. The Township is in a strong position because it has been so proactive in providing affordable housing as a function of all new development.
Another measure of success for a municipality is the attraction and retention of senior residents. In addition to age-restricted housing, the Township, with funding assistance from the County and State, expanded the West Windsor Senior Center facility to provide more services to more of its senior population. The West Windsor Senior Center was designed and constructed to be more energy efficient and eco-friendly with solar panels, a low maintenance exterior utilizing
A-11 fiber cement siding, and numerous recycled materials used in the interior decorating. The facility includes classrooms, a library, game room, conference room and several multi-purpose activity rooms. It is a nationally accredited center offering programs in areas of health and wellness, education, socialization, arts and humanities and transportation. The West Windsor Senior Center is an integral part of the Township community serving the needs of mature and older adults, working with regional agencies and encouraging senior citizens to age in place. The facility offers a myriad of opportunities which allow senior citizens (55+) to continually challenge themselves mentally, physically, technologically and creatively in an active diversified social environment.
To ensure that development does not adversely impact a surrounding area, the Township calculates for all development projects an assessment for off-tract street improvements. The Land Use Boards require an applicant to pay a share of the cost of providing reasonable and necessary street improvements located outside the property limits of the development but necessitated or required by the growth in traffic attributed to the development. Improvements may be required to municipal and county streets and roads and to intersections of these streets and roads with state highways. Street improvements include street widening, alignment, construction of barriers, new or improved traffic signals, signs, curbs, street drainage, sidewalks, trees, the construction or reconstruction of new or existing streets and other associated improvements. Recently, a developer improved the intersection of Meadow Road and Clarksville Road which occurs at the crest of a bridge over the Northeast Corridor Railroad tracks. This intersection now has a traffic signal and merge lanes onto Meadow Road from Clarksville Road and Clarksville Road from Meadow Road. The use of this intersection has increased beyond the impact of the individual development given its new efficiencies.
The Township Planning Board has included a Sustainability Plan developed by the West Windsor Environmental Commission into the Township’s Master Plan. This will guide the Township in areas of energy conservation, responsible development and construction practices, and other eco-friendly directions. The Township already completed grant-funded energy audits of municipally-owned facilities that were conducted by PSE&G. Using the audited information, the Township joined a Municipal Third-Party Energy Purchase for the energy used by the municipal facilities resulting in a financial savings. In addition, after having applied to Sustainable New Jersey and awarded silver certification in 2010, currently the highest that can be awarded, the Township was recertified in 2013 and 2016. As of 2016, there were only 48 municipalities in New Jersey that were awarded a silver level certification. On May 23, 2018, the Township Planning Board adopted its Reexamination Report of the Master Plan. This report can be viewed on the Township’s website.
In the area of infrastructure improvements, the Township is a Complete Streets municipality and as such looks to accommodate all modes of safe transportation including pedestrians, cyclists and cars. A project which will soon be constructed is the reduction in lanes of a four-lane road called Canal Pointe Boulevard. Canal Pointe Boulevard is unique in that the east side is bordered by commercial and retail uses and the west side is entirely residential. The road begins at one of the Township’s busiest collector roads, but essentially ends at a Theological Seminary and Golf Club. Because the road is currently four lanes with no shoulders, it is difficult and unsafe for the residents to cross the road to the commercial and retail which includes a Whole Foods Market, restaurants and a movie theatre. Further, it is difficult and unsafe for employees
A-12 and residents to use bicycles to services during lunch hours or at other times. The reduction in lanes (called a Road Diet), will result in one through lane in each direction, a turning lane and bike lanes. This will allow the road to be used by all modes of conveyance. Two businesses on Canal Pointe Boulevard, Princeton University and the NRG Energy headquarters, are establishing bike- share programs for their staff to use bikes during working hours.
Improvements have recently been completed in the Dutch Neck area of the Township with the addition and refurbishment of sidewalks and bicycle lanes to strengthen available alternatives to motor vehicles. This area is a residential center of the Township with a school, churches, and a fire house.
A preemptive maintenance program was initiated to perform rehabilitation of the existing sanitary sewer lines in locations around the Township on sewers ranging in size from 8 to 16 inches in diameter. The rehabilitation of sewer lines included PVC pipe grouting and ACP pipe cured- in-place pipe (CIPP) relining of older ACP mains. In addition, rehabilitation of 28 manholes in various locations is also being performed.
Recently, a new parking area for commuters utilizing the Princeton Junction at West Windsor Train Station was completed. This parking lot is connected to the Vaughn Drive parking lot and called the South Lot. As part of this project, Old Bear Brook Road, a small, narrow residential road which had been used as a traffic bypass to the newer signalized Bear Brook Road intersection, was terminated in a cul-de-sac. Additional pedestrian improvements including crosswalks incorporating a rapid flash beacon warning system were added. The property on which this parking lot was constructed had been a landfill and compost station. Having received Hazardous Discharge Site Remediation Fund (HDSRF) grants from the State for the investigation and remediation of this property, the land was capped to be used for parking providing approximately 600 additional parking spaces for residential and regional commuters. The South Lot is now fully functional and profitable.
Because of the Township’s commitment to pedestrian and bicycle safety, the Township applied to the League of American Bicyclists in partnership with the West Windsor Bicycle and Pedestrian Alliance (WWBPA) to apply for its Bicycle Friendly America program. The Township was awarded Bicycle Friendly America recognition at the Bronze level in 2011. The Township became the first municipality in the State to have this recognition at any level. The Township renewed its participation in the Bicycle Friendly America program in 2015 and again was awarded the Bronze level. Participation will not need to be renewed until 2019.
The Township also has an infrastructure renewal program that ensures aging secondary and tertiary streets and their intersections are repaired, in addition to improvements to primary roads. Funds are budgeted every year and a list of streets and intersections are identified for a six- year period. Through careful monitoring, the list may be revised given a change in need. On an annual basis, the Township also applies for and receives NJ DOT Municipal Aid grants for improvements to its major roads, such as Alexander Road, one of the Township’s busiest collector roads.
A-13 Construction and other fees are increased as necessary to fund the resources required to keep the Township growing and going.
The Township also works closely with the County and the State on projects which involve County- and State-controlled areas of the Township. One recent example was improving the signalization of two intersections along County Route 571 through the Township. Given an increase in traffic, a dedicated left-turn signal was requested to be added at two separate intersections, one of which was the site of a fatal accident in which a passenger was killed as the driver was trying to turn left into a park. The Township has also been working cooperatively with the NJ Department of Transportation (DOT) for improvements at two intersections along US Route One which runs through the Township. These improvements will alleviate congestion and dangerous queuing for traffic trying to cross US Route One.
Development - Future
The future of the Township is determined by a well thought out and diligently maintained Master Plan applied by the Township planning staff and the Township Planning Board. This document is typically available online through the Township’s website except when updates are being made.
The Township has a Redevelopment Plan that is guiding major development around its train station. Along County Route 571, through a local residential area of the Township called Princeton Junction, numerous owners have come in to redevelop their properties under the Redevelopment zoning which encourages property owners to redevelop their properties as a traditional “Town Center” which would permit apartments over retail space. At least four properties, one of which already has received approval, are looking to redevelop. The Redevelopment Plan, established in 2005, has been revised to better reflect current development imperatives and to extend its area.
Also centralized in and around the Township, NJ Transit has completed a Bus Rapid Transit (BRT) study. The BRT would provide alternative transportation to relieve traffic in and around the US Route One corridor. Called the Central New Jersey Route 1 Bus Rapid Transit Alternatives Analysis Study, it was managed by NJ Transit. The study evaluated route alternatives, including use of existing roads with improvements and new alignments, station locations, ridership, potential for coordination with private sector development, municipal plans, and cost effectiveness. Individual projects to begin implementation are now being assessed and short-term changes are being made to add stops to existing bus routes and implement new routes. The Township land use is taking the BRT into consideration with every application.
These future development plans provide for dynamic and controlled growth of the Township. Bringing together residential, commercial, transit, and infrastructure projects ensures that the Township will enjoy a responsive present and an exciting future.
One of the most prominent companies in the Township is the Sarnoff Corporation now known as SRI International (SRI). The Sarnoff Corporation was the successor organization to the David Sarnoff Research Center and the RCA Laboratories, and the birthplace of color television.
A-14 In 1941, it was decided that all research, original development, and patent and licensing activities would be consolidated at one location. This resulted in the 260 acres of what is now the Sarnoff campus. The Sarnoff Corporation had plans to develop this campus over time and received a general development plan (GDP) approval to develop a 3,000,000 sq. ft. office, research & development and hotel conference center. Princeton Power Systems, a new company producing advanced power conversion products which reduce energy consumption, lower peak electric usage, and provide clean, renewable energy with superior performance, has a product demonstration solar farm on the SRI campus. Princeton University purchased US Route One frontage from SRI.
Princeton University has approximately 482 acres located in the Township. Currently this property is used for playing fields and farming. However, Princeton University has developed a $28 million solar panel field along Washington Road near the Delaware and Raritan Canal as well as a storage facility along Washington Road. The University has plans to develop a new residential college on 100-acres located within the Township. General development plan is expected to be submitted to the Township in early 2019. Mercer County Community College is also located in the Township and occupies a scenic 292-acre campus established in 1971 to serve the needs of County residents. This campus has a 38,000 square foot conference center offering a media-rich, high-tech space that provides an ideal meeting and learning environment. It also developed a $38.9 million solar farm on the college property.
WaterWorks at West Windsor - Swimming Pool Utility
WaterWorks at West Windsor, located in the West Windsor Community Park, is the Township Community Aquatic Facility which features three pools, a waterslide, basketball courts, a volleyball court, children’s playground, and a full-service on-site food vendor. The cost of construction and operation of the facility is supported solely by user fees.
Utility Information
Water Services - Developed areas of the Township are provided water services by the New Jersey American Water Company, a private company. Consumers deal directly with the company without involvement of the Township.
Sewer Services - Developed areas of the Township are provided sewer services by the Township. Various departments of the Township provide administration, billing, collection, and customer services in accordance with Township procedures and policies.
The Stony Brook Regional Sewerage Authority, in which the Township is a participant, provides sewerage treatment.
Stony Brook Regional Sewerage Authority
The Authority was created in 1971 for the purpose of acquiring, constructing, maintaining, and operating sewage treatment facilities for the relief from pollution of the Stony Brook, the Bedens Brook, and the Millstone River. The Authority’s service area is located primarily in the County, with
A-15 a small portion located in Middlesex County. The service area encompasses approximately 88 square miles in the central part of the State midway between New York City and Philadelphia. The Authority’s members consist of the Township, Princeton, Hopewell Township, Hopewell Borough, Pennington Borough, and South Brunswick Township. Six of the Authority’s seven members are participants in the Authority’s System and have entered into Service Contracts with the Authority, the exception being Hopewell Township, which is not a participant. Each participant is required by the Service Contract to make payments to the Authority of Annual Charges to be imposed by the Authority for, or with respect to, the facilities and services made available regarding the treatment and disposal of sewage and other wastes originating within the service territory of such Participant. Such Annual Charges are required to be sufficient, together with other funds available to the Authority, to pay, among other things, expenses of administration, operation and maintenance of the system, and principal of and interest on the Authority’s Bonds and to provide for certain reserves.
Retirement Systems
All full-time permanent or qualified Township employees who began employment after 1944 must enroll in one of two retirement systems depending upon their employment status. These systems were established by acts of the State Legislature. Benefits, contributions, means of funding and the manner of administration are set by State law. The Division of Pensions, within the New Jersey Department of Treasury, is the administrator of the funds with the benefit and contribution levels set by the State. The Township is enrolled in the Public Employees' Retirement System (“PERS”) and the Police and Firemen's Retirement System (“PFRS”).
Pension Information
Employees, who are eligible to participate in a pension plan, are enrolled in PERS or PFRS, administered by the Division. The Division annually charges municipalities and other participating governmental units for their respective contributions to the plans based upon actuarial calculations. The employees contribute a portion of the cost. The Township’s share of pension costs in 2018, which is based upon the annual billings, received from the State, amounted to $818,900 for PERS and $1,504,288 for PFRS.
In addition, the Defined Contribution Retirement Program (DCRP) was established by the State on July 1, 2007, to provide eligible members with a tax-sheltered, defined contribution retirement benefit, along with life insurance and disability coverage. Township employees who are eligible for membership in the DCRP include employees enrolled in the PERS on or after July 1, 2007, who earn salary in excess of established “maximum compensation” limits.
A-16 Employment and Unemployment Comparisons
For the following years, the New Jersey Department of Labor reported the following annual average employment information for the Township, the County, and the State:
Total Labor Employed Total Unemployment Force Labor Force Unemployed Rate Township 2017 14,749 14,347 402 2.7% 2016 14,767 14,349 418 2.8% 2015 14,721 14,256 465 3.2% 2014 14,483 13,952 531 3.7% 2013 14,292 13,609 683 4.8%
County 2017 198,846 190,683 8,163 4.1% 2016 199,400 190,708 8,692 4.4% 2015 198,447 188,505 9,942 5.0% 2014 195,547 184,035 11,512 5.9% 2013 193,679 179,551 14,128 7.3%
State 2017 4,518,838 4,309,708 209,123 4.6% 2016 4,530,800 4,305,515 225,262 5.0% 2015 4,537,231 4,274,685 262,531 5.8% 2014 4,527,177 4,221,277 305,900 6.8% 2013 4,548,569 4,173,815 374,738 8.2%
Source: New Jersey Department of Labor, Office of Research and Planning, Division of Labor Market and Demographic Research, Bureau of Labor Force Statistics, Local Area Unemployment Statistics
Income (as of 2016)
Township County State Median Household Income $167,629 $73,966 $72,093 Median Family Income 189,443 95,533 88,335 Per Capita Income 67,790 38,652 36,582
Source: US Bureau of the Census 2016
A-17 Local Banking Institutions
The table below lists the banks available to Township residents:
Bank of America PNC Bank Wells Fargo Bank Santander Bank Chase Bank Princeton Federal Credit Union
Construction Permits
A summary of the construction permits issued in the Township during the past five years is as follows:
Number of Construction Year Permits Costs 2017 3,571 $ 63,770,891 2016 3,831 52,761,338 2015 2,066 83,637,507 2014 2,194 84,473,645 2013 2,121 51,836,196
Source: Township Construction Official
Population
The following tables summarize population increases and the decreases for the Township, the County, and the State.
Township County State Ye ar Population % Change Population % Change Population % Change 2016 Estimate 28,207 3.84% 371,101 1.25% 8,958,013 1.89% 2010 27,165 24.00 366,513 4.49 8,791,894 4.49 2000 21,907 36.74 350,761 7.65 8,414,350 8.85 1990 16,021 87.56 325,824 5.83 7,730,188 4.96 1980 8,542 32.83 307,863 1.23 7,365,001 2.75
Source: United States Department of Commerce, Bureau of the Census
A-18 Major Employers
The ten largest employers in the Township, based upon their estimate of full time employees as of 2018 are listed below:
Number of Name Employees Mercer County Community College 1,404 Blackrock 960 Bristol Meyers Squibb Company 950 Covance, Inc. 895 West Windsor-Plainsboro RSD 652 ITA Group 635 Mathematica Policy Research 579 Princeton University 536 NRG Energy Inc. 500 Otsuka Pharmaceutical, Inc. 490
Source: County Business and Industrial Directory
Largest Taxpayers
The ten largest taxpayers in the Township and their assessed valuations are listed below:
2018 % of Total Taxpayers Assessed Valuation Assessed Valuation Boston Properties Ltd. $418,281,200 6.97% Hilton Management Real Estate 83,752,000 1.40% Princeton Junction Apartments LP 72,279,504 1.20% RM Square LLC/REXCORP 71,336,000 1.19% Avalon Bay Communities 58,000,000 0.97% Teachers Insurance & Annuity Assoc. 57,500,000 0.96% John Hancock Life Insurance 57,476,100 0.96% West Windsor Developers LLC 54,010,000 0.90% Atlantic Realty Development 51,744,000 0.86% DDR Nassau Pavilion Associates 47,748,600 0.80%
Total $972,127,404 16.20%
Source: School District CAFR & Municipal Tax Assessor
A-19 Comparison of Tax Levies and Collections
Current Year Current Year Ye ar Tax Levy Collection % of Collection 2017 $161,028,584 $160,413,133 99.61% 2016 158,184,562 157,590,593 99.62% 2015 154,485,522 153,898,404 99.62% 2014 152,067,511 151,377,805 99.55% 2013 149,143,021 148,455,617 99.54%
Source: Annual Audit Reports of the Township
Delinquent Taxes and Tax Title Liens
Amount of Tax Amount of Total % of Ye ar Title Liens Delinquent Tax Delinquent Tax Levy 2017 $106,110 $558,633 $664,743 0.42% 2016 109,744 556,941 666,685 0.42% 2015 77,479 534,873 612,352 0.40% 2014 58,440 673,712 732,153 0.48% 2013 49,802 632,065 681,867 0.46%
Source: Annual Audit Reports of the Township
Property Acquired by Tax Lien Liquidation
Ye ar Amount 2017 $5,000 2016 5,000 2015 5,000 2014 5,000 2013 5,000
Source: Annual Audit Reports of the Township
A-20 Tax Rates per $100 of Net Valuations Taxable and Allocations
The table below lists the tax rates for the past five (5) years.
Municipal Regional Ye ar Municipal Open Space School County Total 2018 $0.418 $0.020 $1.548 $0.760 $2.746 2017 0.400 0.020 1.523 0.746 2.689 2016 0.390 0.020 1.493 0.728 2.631 2015 0.380 0.020 1.458 0.712 2.570 2014 0.380 0.020 1.436 0.704 2.540
Source: Abstract of Ratables and State of New Jersey – Property Taxes
Valuation of Property
Aggregate Assessed Aggregate True Ratio of Assessed Valuation of Value of Assessed to Value of Equalized Ye ar Real Property Real Property True Value Personal Property Valuation 2018 $5,988,986,803 $6,707,930,861 89.28% $11,172,487 $6,719,103,348 2017 5,973,148,453 6,688,856,050 89.30 11,203,161 6,700,059,211 2016 5,973,473,253 6,611,481,188 90.35 11,382,995 6,622,864,183 2015 5,968,886,453 6,458,435,894 92.42 11,251,318 6,469,687,212
2014 5,950,686,353 6,115,184,825 97.31 11,563,751 6,126,748,576
Source: Abstract of Ratables and State of New Jersey – Table of Equalized Valuations
Classification of Ratables
The table below lists the comparative assessed valuation for each classification of real property within the Township for past five (5) years.
Ye ar Vacant Land Residential Farm Comme rcial Industrial Apartments Total 2018 $49,497,210 $4,203,491,650 $31,348,349 $1,478,492,494 $61,059,100 $165,098,000 $5,988,986,803 2017 28,441,310 4,205,977,300 32,015,949 1,477,905,794 63,710,100 165,098,000 5,973,148,453 2016 32,564,810 4,211,117,700 29,963,649 1,464,674,994 72,100,800 163,051,300 5,973,473,253 2015 29,138,110 4,208,901,800 30,284,649 1,478,355,094 65,315,500 156,891,300 5,968,886,453 2014 34,046,310 4,206,201,200 30,897,349 1,462,567,994 65,315,500 151,658,000 5,950,686,353
Source: Abstract of Ratables and State of New Jersey – Property Value Classification
A-21 Financial Operations
The following table summarizes the Township’s Current Fund budget for the past five (5) fiscal years ending December 31. The following summary should be used in conjunction with the tables in the sourced documents from which it is derived.
Summary of Current Fund Budget
Anticipated Revenues 2014 2015 2016 2017 2018 Fund Balance Utilized $4,620,529 $4,825,538 $4,630,000 $4,770,000 $4,225,000 Miscellaneous Revenues 9,852,907 9,949,238 10,438,725 10,695,402 10,900,790 Receipts from Delinquent Taxes 600,000 600,000 530,000 525,000 525,000 Amount to be Raised by Taxation 22,681,414 22,724,524 23,364,275 23,951,598 25,075,430 Total Revenue: $37,754,850 $38,099,300 $38,963,000 $39,942,000 $40,726,221
Appropriations General Appropriations $26,528,843 $26,820,407 $27,406,915 $28,313,232 $29,124,863 Operations (Excluded from CAPS) 3,644,393 3,685,327 3,961,478 4,030,650 3,999,116 Deferred Charges and Statutory Expenditures 240 0 0 172,000 677,479 Capital Improvement Fund 188,000 199,400 199,400 284,400 286,350 Municipal Debt Service 5,562,941 5,562,801 5,562,763 5,305,804 4,798,375 Reserve for Uncollected Taxes 1,830,433 1,831,365 1,832,444 1,835,914 1,840,038 Total Appropriations: $37,754,850 $38,099,300 $38,963,000 $39,942,000 $40,726,221
Source: Annual Adopted Budgets of the Township
Fund Balance
Current Fund The following table lists the Township’s fund balance and the amount utilized in the succeeding year’s budget for the Current Fund for the past five (5) fiscal years ending December 31. Fund Balance - Current Fund Balance Utilized in Budget Ye ar 12/31 of Succeeding Year 2017 $5,726,167 $4,225,000 2016 5,757,018 4,770,000 2015 6,307,106 4,630,000 2014 6,403,892 4,825,538 2013 6,604,187 4,620,529
Source: Annual Audit Reports of the Township
A-22 Swimming Pool Utility Fund The following table lists the Township’s fund balance and the amount utilized in the succeeding year’s budget for the Swimming Pool Utility Fund for the past five (5) fiscal years ending December 31.
Fund Balance - Swimming Pool Utility Operating Fund Balance Utilized in Budget Ye ar 12/31 of Succeeding Year 2017 $1,139 $0 2016 654 0 2015 1,249 1,000 2014 8,092 8,000 2013 20,705 20,000
Source: Annual Audit Reports of the Township
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A-23 Township Indebtedness as of December 31, 2017
General Purpose Debt Serial Bonds $29,575,000 Bond Anticipation Notes 0 Bonds and Notes Authorized but Not Issued 7,752,549 Other Bonds, Notes and Loans 1,469,607 Total: $38,797,156 Regional School District Debt Serial Bonds $25,238,029 Temporary Notes Issued 0 Bonds and Notes Authorized but Not Issued 0 Total: $25,238,029 Self-Liquidating Debt Serial Bonds $285,000 Bond Anticipation Notes 0 Bonds and Notes Authorized but Not Issued 95,500 Other Bonds, Notes and Loans 0 Total: $380,500
TOTAL GROSS DEBT $64,415,685 Less: Statutory Deductions General Purpose Debt $3,076,220 Local School District Debt 0 Regional School District Debt 25,238,029 Self-Liquidating Debt 294,750 Total: $28,608,999
TOTAL NET DEBT $35,806,686
Source: Annual Debt Statement of the Township
A-24 Overlapping Debt (as of December 31, 2017)
Related Entity Township Township Name of Related Entity Debt Outstanding Percentage Share1 West Windsor-Plainsboro RSD $41,700,000 60.52% $25,238,029 West Windsor Parking Authority 4,520,000 100.00% 4,520,000 Mercer County Improvement Authority 245,643,507 15.08% 37,031,687 Mercer County 531,752,113 15.08% 80,163,641 Stony Brook Regional Sewerage Authority 19,317,312 23.03% 4,448,777
Net Indirect Debt $151,402,134 Net Direct Debt 35,806,686 Total Net Direct and Indirect Debt $187,208,820
1 Township percentage based on the Township’s share of total equalized valuation in the County
Debt Limit
Average Equalized Valuation Basis (2015, 2016, 2017) $6,586,257,711 Permitted Debt Limitation (3 1/2%) 230,519,020 Less: Net Debt 35,806,686 Remaining Borrowing Power $194,712,334 Percentage of Net Debt to Average Equalized Valuation 0.544%
Gross Debt Per Capita based on 2010 population of 27,165 $2,371 Net Debt Per Capita based on 2010 population of 27,165 $1,318
Source: Annual Debt Statement of the Township
Capital Improvement Program
The capital improvement program is increasingly being utilized and integrated with zoning, subdivision controls, and public acquisition of land, to further community goals and objectives. It is viewed as an important link between policy and action, a means of improving financial management and scheduling, priority setting, and investment programming.
The capital improvement program is a systematic approach for planning capital projects. It relates the recommended projects to the anticipated revenues and revenue sources that the municipality can use for purchasing and construction.
A-25 The capital improvement program lists all of the future projects contemplated by the Township for a six-year period. A six-year programming period has been selected because it allows time for planning and financing major facilities without deferring them indefinitely into the future. More importantly, the capital improvement program established a review system which enables the municipality to modify projects and reorder priorities to meet the needs of a changing future.
A-26 APPENDIX B
FINANCIAL STATEMENTS OF THE TOWNSHIP OF WEST WINDSOR FOR YEAR ENDED DECEMBER 31, 2017
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S S UPLEE, C LOONEY & C OMPANY
C C ERTIFIED P UBLIC A CCOUNTANTS C 308 East Broad Street, Westfield, New Jersey 07090-2122
Telephone 908-789-9300 Fax 908-789-8535 E-mail [email protected]
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Members of the Township Council Township of West Windsor County of Mercer West Windsor, New Jersey
Report on the Financial Statements
We have audited the accompanying balance sheets - regulatory basis of the various individual funds and account group of the Township of West Windsor, as of December 31, 2017 and 2016, the related statement of operations and changes in fund balance - regulatory basis for the years then ended, and the related notes to the financial statements, which collectively comprise the Township’s regulatory financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the regulatory basis of accounting prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these regulatory financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the “Division”), and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
B-1 SUPLEE, CLOONEY & COMPANY
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the regulatory financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the regulatory financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Basis for Adverse Opinion on U.S Generally Accepted Accounting Principles
As described in Note 1 of the regulatory financial statements, the regulatory financial statements are prepared by the Township of West Windsor on the basis of the financial reporting provisions prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of New Jersey.
The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.
Adverse Opinion on U.S. Generally Accepted Accounting Principles
In our opinion, because of the significance of the matter discussed in the “Basis for Adverse Opinion on U.S Generally Accepted Accounting Principles” paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the various individual funds and account group of the Township of West Windsor as of December 31, 2017 and 2016, or the results of its operations and changes in fund balance for the years then ended.
Basis for Qualified Opinion on Statutory Basis of Accounting
The financial activities of the Length of Service Award Program (LOSAP) are presented in the financial statements of the Township’s Trust Fund. These financial statements of the LOSAP have not been audited and were not required to be in accordance with the regulations of the Division of Local Government Services, Department of Community Affairs, State of New Jersey.
Opinion on Regulatory Basis of Accounting
In our opinion, except for the effects of such adjustments, if any, that might have been necessary had the LOSAP Fund Financial Statements been audited, the regulatory financial statements referred to above present fairly, in all material respects, the regulatory basis balances sheets of the various individual funds and account group as of December 31, 2017 and 2016, the statutory basis statement of operations and changes in fund balance for the years then ended in accordance with the basis of financial reporting prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey as described in Note 1.
B-2
SUPLEE, CLOONEY & COMPANY
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 4, 2018 on our consideration of the Township of West Windsor’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Township of West Windsor’s internal control over financial reporting and compliance.
SUPLEE, CLOONEY AND COMPANY Certified Public Accountants
/S/ Warrem M. Korecky Warren M. Korecky, C.P.A., R.M.A. May 4, 2018
B-3 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
BALANCE SHEET - CURRENT FUND
REGULATORY BASIS Sheet 1 of 2
DECEMBER 31, 2017 AND 2016
2017 2016 Assets Cash and Cash Equivalents $ 32,786,520.42 $ 8,225,913.61 Cash - Change Funds 825.00 825.00 Investments 2,280,000.00 13,086,436.00 35,067,345.42 21,313,174.61 Receivables and Other Assets with Full Reserves: Special Police Duty Receivable 24,500.31 21,495.55 Delinquent Property Taxes Receivable 558,633.21 556,941.12 Tax Title Liens Receivable 106,110.36 109,744.42 Property Acquired for Taxes - Assessed Valuation 5,000.00 5,000.00 Sewer Charges Receivable 59,194.05 44,084.14 Revenue Accounts Receivable 58,688.46 51,115.96 812,126.39 788,381.19 35,879,471.81 22,101,555.80 Grant Fund: Interfund - Current Fund 194,507.02 181,498.82 Grants Receivable 10,585.00 205,092.02 181,498.82
$ 36,084,563.83 $ 22,283,054.62
The accompanying Notes to Financial Statements are an integral part of this statement.
B-4 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
BALANCE SHEET - CURRENT FUND
REGULATORY BASIS Sheet 2 of 2
DECEMBER 31, 2017 AND 2016
2017 2016 Liabilities, Reserves and Fund Balance Liabilities: Appropriation Reserves $ 958,611.36 $ 1,237,383.71 Reserve for Encumbrances 1,877,698.79 2,117,173.57 Accounts Payable 4,532,628.13 4,352,286.29 Due to State of New Jersey: Marriage License Fees 475.00 450.00 Construction Fees 20,800.00 12,952.00 Senior Citizen and Veterans Deductions 3,517.36 Tax Overpayments 17,893.56 95,230.10 Sewer Overpayments 18,326.98 128.17 Prepaid Taxes 15,817,718.78 1,512,144.98 Prepaid Sewer Charges 94,219.15 99,564.83 Amount Due County for Added and Omitted Taxes 30,310.93 200,060.48 Reserve for: Taxes Collected on Appeal 4,799,549.12 4,799,549.12 Sale of Municipal Assets 721,400.00 695,953.62 LOSAP 89,351.44 89,351.44 Developers Contribution for Police Services 97,883.00 96,891.00 Princeton University 58,387.02 57,637.73 Donation to Plant Trees 400.00 400.00 Easement 7,501.00 7,501.00 Interfund - Grant Fund 194,507.02 181,498.82 29,341,178.64 15,556,156.86 Reserve for Receivables and Other Assets 812,126.39 788,381.19 Fund Balance 5,726,166.78 5,757,017.75 35,879,471.81 22,101,555.80 Grant Fund: Reserve for Encumbrances 2,568.00 Appropriated Reserves 191,303.45 181,498.82 Unappropriated Reserves 11,220.57 205,092.02 181,498.82
$ 36,084,563.83 $ 22,283,054.62
The accompanying Notes to Financial Statements are an integral part of this statement.
B-5 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
CURRENT FUND
STATEMENT OF OPERATIONS AND CHANGE IN FUND BALANCE Sheet 1 of 2
REGULATORY BASIS
Year 2017 Year 2016 Revenue and Other Income Realized Fund Balance Utilized $ 4,770,000.00 $ 4,630,000.00 Miscellaneous Revenue Anticipated 12,512,648.48 10,655,818.74 Receipts from Delinquent Taxes 582,779.14 526,624.02 Receipts from Current Taxes 160,418,133.18 157,590,593.27 Non-Budget Revenues 528,752.61 528,892.09 Other Credits to Income: Cancel Accounts Payable 675,588.65 Unexpended Balance of Appropriation Reserves 1,129,739.72 890,851.17 Grant Balances Cancelled 9,295.00 3,275.00 Total Income 179,951,348.13 175,501,642.94
Expenditures Budget: Appropriations within "Caps": Operations: Salaries and Wages 13,409,257.75 13,207,028.75 Other Expenses 11,553,106.00 10,971,107.00 Deferred Charges and Statutory Expenditures 3,313,868.00 3,228,779.00 Appropriations Excluded from "Caps": Operations: Salaries and Wages 226,701.25 246,945.14 Other Expenses 3,935,873.87 3,822,230.27 Capital Improvements 284,400.00 199,400.00 Municipal Debt Service 5,305,803.82 5,455,200.11 Deferred Charges 172,000.00 38,201,010.69 37,130,690.27 Reserve for: Receivable - Special Duty Police 3,004.76 4,095.55 Sale of Municipal Assets 31,200.00 25,089.91 Prior Year Senior Citizens Deductions Disallowed 1,500.00 750.00 Cancel Balance Senior Citizens Deductions 94.97 Refund of Prior Year Revenue 9,009.84 1,219.00 County Taxes 44,621,140.63 43,510,545.18 Amount Due County for Added and Omitted Taxes 30,310.93 200,060.48 Regional District School Taxes 91,108,756.00 89,348,130.00 Municipal Open Space Taxes 1,196,971.25 1,196,971.25 Cancel Special Duty Police Receivable 810.00 Cancel Grants Receivable 9,295.00 3,275.00 Total Expenditures 175,212,199.10 171,421,731.61
The accompanying Notes to Financial Statements are an integral part of this statement.
B-6 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
CURRENT FUND
STATEMENT OF OPERATIONS AND CHANGE IN FUND BALANCE Sheet 2 of 2
REGULATORY BASIS
Year 2017 Year 2016 Expenditures (Continued) Excess in Revenue $ 4,739,149.03 $ 4,079,911.33 Fund Balance January 1 5,757,017.75 6,307,106.42 10,496,166.78 10,387,017.75 Decreased by: Utilization as Anticipated Revenue 4,770,000.00 4,630,000.00
Fund Balance December 31 $ 5,726,166.78 $ 5,757,017.75
The accompanying Notes to Financial Statements are an integral part of this statement.
B-7 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
BALANCE SHEET - TRUST FUNDS
REGULATORY BASIS
DECEMBER 31, 2017 AND 2016
2017 2016 Assets Assessment Fund: Cash $ 665,930.14 $ 48,036.92 Assessments Receivable 618,107.14 Assessments Held in Abeyance 4,788.87 4,788.87 Deferred Assessments Receivable 152,481.38 152,481.38 1,441,307.53 205,307.17 Animal Control Trust Fund: Cash 13,233.34 16,335.94
Other Trust Fund: Cash 10,502,334.11 11,734,932.43 Investments 4,262,708.00 4,289,647.00 14,765,042.11 16,024,579.43
Length of Service Awards Program Fund (LOSAP) - Unaudited: Funds Held by Trustee 1,340,579.55 1,094,609.70
$ 17,560,162.53 $ 17,340,832.24
Liabilities, Reserves and Fund Balance Assessment Fund: Reserve for Assessments $ 775,377.39 $ 157,270.25 Serial Bonds Payable 275,000.00 Fund Balance 390,930.14 48,036.92 1,441,307.53 205,307.17 Animal Control Trust Fund: Reserve for Animal Control Fund Expenditures 13,229.14 16,335.94 Fees Due to State of New Jersey 4.20 13,233.34 16,335.94 Other Trust Fund: Miscellaneous Reserves 11,859,664.51 12,126,433.59 Reserve for Recreation and Open Space Trust 2,905,377.60 3,898,145.84 14,765,042.11 16,024,579.43 Length of Service Awards Program Fund (LOSAP) - Unaudited: Reserve for Length of Service Awards Program (LOSAP) 1,340,579.55 1,094,609.70
$ 17,560,162.53 $ 17,340,832.24
The accompanying Notes to Financial Statements are an integral part of this statement. B-8 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
ASSESSMENT TRUST FUND
STATEMENT OF FUND BALANCE - REGULATORY BASIS
Balance December 31, 2016 $ 48,036.92
Increased by: Collection of Unpledged Assessments 342,893.22
Balance December 31, 2017 $ 390,930.14
The accompanying Notes to Financial Statements are an integral part of this statement.
B-9 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
BALANCE SHEET - GENERAL CAPITAL FUND
REGULATORY BASIS
DECEMBER 31, 2017 AND 2016
2017 2016 Assets Cash and Cash Equivalents $ 13,568,216.48 $ 17,607,865.92 Grants Receivable 23,750.00 Deferred Charges to Future Taxation: General Improvements: Funded 27,730,000.00 32,145,000.00 Unfunded 7,752,549.48 2,352,076.95 Local Improvements: Funded 375,000.00 Open Space Improvements: Funded 3,039,606.98 3,681,913.20
$ 52,090,372.94 $ 56,185,606.07
Liabilities, Reserves and Fund Balance Capital Improvement Fund $ 141,229.58 $ 146,079.58 Retainage Due Contractors 97,812.67 56,563.62 Improvement Authorizations: General Improvements and Local Improvements: Funded 10,842,706.43 15,554,380.63 Unfunded 7,483,332.56 2,169,469.17 Open Space Improvements: Funded 1,971,111.98 856,045.38 General Serial Bonds: General Improvements 27,730,000.00 32,145,000.00 Local Improvements 375,000.00 Open Space Improvements 1,570,000.00 1,955,000.00 Green Trust Loan Program: Open Space Improvements 657,704.34 723,773.88 NJ Environmental Infrastructure Trust Loan: Open Space Improvements 811,902.64 1,003,139.32 Miscellaneous Reserves 423,365.45 345,511.99 Fund Balance 361,207.29 855,642.50
$ 52,090,372.94 $ 56,185,606.07
The accompanying Notes to Financial statements are an integral part of this statement.
B-10 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
GENERAL CAPITAL FUND
STATEMENT OF FUND BALANCE - REGULATORY BASIS
Balance December 31, 2016 $ 855,642.50
Decreased by: Payment to Current Fund as Anticipated Revenue 494,435.21
Balance December 31, 2017 $ 361,207.29
The accompanying Notes to Financial Statements are an integral part of this statement.
B-11 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
BALANCE SHEET - SWIMMING POOL UTILITY FUND
REGULATORY BASIS
DECEMBER 31, 2017 AND 2016
2017 2016 Assets Operating Fund: Cash $ 37,440.27 $ 15,739.54 Interfund - Swimming Pool Utility Capital Fund 6,000.00 6,000.00 Total Operating Fund 43,440.27 21,739.54
Capital Fund: Cash and Cash Equivalents 244,403.13 551,876.09 Fixed Capital 3,271,345.81 3,221,345.81 Fixed Capital Authorized and Uncompleted 50,400.00 100,400.00 Total Capital Fund 3,566,148.94 3,873,621.90
$ 3,609,589.21 $ 3,895,361.44
Liabilities, Reserves and Fund Balance Operating Fund: Appropriation Reserves $ 30,285.99 $ 4,681.10 Reserve for Encumbrances 8,967.17 10,522.09 Accrued Interest on Bonds 3,047.92 5,881.94 42,301.08 21,085.13 Fund Balance 1,139.19 654.41 Total Operating Fund 43,440.27 21,739.54
Capital Fund: Capital Improvement Fund 100.00 100.00 Interfund - Swimming Pool Utility Operating Fund 6,000.00 6,000.00 Reserve to Pay Debt Service 294,750.00 585,750.00 Improvement Authorizations: Funded 2,000.00 Unfunded 39,053.13 53,526.09 Serial Bonds 285,000.00 550,000.00 Reserve for Amortization 2,938,845.81 2,671,345.81 Deferred Reserve for Amortization 2,400.00 4,900.00 Total Capital Fund 3,566,148.94 3,873,621.90
$ 3,609,589.21 $ 3,895,361.44
The accompanying Notes to Financial statements are an integral part of this statement.
B-12 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
SWIMMING POOL UTILITY FUND
STATEMENT OF OPERATIONS AND CHANGE IN FUND BALANCE
REGULATORY BASIS
Year 2017 Year 2016 Revenue and Other Income Realized Fund Balance Anticipated $ $ 1,000.00 Membership Fees 238,315.00 266,808.00 Other Fees 148,838.00 160,054.20 Interest on Investments and Deposits 162.10 659.93 Reserve for Debt Service 291,000.00 216,084.00 Other Credits to Income: Unexpended Balance of Appropriation Reserves 12,544.66 32,366.88 Total Income 690,859.76 676,973.01
Expenditures Operating 383,879.00 370,163.00 Debt Service 289,665.98 290,623.61 Deferred Charges and Statutory Expenditures 16,830.00 15,781.00 690,374.98 676,567.61
Excess in Revenue 484.78 405.40 Fund Balance January 1 654.41 1,249.01 1,139.19 1,654.41 Decreased by: Utilization by Swimming Pool Operating Budget 1,000.00
Fund Balance December 31 $ 1,139.19 $ 654.41
The accompanying Notes to Financial Statements are an integral part of this statement.
B-13 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
BALANCE SHEET - PUBLIC ASSISTANCE TRUST FUND
REGULATORY BASIS
DECEMBER 31, 2017 AND 2016
2017 2016 Assets Cash - Treasurer $ 53,611.93 $ 73,019.94
Liabilities and Reserves Due to State of New Jersey $ $ 19,467.00 Reserve for Public Assistance 53,611.93 53,552.94
$ 53,611.93 $ 73,019.94
The accompanying Notes to Financial Statements are an integral part of this statement.
B-14 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
BALANCE SHEET - PAYROLL FUND
REGULATORY BASIS
DECEMBER 31, 2017 AND 2016
2017 2016 Assets Cash $ 151,309.45 $ 178,205.98
Liabilities Due to Various Agencies $ 151,309.45 $ 178,205.98
The accompanying Notes to Financial Statements are an integral part of this statement.
B-15 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
BALANCE SHEET - GENERAL FIXED ASSET ACCOUNT GROUP
REGULATORY BASIS
DECEMBER 31, 2017 AND 2016
2017 2016 Assets Land $ 38,946,245.70 $ 38,946,245.70 Buildings 7,936,574.85 7,936,574.85 Machinery and Equipment 25,499,281.24 24,731,992.49
$ 72,382,101.79 $ 71,614,813.04
Reserve Investment in Fixed Assets $ 72,382,101.79 $ 71,614,813.04
The accompanying Notes to Financial Statements are an integral part of this statement.
B-16 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2017
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The financial statements of the Township of West Windsor, County of Mercer, New Jersey (the “Township”), include every board, body, office or commission supported and maintained wholly or in part by funds appropriated by the Township as required by N.J.S. 40A:5-5. The financial statements of the Township do not include the operations of the Board of Education, first aid organization or volunteer fire companies which are subject to separate audits.
The Governmental Accounting Standards Board (“GASB”) Statement 14 established criteria to be used to determine which component units should be included in the financial statements of the oversight entity. The criteria differ from the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the “Division”) requirements where certain boards, commissions, and agencies of the Township, by statute or other directive, report separately on their financial statements. The financial statements of the Township of West Windsor Parking Authority are reported separately.
B. Descriptions of Funds
The GASB is the recognized standard-setting body for establishing governmental generally accepted accounting and financial reporting principles.
The accounting policies of the Township conform to the accounting principles applicable to municipalities which have been prescribed by the Division. Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the Township accounts for its financial transactions through the following separate funds which differs from the fund structure required by generally accepted accounting principles (GAAP):
Current Fund - revenues and expenditures for governmental operations of a general nature, including Federal and State grant funds.
Assessment Trust Fund - used to account for the financing of local improvements deemed to benefit the properties against which assessments are levied.
Animal Control Trust Fund - animal license revenues and expenditures.
Other Trust Fund - sundry deposits held for satisfactory completion of specific work; receipts and disbursements for dedicated purposes.
B-17 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. Descriptions of Funds (Continued)
General Capital Fund - resources, including Federal and State Grants in aid of construction, and expenditures for the acquisition of general capital facilities, other than those acquired through the Current Fund, including the status of bonds and notes authorized for said purposes.
Swimming Pool Utility Operating Fund - revenues and expenditures necessary to operate a municipally-owned swimming pool from user fees.
Swimming Pool Utility Capital Fund - receipt and disbursement of funds used for acquisition of capital facilities necessary to maintain and extend the municipally-owned swimming pool.
Public Assistance Trust Fund - receipt and disbursement of funds that provide assistance to certain residents of the Township pursuant to Title 44 of New Jersey statutes.
Payroll Fund - receipt and disbursement for payroll costs and payroll taxes.
General Fixed Assets Account Group - used to account for fixed assets used in general government operations.
C. Basis of Accounting
The accounting principles and practices prescribed for municipalities by the Division differ in certain respects from GAAP applicable to local governmental units. The more significant differences are as follows:
A modified accrual basis of accounting is followed with minor exceptions.
Property Taxes and Other Revenues - property taxes and other revenues are recognized on a cash basis. Receivables for property taxes and other items that are susceptible to accrual are recorded with offsetting reserves on the balance sheet of the Township's Current Fund. GAAP requires such revenue to be recognized in the accounting period when they become susceptible to accrual, reduced by an allowance for doubtful accounts.
Grant Revenues - Federal and State grants, entitlement or shared revenues received for purposes normally financed through the Current Fund are recognized when anticipated in the Township's budget. Federal and State grant revenues received for purposes of capital projects financed by capital ordinances are recognized when received. GAAP requires such revenues to be recognized in the accounting period when they become susceptible to accrual.
B-18 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Basis of Accounting (Continued)
Expenditures - unexpended or uncommitted appropriations, at December 31, are reported as expenditures through the establishment of appropriation reserves unless cancelled by the governing body. GAAP requires expenditures to be recognized in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest on general long-term debt, which should be recognized when due.
Encumbrances - contractual orders at December 31, are reported as expenditures through the establishment of a reserve for encumbrances. Encumbrances do not constitute expenditures under GAAP.
Appropriation Reserves - are available, until lapsed at the close of the succeeding year, to meet specific claims, commitments or contracts incurred during the preceding year. Lapsed appropriation reserves are recorded as additions to income. Appropriation reserves do not exist under GAAP.
Deferred Charges - the regulatory basis of accounting utilized by the Township requires that certain expenditures be deferred, and raised as items of appropriation in budgets of succeeding years. These deferred charges include the two general categories, overexpenditures and emergency appropriations. Overexpenditures occur when expenditures recorded as “paid or charged” exceed available appropriation balances. Emergency appropriations occur when, subsequent to the adoption of a balanced budget, the governing body authorizes the establishment of additional appropriations based on unforeseen circumstances or for other special purposes as defined by statute. Overexpenditures and emergency appropriations are deducted from total expenditures in the calculation of operating results and are established as assets for Deferred Charges on the respective balance sheets. GAAP does not permit the deferral of overexpenditures to succeeding budgets. In addition, GAAP does not recognize expenditures based on the authorization of an appropriation. Instead, the authorization of special purpose expenditures, such as the preparation of tax maps or revaluation of assessable real property, would represent the designation of fund balance.
Compensated Absences - expenditures relating to obligations for unused vested accumulated vacation and sick pay are not recorded until paid. GAAP requires that the amount which would normally be liquidated with expendable available financial resources be recorded as an expenditure in the Current Fund and the remaining obligations be recorded as a long-term obligation. The compensated absence liability at December 31, 2017 is set forth in Note 4.
Property Acquired for Taxes - is recorded in the Current Fund at the assessed valuation when such property was acquired and fully reserved. GAAP requires such property to be recorded at its market value.
Sale of Municipal Assets - Cash proceeds from the sale of Township owned property may be reserved until utilized as an item of anticipated revenue in a subsequent year budget. Year end balances of such proceeds are reported as a cash liability in the Current Fund. GAAP requires that revenue be recognized in the accounting period that the terms of sales contracts become legally enforceable.
B-19 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Basis of Accounting (Continued)
Interfunds - advances in the Current Fund are reported as interfund receivables with offsetting reserves which are created by charges to operations. Income is recognized in the year the receivables are liquidated. GAAP does not require the establishment of an offsetting reserve.
Inventories of Supplies - The costs of inventories of supplies for all funds are recorded as expenditures at the time individual items are purchased. The costs of inventories are not included on the various balance sheets. GAAP requires that the cost of inventories be reflected on the balance sheet until utilized and expended.
General Fixed Assets - In accordance with the New Jersey Administrative Code, which differs in certain respects from GAAP, the Township has developed a fixed assets accounting and reporting system. Fixed assets acquired prior to January 1, 1987 are based on an inspection and appraisal prepared by an independent firm. All general fixed assets acquired after January 1, 1987 are recorded at cost.
Fixed assets used in governmental operations (general fixed assets) are required to be accounted for in the General Fixed Assets Account Group. Public domain (“infrastructure”) general fixed assets consisting of certain improvements other than buildings, such as roads, bridges, curbs and gutters, streets and sidewalks and drainage systems are not capitalized.
GAAP does not require utilization of a general fixed asset account group.
All fixed assets are valued at historical cost or estimated historical cost if actual historical cost is not available.
Depreciation is not recorded in the General Fixed Assets Account Group.
Expenditures for construction in progress are required to be recorded in the Capital Funds until such time as the construction is completed and put into operation.
Fixed assets acquired through grants in aid or contributed capital have not been accounted for separately.
Utility Fixed Assets - Accounting for utility fund “fixed capital” remains unchanged.
Property and equipment purchased by the Swimming Pool Utility Fund are recorded in the capital account at cost and are adjusted for disposition and abandonment. The amounts shown do not purport to represent reproduction costs or current value. The balance in the Reserve for Amortization and Deferred Reserve for Amortization accounts in the utility capital fund represent charges to operations for the costs of acquisitions of property, equipment and improvements.
B-20 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Basis of Accounting (Continued)
Utility Fixed Assets (Continued)
Property and equipment of the Swimming Pool Utility Fund are not depreciated. Principal payments for Swimming Pool Utility debt are recorded as expenditures in the Swimming Pool Utility Statement of Operations.
During 2017 and 2016 the following changes occurred in the fixed assets of the Township:
Expenditures from Balance Current Capital Less: Balance Jan. 1, 2017 Fund Fund Disposals Transfer Dec. 31, 2017 General Fixed Assets Account Group: Land $ 38,946,246 $ $ $ $ $ 38,946,246 Buildings 7,936,575 7,936,575 Machinery and Equipment 24,731,992 12,789 835,082 80,582 25,499,281 Swimming Pool Utility Fund: Fixed Capital 3,221,346 50,000 3,271,346 Fixed Capital Authorized and Uncompleted 100,400 (50,000) 50,400
$ 74,936,559 $ 12,789 $ 835,082 $ 80,582 $ $ 75,703,848
Expenditures from Balance Current Capital Utility Less: Balance Jan. 1, 2016 Fund Fund Fund Disposals Dec. 31, 2016 General Fixed Assets Account Group: Land $ 38,946,246 $ $ $ $ $ 38,946,246 Buildings 7,936,575 7,936,575 Machinery and Equipment 23,757,526 49,342 950,356 25,232 24,731,992 Swimming Pool Utility Fund: Fixed Capital 3,221,346 3,221,346 Fixed Capital Authorized and Uncompleted 50,000 50,400 100,400
$ 73,911,693 $ 49,342 $ 950,356 $ 50,400 $ 25,232 $ 74,936,559
B-21 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Impact of Recently Issued Accounting Principles
Adopted Accounting Pronouncements
The following GASB Statements became effective for the year ended December 31, 2017:
Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This statement will be effective for the year ended December 31, 2018. The adoption of this Statement had no impact on the Borough’s financial statements.
Statement No. 75, Accounting and Financial Reporting for Post-employment Benefits Other than Pensions. This Statement replaces the requirements of Statement No. 45, Accounting and Financial Reporting by Employers for Post-employment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agency Employers and Agent Multi-Employer Plans, for OPEB Statement No. 74, Financial Reporting for Post-employment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB Plans. The adoption of this Statement had no impact on the Borough’s financial statements.
Statement No. 80, Blending Requirements for Certain Component Units - an amendment of GASB Statement No. 14. The objective of this Statement is to improve financial reporting by clarifying the financial statement presentation requirements for certain component units. This Statement amends the blending requirements established in paragraph 53 of Statement No. 14, The Financial Reporting Entity, as amended. The adoption of this Statement had no impact on the Borough’s financial statements.
Statement No. 81, Irrevocable Split-Interest Agreements. The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. The adoption of this Statement had no impact on the Borough’s financial statements.
B-22 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Impact of Recently Issued Accounting Principles (Continued)
Recently Issued Accounting Pronouncements
The GASB has issued the following Statements which will become effective in future fiscal years as shown below:
Statement No. 82, Pension Issues - an amendment of GASB Statements No. 67, 68 and No. 73. The objective of this Statement is to address certain issues that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. This statement will be effective for the year ended December 31, 2018. Management has not yet determined the potential impact on the Borough’s financial statements.
Statement No. 83, Certain Asset Retirement Obligations. An asset retirement obligation is a legally enforceable liability associated with the retirement of a tangible capital asset. Statement No. 83 establishes guidance for determining the timing and pattern of recognition for liabilities and corresponding deferred outflow of resources related to such obligations. This statement will be effective for the year ended December 31, 2019. Management does not expect this Statement to have a material impact on the Borough’s financial statements.
Statement No. 84, Fiduciary Activities. The Statement intends to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. To that end, Statement No. 84 establishes criteria for identifying fiduciary activities of all state and local governments and clarifies whether and how business-type activities should report their fiduciary activities. This statement will be effective for the year ended December 31, 2019. Management does not expect this Statement to have a material impact on the Borough’s financial statements.
Statement No. 85, Omnibus 2017. This Statement provides guidance that addresses several different accounting and financial reporting issues identified during the implementation and application of other GASB pronouncements. This statement will be effective for the year ended December 31, 2018. Management does not expect this Statement to have a material impact on the Borough’s financial statements.
Statement No. 86, Accounting for Certain Debt Extinguishment. Statement No. 86 provides guidance for transactions in which cash and other monetary assets acquired with only existing resources, that is, resources other than the proceeds of refunding debt, are placed in an irrevocable trust for the sole purpose of extinguishing debt. This statement will be effective for the year ended December 31, 2018. Management does not expect this Statement to have a material impact on the Borough’s financial statements.
B-23 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Impact of Recently Issued Accounting Principles (Continued)
Recently Issued Accounting Pronouncements (Continued)
Statement No. 87, Leases. Statement No. 87 establishes a single approach to accounting for and reporting leases by state and local governments. The GASB based the new standard on the principle that leases are financing of the right to use an underlying asset. This statement will be effective for the year ended December 31, 2020. Management does not expect this Statement to have a material impact on the Borough’s financial statements.
E. Financial Statements
The GASB Codification requires the financial statements of a governmental unit to be presented in accordance with GAAP. The Township presents its financial statements in accordance with another comprehensive basis of accounting as promulgated by the Division which differs from the financial statements required by GAAP. In addition, the Division requires the financial statements to be referenced to the supplementary schedules. This practice differs from GAAP.
F. Budgets and Budgetary Accounting
An annual budget is required to be adopted and integrated into the accounting system to provide budgetary control over revenues and expenditures. Budget amounts presented in the accompanying financial statements represent amounts adopted by the Township and approved by the Division in accordance with applicable statutes.
G. Reporting Entity
GASB Statement 14 establishes criteria to be used to determine which component units should be included in the financial statements of the oversight entity. The Division requires the financial statements of the Township to be reported separately. The financial statements of the Township of West Windsor Parking Authority are reported separately.
NOTE 2. CASH AND CASH EQUIVALENTS
A. Deposits
New Jersey statutes permit the deposit of public funds in institutions located in New Jersey which are insured by the Federal Deposit Insurance Corporation (“FDIC”), or by any other agencies of the United States that insure deposits or the State of New Jersey Cash Management Fund.
B-24 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 2. CASH AND CASH EQUIVALENTS (CONTINUED)
A. Deposits (Continued)
New Jersey statutes require public depositories to maintain collateral for deposits of public funds that exceed insurance limits as follows:
The market value of the collateral must equal five percent of the average daily balance of public funds; or
If the public funds deposited exceed 75 percent of the funds of the depository, the depository must provide collateral having a market value equal to 100 percent of the amount exceeding 75 percent.
All collateral must be deposited with the Federal Reserve Bank, the Federal Home Loan Bank Board or a banking institution that is a member of the Federal Reserve System and has capital funds of not less than $25,000,000.
At year-end the carrying amount of the Township's deposits was $58,124,002 and the bank balance amount was $57,042,426. Of this amount $750,000 was covered by federal depository insurance and a collateral pool under New Jersey’s Governmental Unit Deposit Protection Act covered $55,203,837. An amount of $1,088,589 was on deposit in the name of various developers for escrow and is insured by federal depository insurance or uninsured depending on the deposits of the individual developer in the depository.
B. Investments
a. When authorized by a cash management plan approved pursuant to N.J.S. 40A:5-14, the Township may use available funds for the purchase of the following types of securities which, if suitable for registry, may be registered in the name of the Township:
a. (1) Bonds or other obligations of the United States or obligations guaranteed by the United States.
(2) Government money market mutual funds.
(3) Any obligation that a federal agency or a federal instrumentality has issued in accordance with an act of Congress, which security has a maturity date not greater than 397 days from the date of purchase, provided that such obligation bears a fixed rate of interest not dependent on any index or other external factor.
(4) Bonds or other obligations of the Township, or bonds or other obligations of school districts of which the Township is a part or within which the school district is located.
B-25 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 2. CASH AND CASH EQUIVALENTS (CONTINUED)
B. Investments (Continued)
a. (5) Bonds or other obligations, having a maturity date not more than 397 days from the date of purchase, approved by the Division of Investments, New Jersey Department of the Treasury.
(6) Municipal investment pools.
(7) Deposits with the State of New Jersey Cash Management Fund established pursuant to section 1 of P.L. 1977, c. 281; or
(8) Agreements for the repurchase of fully collateralized securities, if:
(a) the underlying securities are permitted investments pursuant to paragraphs (1) and (3) of this section; (b) the custody of collateral is transferred to a third party; (c) the maturity of the agreement is not more than 30 days; (d) the underlying securities are purchased through a public depository as defined in section 1 of P.L. 1970, c. 236 (C.17:9-41); (e) a master repurchase agreement providing for the custody and security of collateral is executed.
b. Any investment instruments in which the security is not physically held by the Township shall be covered by a third party custodial agreement, which shall provide for the designation of such investments in the name of the Township and prevent unauthorized use of such investments.
c. Investments are further regulated and restricted in accordance with N.J.S. 40A:5-15.1.
The State of New Jersey Cash Management Fund is authorized by statute and regulations of the State Investment Council to invest in fixed income and debt securities which mature within one year. Collateralization of Fund investments is generally not required. “Other Than State” participants contribute up to one twentieth of one percent per year of the value of the aggregate units owned by them to establish a Reserve Fund, which is supplemented by the proportional interest of “Other Than State” participants in gains on investment transactions realized. The Reserve Fund is available to cover losses of “Other Than State” participants occasioned by the bankruptcy of an issuer of an investment held by the Fund and losses on sales of securities.
B-26 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 2. CASH AND CASH EQUIVALENTS (CONTINUED)
B. Investments (Continued)
At year-end, the carrying value of the Township’s investments was $6,542,708 and the investment balance amount was $6,542,708.
Borough of Barnegat Light Bond Anticipation Note $ 2,280,000 Borough of West Wildwood Bond Anticipation Note 1,010,000 City of Bridgeton Bond Anticipation Note 105,000 City of Egg Harbor City Bond Anticipation Note 1,258,000 Town of Secaucus Bond Anticipation Note 560,708 Township of Little Egg Harbor Bond Anticipation Note 1,329,000
$ 6,542,708
C. Cash Management Plan
In accordance with N.J.S. 40A:5-14, every municipality shall adopt a cash management plan and shall deposit and invest its funds pursuant to that plan. The plan shall be approved annually by majority vote of the governing body and may be modified from time to time in order to reflect changes in federal or state law or regulations. The chief financial officer shall be charged with administering the plan.
When an investment in bonds maturing in more than one year is authorized, the maturity of those bonds shall approximate the prospective use of the funds invested.
The plan also requires a monthly report to the governing body summarizing all investments made or redeemed since the previous report and shall include, at a minimum, the specific detailed information as set forth in the statute.
D. Credit Risk Categories
All bank deposits and investments as of the balance sheet date are classified as to credit risk by the following categories described below: Bank Balance 2017 2016 Depository Account Insured: FDIC $ 750,000 $ 750,000 GUDPA 55,203,837 35,829,947 Uninsured 6,542,708 17,376,083 Escrow Deposits 1,088,589 2,636,247
$ 63,585,134 $ 56,592,277
B-27 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 2. CASH AND CASH EQUIVALENTS (CONTINUED)
D. Credit Risk Categories
Custodial Credit Risk - Deposits Custodial credit risk is the risk that, in the event of a bank failure, the government’s deposits may not be returned to it. The Township does not have a formal policy for custodial credit risk.
State law limits investments as noted above.
During the year, the Township had none of its idle funds invested in repurchase agreements collateralized by eligible securities. At the close of the year, no such investments were held by the Township.
NOTE 3. DEBT
The Local Bond Law governs the issuance of bonds and notes to finance general municipal capital expenditures. Bonds are retired in serial installments within the statutory period of usefulness. Bonds issued by the Township are general obligation bonds, backed by the full faith and credit of the Township. Bond anticipation notes are issued to temporarily finance capital projects, prior to the issuance of serial bonds. The term of the notes cannot exceed one year but the notes may be renewed from time to time for a period not exceeding one year. All such notes must be paid no later than the tenth anniversary of the date of the original note. The State of New Jersey also prescribes that on or before the third anniversary date of the original note a payment of at least equal to the first legally payable installment of the bonds in anticipation of which such notes were issued be paid. A second legal installment must be paid if the notes are to be renewed beyond the fourth anniversary date of the original issuance and so on. Tax anticipation notes are issued if the cash on hand is not sufficient to carry on normal operations of the municipality at any time during the year. Such notes are authorized by a resolution adopted by the governing body.
B-28 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 3. DEBT (CONTINUED)
A. Long-Term Debt
The Township's long-term debt is summarized as follows:
General Capital Fund - General Improvements 2.00% to 5.00% General Improvement Bonds issued December 1, 2009, installment maturities to December 1, 2019 $ 2,275,000 2.00% to 2.50% General Improvement Bonds issued November 15, 2011, installment maturities to November 15, 2023 3,600,000 2.00% to 3.00% General Improvement Bonds issued October 15, 2106, installment maturities to October 15, 2029 15,530,000 2.00% Refunding Bonds Issued December 1, 2016, installment maturities to December 1, 2024 6,325,000
$ 27,730,000
The General Capital Fund - General Improvement Bonds mature serially in installments to the year 2029. Aggregate debt service requirements are as follows:
Year Principal Interest 2018 $ 4,140,000 $ 651,188 2019 3,795,000 546,387 2020 3,225,000 443,175 2021 2,645,000 365,675 2022 2,580,000 312,025 2023 2,515,000 258,625 2024 1,950,000 192,075 2025 1,375,000 139,325 2026 1,375,000 111,825 2027 1,375,000 84,325 2028 1,375,000 56,825 2029 1,380,000 29,325
Total $ 27,730,000 $ 3,190,775
B-29 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 3. DEBT (CONTINUED)
A. Long-Term Debt (Continued)
Assessment Trust Fund - Special Assessment Improvements 2.00% to 5.00% Special Assessment Bonds issued December 1, 2009, installment maturities to December 1, 2019 $ 275,000
The General Capital Fund - Local Improvement Bonds mature serially in installments to the year 2019. Aggregate debt service requirements are as follows:
Year Principal Interest 2018 $ 100,000 $ 7,187 2019 175,000 3,188
Total $ 275,000 $ 10,375
General Capital Fund - Open Space Improvements 3.00% to 5.00% Refunding Bonds issued October 15, 2008, installment maturities to October 15, 2021 $ 1,570,000
The General Capital Fund - Open Space Improvement Bonds mature serially in installments to the year 2021. Aggregate debt service requirements are as follows:
Year Principal Interest 2018 $ 395,000 $ 66,750 2019 395,000 47,000 2020 390,000 31,200 2021 390,000 15,600
Total $ 1,570,000 $ 160,550
Green Trust Loan Program
The Township has a low interest loan (2%) under the New Jersey Department of Environmental Protection Green Trust Loan Program. $1,290,000 for the development of Central Community Park was finalized on July 19, 2006. The Township must repay the loans in semi-annual installments over twenty years. The balance December 31, 2017 was $657,704. Loan payments are due through 2026.
B-30 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 3. DEBT (CONTINUED)
A. Long-Term Debt (Continued)
Green Trust Loan Program (Continued)
Debt service requirements during the next five fiscal years and thereafter are as follows:
Year Principal Interest 2018 $ 67,397 $ 12,819 2019 68,752 11,464 2020 70,134 10,082 2021 71,544 8,672 2022 72,982 7,234 2023 74,449 5,768 2024 75,945 4,271 2025 77,472 2,745 2026 79,029 1,187
Total $ 657,704 $ 64,242
N.J. Environmental Infrastructure Program
The Township has two loans with the New Jersey Environmental Infrastructure Program to fund the purchase of Open Space. The first loan from the New Jersey Infrastructure Fund amounting to $1,674,984 is payable semi-annually till 2021 with no interest. The second loan from the New Jersey Environmental Infrastructure Trust amounting to $1,595,000 is payable semi-annually till 2021 with interest from 4% to 5.5%. The proceeds of the loans were received in 2002. The balance at December 31, 2017 was $811,903. Aggregate debt service requirements are as follows:
Infrastructure Fund Infrastructure Trust Year Principal Interest Principal Interest 2018 $ 86,075 $ -0- $ 110,000 $ 22,888 2019 85,751 -0- 115,000 17,387 2020 85,265 -0- 120,000 11,638 2021 84,812 -0- 125,000 5,938
Total $ 341,903 $ None $ 470,000 $ 57,851
B-31 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 3. DEBT (CONTINUED)
A. Long-Term Debt (Continued)
Swimming Pool Utility Capital Fund
3.00% to 5.00% Swimming Pool Utility Refunding Bonds issued October 15, 2008, installment maturities to October 15, 2018 $ 285,000
The Swimming Pool Utility Fund bonds mature serially in installments to the year 2018. Aggregate debt service requirements are as follows:
Year Principal Interest 2018 $ 285,000 $ 14,250
B. Short-Term Debt
On December 31, 2017, the Township had no short-term debt outstanding.
C. Bonds and Notes Authorized but not Issued
At December 31 the Township had authorized but not issued bonds and notes as follows:
2017 2016 General Capital Fund - General Improvements $ 7,752,549 $ 2,352,077 General Capital Fund - Open Space Improvements -0- -0- Swimming Pool Utility Fund 95,500 95,500
D. Borrowing Power
New Jersey statutes limit the debt of a municipality to 3.5% of the average of the last three preceding years equalized valuations of the taxable real estate and improvements. The Township's statutory net debt at December 31, 2017 was .544%. The Township's remaining borrowing power is 2.956%.
The summary of municipal debt for the last three years and the calculation of statutory net debt is presented in the Supplementary Data section of this report.
B-32 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 3. DEBT (CONTINUED)
E. Summary of Debt Activity
During 2017 and 2016 the following changes occurred in the debt service of the Township:
Balance Balance Due within Jan. 1, 2017 Retired Transfers Dec. 31, 2017 One Year Assessment Trust Debt: Serial Bonds $ $ $ 275,000 $ 275,000 $ 100,000 General Capital Fund Debt: Serial Bonds: General Improvements 32,145,000 4,415,000 27,730,000 4,140,000 Special Assessment Improvements 375,000 100,000 (275,000) Open Space Improvements 1,955,000 385,000 1,570,000 395,000 Green Trust Loan Program 723,774 66,070 657,704 67,397 Environmental Infrastructure Loan 1,003,139 191,236 811,903 196,075 Swimming Pool Utility Fund Debt: Serial Bonds 550,000 265,000 285,000 285,000
$ 36,751,913 $ 5,422,306 $ $ 31,329,607 $ 5,183,472
Balance Balance Due within Jan. 1, 2016 Issued Retired Dec. 31, 2016 One Year General Capital Fund Debt: Serial Bonds: General Improvements $ 19,965,000 $ 15,835,000 $ 3,655,000 $ 32,145,000 $ 4,415,000 Special Assessment Improvements 525,000 150,000 375,000 100,000 Open Space Improvements 2,330,000 375,000 1,955,000 385,000 Bond Anticipation Notes: General Improvements 9,080,000 9,080,000 Green Trust Loan Program 788,541 64,767 723,774 66,070 Environmental Infrastructure Loan 1,189,376 186,237 1,003,139 191,236 Swimming Pool Utility Fund Debt: Serial Bonds 795,000 245,000 550,000 265,000
$ 34,672,917 $ 15,835,000 $ 13,756,004 $ 36,751,913 $ 5,422,306
F. Debt Guarantee
The Township, by ordinance, has guaranteed payment of principal and interest on bonds issued by the West Windsor Parking Authority in 2013. The outstanding balance at December 31, 2017 and 2016 was $4,520,000 and $4,620,000, respectively.
B-33 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 4. ACCRUED SICK AND VACATION BENEFITS
As discussed in Note 1 and in accordance with accounting principles prescribed by the State of New Jersey, the cash basis of accounting is followed for recording the Township's liability related to unused vacation and sick pay. The Township permits certain employees within limits to accumulate unused vacation and sick pay, which may be taken as time off or paid at a later date at an agreed upon rate. The estimated maximum current cost of such unpaid compensation approximates $1,719,298 and $1,715,092 at December 31, 2017 and 2016, respectively, assuming that all personnel retire from the Township. In accordance with New Jersey accounting principles, this amount is not reported as an expenditure or liability in the accompanying financial statements.
NOTE 5. FUND BALANCES APPROPRIATED
The fund balances at December 31 which have been appropriated and included as anticipated revenue in the municipal budget for the year ending December 31 of the succeeding years are as follows:
2017 2016 Current Fund $ 4,225,000 $ 4,770,000 Swimming Pool Utility Fund -0- -0-
NOTE 6. TAXES, CHARGES AND MEMBERSHIP FEES COLLECTED IN ADVANCE
Taxes, sewer charges and swimming pool membership fees collected in advance set forth as cash liabilities in the financial statements, are as follows:
Balance December 31 2017 2016 Prepaid Taxes $ 15,817,719 $ 1,512,145 Prepaid Sewer Utility Charges 94,219 99,565
NOTE 7. ASSESSMENT AND COLLECTION OF PROPERTY TAXES
New Jersey statutes require that taxable valuation of real property be prepared by the Township Tax Assessor as of October 1 in each year and filed with the County Board of Taxation (the “Board”) by January 10 of the following year. Upon the filing of certified adopted budgets by the Township, Regional School District and County, the tax rate is struck by the Board based on the certified amounts in each of the taxing districts for collection to fund the budgets. Pursuant to statute, this process is to be completed on or before May 3, with a completed duplicate of the tax rolls to be delivered to the Township Tax Collector (the “Collector”) on or before May 13th.
B-34 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 7. ASSESSMENT AND COLLECTION OF PROPERTY TAXES (CONTINUED)
Tax bills are prepared then mailed by the Collector of the Township annually and set forth the final tax for the tax year. The bill contains a credit for preliminary amounts billed previously with the balance payable in equal installments on August 1st and November 1st of the tax year. In addition the property owner receives a preliminary bill for the succeeding year based on one half of the prior year's tax. The preliminary payments are due and payable on February 1st and May 1st. The N.J. Statutes allow a grace period of 10 days for each payment period and the Township granted this option to taxpayers. Taxes become delinquent if not paid on the installment dates and become subject to interest penalties of 8% or 18% of the amount delinquent. If taxes are delinquent on or after April 1st of the succeeding year, the delinquent amount is subject to “Tax Sale” which places a tax lien on the property allowing the holder to enforce the tax lien by collection or foreclosure. New Jersey property tax laws establish a tax lien on real estate as of January 1st of the current tax year even though the amount due is not known.
NOTE 8. DEFERRED CHARGES TO FUTURE TAXATION FUNDED AND UNFUNDED
Upon the authorization of capital projects, the Township establishes deferred charges for the cost of the capital projects to be raised by future taxation. Funded deferred charges relate to permanent debt issued, whereas unfunded deferred charges relate to temporary or non-funding of the authorized cost of capital projects. According to the New Jersey Statutes Annotated 40A:2-4, the Township may levy taxes on all taxable property within the local unit to repay the debt. Annually, the Township raises the debt requirements for the particular year in the current budget. As funds are raised, the deferred charges are reduced.
NOTE 9. PENSION OBLIGATIONS
A. Public Employees’ Retirement System (PERS)
Plan Description - The State of New Jersey, Public Employees' Retirement System (PERS) is a cost-sharing multiple-employer defined benefit pension plan administered by the State of New Jersey, Division of Pensions and Benefits (the Division). For additional information about PERS, please refer to the Division's Comprehensive Annual Financial Report (CAFR) which can be found at www.state.nj.us/treasury/pensions/annrprts.shtml.
The vesting and benefit provisions are set by N.J.S.A. 43:15A. PERS provides retirement, death and disability benefits. All benefits vest after ten years of service, except for medical benefits, which vest after 25 years of service or under the disability provisions of PERS.
The following represents the membership tiers for PERS:
Tier Definition 1 Members who were enrolled prior to July 1, 2007 2 Members who were eligible to enroll on or after July 1, 2007 and prior to November 2, 2008 3 Members who were eligible to enroll on or after November 2, 2008 and prior to May 22, 2010 4 Members who were eligible to enroll on or after May 22, 2010 and prior to June 28, 2011 5 Members who were eligible to enroll on or after June 28, 2011
B-35 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
A. Public Employees’ Retirement System (PERS) (Continued)
Plan Description (Continued)
Service retirement benefits of 1/5 5th of final average salary for each year of service credit is available to tiers 1 and 2 members upon reaching age 60 and to tier 3 members upon reaching age 62. Service retirement benefits of 1/60th of final average salary for each year of service credit is available to tier 4 members upon reaching age 62 and tier 5 members upon reaching age 65. Early retirement benefits are available to tiers 1 and 2 members before reaching age 60, tiers 3 and 4 before age 62 with 25 or more years of service credit and tier 5 with 30 or more years of service credit before age 65. Benefits are reduced by a fraction of a percent for each month that a member retires prior to the age at which a member can receive full early retirement benefits in accordance with their respective tier. Tier 1 members can receive an unreduced benefit from age 55 to age 60 if they have at least 25 years of service. Deferred retirement is available to members who have at least 10 years of service credit and have not reached the service retirement age for the respective tier.
Contributions - The contribution policy for PERS is set by N.J.S.A. 15A and requires contributions by active members and contributing employers. State legislation has modified the amount that is contributed by the State. The State's pension contribution is based on an actuarially determined amount which includes the employer portion of the normal cost and an amortization of the unfunded accrued liability. Funding for noncontributory group insurance benefits is based on actual claims paid. For fiscal year 2017, the State's pension contribution was less than the actuarial determined amount. The local employers' contribution amounts are based on an actuarially determined rate which includes the normal cost and unfunded accrued liability. Chapter 19, P.L. 2009 provided an option for local employers of PERS to contribute 50% of the normal and accrued liability contribution amounts certified for payments due in State fiscal year 2009. Such employers will be credited with the full payment and any such amounts will not be included in their unfunded liability. The actuaries will determine the unfunded liability of those retirement systems, by employer, for the reduced normal and accrued liability contributions provided under this law. This unfunded liability will be paid by the employer in level annual payments over a period of 15 years beginning with the payments due in the fiscal year ended June 30, 2012 and will be adjusted by the rate of return on the actuarial value of assets. Township contributions to PERS amounted to $818,535 for 2017.
The employee contribution rate was 7.20% effective July 1, 2016 and increased to 7.34% effective July 1, 2017. Subsequent increases after October 1, 2011 are being phased in over 7 years effective on each July 1st to bring the total pension contribution rate to 7.5% of base salary as of July 1, 2018.
B-36 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
A. Public Employees’ Retirement System (PERS) (Continued)
Net Pension Liability and Pension Expense - At June 30, 2017, the State reported a net pension liability of $20,413,052.00 for the Township of West Windsor’s proportionate share of the total net pension liability. The total pension liability for the June 30, 2017 measurement date was determined by an actuarial valuation as of July 1, 2016, which was rolled forward to June 30, 2017. The Township's proportion of the net pension liability was based on a projection of the Township’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2017, the Township’s proportion was 0.0876909501 percent, which was a decrease of 0.0040597374 percent from its proportion measured as of June 30, 2016.
For the year ended June 30, 2017, the State recognized an actuarially determined pension expense of $1,488,746.00 for the Township of West Windsor’s proportionate share of the total pension expense. The pension expense recognized in the Township’s financial statement based on the April 1, 2017 billing was $815,100.00.
At June 30, 2017, the State reported deferred outflows of resources and deferred inflows of resources related to PERS from the following sources:
Deferred Deferred Inflow of Outflow of Resources Resources - Differences between expected and actual experience $480,657.00
Changes of assumptions $4,097,449.00 4,112,526.00
Net difference between projected and actual earnings on pension plan investments 138,999.00
Changes in proportion and differences between Township contributions and proportionate share of contributions $879,739.00 771,516.00
$4,977,188.00 $5,503,698.0 0
B-37 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
A. Public Employees’ Retirement System (PERS) (Continued)
Other local amounts reported by the State as the Township’s proportionate share of deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in the State’s actuarially calculated pension expense as follows:
Year Ended June 30, Amount
2018 $515,106.00 2019 751,611.00 2020 478,118.00 2021 (692,138.00) 2022 (526,187.00)
$526,510.00
Actuarial Assumptions - The total pension liability for the June 30, 2017 measurement date was determined by an actuarial valuation as of July 1, 2016, which rolled forward to June 30, 2017. These actuarial valuations used the following assumptions: June 30, 2017 June 30, 2016
Inflation 2.25 Percent 3.08 Percent Salary Increases (based on age) Though 2026 1.65-4.15 Percent 1.65-4.15 Percent Thereafter 2.65-5.15 Percent 2.65-5.15 Percent
Investment Rate of Return 7.00 Percent 7.65 percent
Preretirement mortality rates were based on the RP-2000 Employee Preretirement Mortality Table for male and female active participants. For State employees, mortality tables are set back 4 years for males and females. For local employees, mortality tables are set back 2 years for males and 7 years for females. In addition, the tables provide for future improvements in mortality from the base year of 2013 using a generational approach based on the plan actuary's modified MP-2014 projection scale. Postretirement morality rates were based on the RP-2000 Combined Healthy Male and Female Mortality Tables (set back 1 year for males and females) for service retirements and beneficiaries of former members and a one-year static projection based on mortality improvement Scale AA. In addition, the tables for service retirements and beneficiaries of former members provide for future improvements in mortality from the base year of 2013 using a generational approach based on the plan actuary's modified MP-2014 projection scale. Disability retirement rates used to value disabled retirees were based on the RP-2000 Disabled Mortality Table (set back 3 years for males and set forward 1 year for females).
B-38
TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
A. Public Employees’ Retirement System (PERS) (Continued)
Actuarial Assumptions (Continued) - The actuarial assumptions used in the July 1, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2011 to June 30, 2014. It is likely that future experience will not exactly conform to these assumptions. To the extent that actual experience deviates from these assumptions, the emerging liabilities may be higher or lower than anticipated. The more the experience deviates, the larger the impact on future financial statements.
Long-Term Rate of Return - In accordance with State statute, the long-term expected rate of return on plan investments (7.00% at June 30, 2017 and 7.65 at June 30, 2016) is determined by the State Treasurer, after consultation with the Directors of the Division of Investment and Division of Pensions and Benefits, the board of trustees and the actuaries. The long-term expected rate of return was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic rates of return for each major asset class included in PERS's target asset allocation as of June 30, 2017 are summarized in the following table:
June 30, 2017 Long-Term Target Expected Real Asset Class Allocation Rate of Return Absolute Return/Risk Mitigation 5.00% 5.51% Cash 5.50% 1.00% US Treasuries 3.00% 1.87% Investment Grade Credit 10.00% 3.78% Public High Yield 2.50% 6.82% Global Diversified Credit 5.00% 7.10% Credit Oriented Hedge Funds 1.00% 6.60% Debt Related Private Equity 2.00% 10.63% Debt Related Real Estate 1.00% 6.61% Private Real Estate 2.50% 11.83% Equity Related Real Estate 6.25% 9.23% U.S. Equity 30.00% 8.19% Non-U.S. Developed Market Equity 11.50% 9.00% Emerging Markets Equity 6.50% 11.64% Buyouts Venture Capital 8.25% 13.08% 100.00%
B-39 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
A. Public Employees’ Retirement System (PERS) (Continued)
Discount Rate - The discount rate used to measure the total pension liability was 5.00% and 3.98% as of June 30, 2017 and 2016, respectively. This single blended discount rate was based on the long-term expected rate of return on pension plan investments of 7.00% and 7.65%, and a municipal bond rate of 3.58% and 2.85% as of June 30, 2017 and 2016, respectively, based on the Bond Buyer Go 20-Bond Municipal Bond Index which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made based on the contribution rate in the most recent fiscal year. The State employer contributed 40% of the actuarially determined contributions and the local employers contributed 100% of their actuarially determined contributions. Based on those assumptions, the plan's fiduciary net position was projected to be available to make projected future benefit payments of current plan members through 2040. Therefore, the long-term expected rate of return on plan investments was applied to projected benefit payments through 2040 and the municipal bond rate was applied to projected benefit payments after that date in determining the total pension liability.
Sensitivity of the collective net pension liability to changes in the discount rate - The following presents the collective net pension liability of the participating employers as of June 30, 2017 respectively, calculated using the discount rate as disclosed above as well as what the collective net pension liability would be if it was calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate: June 30, 2017 1% At Current 1% Decrease Discount Rate Increase 4.00% 5.00% 6.00% Township's Proportionate Share of the Pension Liability $25,323,776.00 $20,413,052.00 $16,321,810.00
Pension plan fiduciary net position - Detailed information about the pension plan’s fiduciary net position is available in the separately issued Financial Report for the State of New Jersey Public Employees Retirement System (PERS). The report may be obtained at State of New Jersey Division of Pensions and Benefits P.O. Box 295 Trenton, New Jersey 08625-0295 http://www.state.nj.us/treasury/pensions.
B-40
TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
B. Police and Firemen’s Retirement System (PFRS) (Continued)
Plan Description (Continued)
The following represents the membership tiers for PFRS:
Tier Definition 1 Members who were enrolled prior to May 22, 2010. 2 Members who were eligible to enroll on or after May 22, 2010 and prior to June 28, 2011 3 Members who were eligible to enroll on or after June 28, 2011
Service retirement benefits are available at age 55 and are generally determined to be 2% of final compensation for each year of creditable service, as defined, up to 30 years plus 1% for each year of service in excess of 30 years. Members may seek special retirement after achieving 25 years of creditable service, in which benefits would equal 65% (tiers 1 and 2 members) and 60% (tier 3 members) of final compensation plus 1 % for each year if creditable service over 25 years but not to exceed 30 years. Members may elect deferred retirement benefits after achieving ten years of service, in which case benefits would begin at age 55 equal to 2% of final compensation for each year of service.
Contributions - The contribution policy for PFRS is set by N.J.S.A. 43:16A and requires contributions by active members and contributing employers. State legislation has modified the amount that is contributed by the State. The State's contribution amount is based on an actuarially determined rate which includes the normal cost and unfunded accrued liability. For fiscal year 2016, the State contributed an amount less than the actuarially determined amount. The Local employers’ contribution amounts are based on an actuarially determined rate which includes the normal cost and unfunded accrued liability. Chapter 19, P.L. 2009 provided an option for local employers of PFRS to contribute 50% of the normal and accrued liability contribution amounts certified for payments due in State fiscal year 2009. Such employers will be credited with the full payment and any such amounts will not be included in their unfunded liability. The actuaries will determine the unfunded liability of those retirement systems, by employer, for the reduced normal and accrued liability contributions provided under this law. This unfunded liability will be paid by the employer in level annual payments over a period of 15 years beginning with the payments due in the fiscal year ended June 30, 2012 and will be adjusted by the rate of return on the actuarial value of assets. Township contributions to PFRS amounted to $1,490,556 for 2016.
The employee contributions for PFRS are 10.00% of employees’ annual compensation, as defined.
B-41 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
B. Police and Firemen’s Retirement System (PFRS) (Continued)
Net Pension Liability and Pension Expense - At June 30, 2017, the State reported a net pension liability of $26,240,468.00 for the Township of West Windsor’s proportionate share of the total PFRS net pension liability. The total pension liability for the June 30, 2017 measurement date was determined by an actuarial valuation as of July 1, 2016, which was rolled forward to June 30, 2017. The Township's proportion of the net pension liability was based on a projection of the Township's long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2017, the Township’s proportion was 0.1699725002 percent, which was a decrease of 0.0107757678 percent from its proportion measured as of June 30, 2016.
For the year ended June 30, 2017, the State recognized an actuarially determined pension expense of $2,100,953.00. The pension expense recognized in the Township’s financial statement based on the April 1, 2017 billing was $1,473,714.00.
At June 30, 2017, the State reported deferred outflows of resources and deferred inflows of resources related to PFRS from the following sources:
Deferred Deferred Inflow of Outflow of Resources Resources Differences between expected and actual experience $154,010.00 $170,233.00
Changes of assumptions 4,297,421.00 3,235,742.00
Net difference between projected and actual earnings on pension plan investments 500,730.00
Changes in proportion and differences between the Township's contributions and proportionate share of contributions 2,259,695.00 991,532.00
$6,711,126.00 $4,898,237.00
B-42 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
B. Police and Firemen’s Retirement System (PFRS) (Continued)
Net Pension Liability and Pension Expense (Continued)
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Year Ended June 30 Amount
2018 $86,858.00 2019 623,389.00 2020 (190,610.00) 2021 (1,603,880.00) 2022 (728,645.00)
($1,812,888.00)
Actuarial Assumptions - The total pension liability for the June 30, 2017 measurement date was determined by an actuarial valuation as of July 1, 2016, which rolled forward to June 30, 2017. This actuarial valuation used the following assumptions:
2016 2017
Inflation 3.08 Percent 2.25 Percent
Salary Increases (based on age) Through 2026 2.10-8.98 Percent 2.10-8.98 Percent Based on Age Based on Age
Thereafter 3.10-9.98 Percent 3.10-9.98 Percent Based on Age Based on Age
Investment Rate of Return 7.65 Percent 7.00 Percent
B-43 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
B. Police and Firemen’s Retirement System (PFRS) (Continued)
Actuarial Assumptions (Continued)
Pre-retirement mortality rates were based on the RP-2000 Pre-Retirement mortality tables projected thirteen years using Projection Scale BB and then projected on a generational basis using the plan actuary's modified 2014 projection scales. Post-retirement mortality rates for male service retirements and beneficiaries are based the RP-2000 Combined Healthy Mortality Tables projected one year using Projection Scale AA and two years using the plan actuary's modified 2014 projection scales, which was further projected on a generational basis using the plan actuary's modified 2014 projection scales. Post- retirement mortality rates for female service retirements and beneficiaries were based the RP-2000 Combined Healthy Mortality Tables projected thirteen years using Projection Scale BB and then two years using the plan actuary's modified 2014 projection scales, which was further projected on a generational basis using the plan actuary's modified 2014 projection scales. Disability mortality rates were based on special mortality tables used for the period after disability retirement.
The actuarial assumptions used in the July 1, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2010 to June 30, 2013.
Long-Term Rate of Return - In accordance with State statute, the long-term expected rate of return on plan investments (7.00 percent at June 30, 2017 and 7.65% at June 30, 2016) is determined by the State Treasurer, after consultation with the Directors of the Division of Investment and Division of Pensions and Benefits, the board of trustees and the actuaries. The long-term expected rate of return was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic rates of return for each major asset class included in PFRS s target asset allocation as of June 30, 2017 are summarized in the following table:
B-44 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
B. Police and Firemen’s Retirement System (PFRS) (Continued)
Long-Term Rate of Return (Continued)
June 30,2017 Long-Term Target Expected Real Asset Class Allocation Rate of Return Absolute Return/Risk Mitigation 5.00% 5.51% Cash 5.50% 1.00% U.S. Treasuries 3.00% 1.87% Investment Grade Credit 10.00% 3.78% Public High Yield 2.50% 6.82% Global Diversified Credit 5.00% 7.10% Credit Oriented Hedge Funds 1.00% 6.60% Debt Related Private Equity 2.00% 10.63% Debt Related Real Estate 1.00% 6.61% Private Real Estate 2.50% 11.83% Equity Related Real Estate 6.25% 9.23% U.S. Equity 30.00% 8.19% Non-U.S. Developed Market Equity 11.50% 9.00% Emerging Markets Equity 6.50% 11.64% Buyouts Venture Capital 8.25% 13.08% 100.00%
Discount Rate - The discount rate used to measure the total pension liability was 6.14% and 5.55% as of June 30, 2017 and June 30, 2016 respectively. This single blended discount rate was based on the long-term expected rate of return on pension plan investments of 7.00 and 7.65% and a municipal bond rate of 3.58% and 2.85% as of June 30, 2017 and June 30, 2016 respectively based on the Bond Buyer Go 20-Bond Municipal Bond Index, which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers and the nonemployer contributing entity will be made based on the contribution rate in the most recent fiscal year. The State employer contributed 40% of the actuarially determined contributions and the local employers contributed 100% of their actuarially determined contributions. Based on those assumptions, the plan's fiduciary net position was projected to be available to make projected future benefit payments of current plan members through 2057. Therefore, the long-term expected rate of return on plan investments was applied to projected benefit payments through 2057, and the municipal bond rate was applied to projected benefit payments after that date in determining the total pension liability.
B-45 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
B. Police and Firemen’s Retirement System (PFRS) (Continued)
Sensitivity of the Township’s Proportionate share of the Net Pension Liability to Changes in the Discount Rate - The following presents the collective net pension liability of the participating employers as of June 30, 2017 respectively, calculated using the discount rate as disclosed above as well as what the collective net pension liability would be if it was calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:
June 30, 2017 1% At Current 1% Decrease Discount Rate Increase 5.14% 6.14% 7.14% Township's proportionate share of the PFRS pension liability $34,573,977.00 $26,240,468.00 $19,393,542.00
Special Funding Situation - In accordance with N.J.S.A. 43:16A-15, local participating employers are responsible for their own contributions based on actuarially determined amounts, except where legislation was passed which legally obligated the State if certain circumstances occurred. The legislation which legally obligates the State is as follows: Chapter 8, P.L. 2000, Chapter 318, P.c. 2001, Chapter 86, P.L. 2001, Chapter 511, P.L. 1991, Chapter 109, P.c. 1979, Chapter 247, P.L. 1993 and Chapter 201, P.L. 2001. The amounts contributed by the State on behalf of the Township under this legislation is considered to be a special funding situation as defined by GASB Statement No. 68, and the State is treated as a nonemployer contributing entity. Since the Township does not contribute under this legislation directly to the plan (except for employer specific financed amounts), there is no net pension liability or deferred outflows or inflows to disclose in the notes to the financial statements of the Township related to this legislation.
At June 30, 2017 and 2016, the State's proportionate share of the net pension liability attributable to the Township for the PFRS special funding situation is $2,939,153.00 and $2,899,457 respectively.
At June 30, 2017, the Township's and State of New Jersey's proportionate share of the PFRS net pension liability were as follows:
Township's Proportionate Share of Net Pension Liability $26,240,468.00
State of New Jersey Proportionate Share of Net Pension Liability Associated with the Township 2,939,153.00
$29,179,621.00
B-46 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 9. PENSION OBLIGATIONS (CONTINUED)
B. Police and Firemen’s Retirement System (PFRS) (Continued)
Pension Plan Fiduciary Net Position - Detailed information about the pension plan’s fiduciary net position is available in the separately issued PERS financial statements.
Defined Contribution Retirement Program - The Defined Contribution Retirement Program (DCRP) is a cost-sharing multiple-employer defined contribution pension fund which was established in 2007, under the provisions of Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007 (N.J.SA 43:15C-1 et. seq.) and expanded under the provisions of Chapter 89, P.L. 2008 and Chapter 1, P.L. 2010. The DCRP provides eligible members, and their beneficiaries, with a tax-sheltered, defined contribution retirement benefit, along with life insurance and disability coverage. Vesting and benefit provisions are established by N.J.S.A.43:15C-l et. seq. The contribution requirements of plan members are determined by State statute. In accordance with Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007, plan members are required to contribute 5.5% of their annual covered salary. In addition to the employee contributions, the Township's contribution amounts for each pay period are transmitted to Prudential Financial not later than the fifth business day after the date on which the employee is paid for that pay period.
Related Party Investments - The Division of Pensions and Benefits does not invest in securities issued by the Township.
NOTE 10. OTHER POSTEMPLOYMENT BENEFITS
In addition to the pension benefits described in Note 9, the Township provides postretirement health care benefits to employees who retire from the Township that meet certain age and length of service requirements. Currently, fifty-seven retirees meet those requirements. Expenditures for postretirement health care benefits are recognized when the insurance premiums are charged to the budget. During 2017 and 2016, expenditures of $1,803,883 and $1,593,924, respectively, were recognized for postretirement health care.
NOTE 11. RISK MANAGEMENT
The Township is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Township is a member of the Mercer County Municipal Joint Insurance Fund, and the Municipal Excess Liability Fund, public entity risk pools currently operating as a common risk management and insurance programs for municipalities within the state. The Township pays an actuarially determined annual assessment to Mercer County Municipal Joint Insurance Fund for its insurance coverage and that of the Municipal Excess Liability Fund. Supplemental assessments may be levied to supplement the funds. The Township has not been notified on any supplemental assessments.
Settled claims resulting from these risks have not exceeded insurance coverage in any of the past three years.
B-47 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 12. CONTINGENT LIABILITIES
State and Federal Financial Assistance
The Township receives financial assistance from the State of New Jersey and the U.S. government in the form of grants. Entitlement to the funds is generally conditional upon compliance with terms and conditions of the financial assistance agreements and applicable regulations, including the expenditure of the funds for eligible purposes. Substantially all grants, entitlements and cost reimbursements are subject to financial and compliance audits by grantors. As a result of these audits, costs previously reimbursed could be disallowed and require repayment to the grantor agency. As of December 31, 2017, the Township estimates that no material liabilities will result from such audits.
Major Tax Assessments
Taxpayers in 2017 with assessments in excess of 1% of the total assessed valuation were as follows:
Assessed % of Owner Value Value Boston Properties, Ltd. $ 407,336,700 6.81% RM Square LLC/Rex Corp 80,588,200 1.35% Princeton Jct. Apartments LP (Toll Bros) 72,279,504 1.21% Hilton Management 79,204,700 1.32%
Tax Appeals
The Township has reserved $4,799,549 in anticipation of successful tax appeals.
Pending Litigation
There are actions which have been instituted against the Township which are either in the discovery stage or whose final outcome cannot be determined at the present time. In the opinion of the administration, the amount of ultimate liability with respect to these actions will not materially affect the financial position of the Township.
It is the opinion of the Township officials that there is no litigation threatened or pending that would materially affect the financial position of the Township or adversely affect the Township's ability to levy, collect and enforce the collection of taxes or other revenue for the payment of its bonds or other obligations.
The Township officials believe that negligence and other types of liability suits, of which the Township is aware, appear to be within the stated policy limits and would be deferred by the respective carriers
B-48 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 13. INTERFUND RECEIVABLES AND PAYABLES
The following interfund balances remained on the balance sheets at December 31, 2017:
Interfund Interfund Receivable Payable Current Fund $ $ 194,507 Grant Fund 194,507 Swimming Pool Utility Operating Fund 6,000 Swimming Pool Utility Capital Fund 6,000
$ 200,507 $ 200,507
NOTE 14. SERVICE CONTRACT - PARKING AUTHORITY
The Township adopted an ordinance dated March 12, 1979, as amended January 26, 1981, providing for a service contract between the Township and the West Windsor Parking Authority (the “Authority”) which, among other things, obligates the Township to pay to the Authority such sums of money as may be necessary to provide for deficits which result from failure of the Authority to provide adequate revenues from the operations of the Authority.
NOTE 15. LENGTH OF SERVICE AWARD PROGRAM (“LOSAP”) - UNAUDITED
The Township has established a Volunteer Length of Service Award Plan (“LOSAP”) (“Plan”) to ensure retention of the Township’s volunteers. The Plan shall be construed under the laws of the State of New Jersey and is established with the intent that it meets the requirements of a length of service award plan under Section 457(e)11 of the Internal Revenue Code”.
Annual Contributions - An annual contribution is to be made by the Township for each active volunteer member with active emergency service, commencing with the year 2001. The contribution for 2017 was $1,538.55 per volunteer.
Appropriations - Appropriations for the purpose of funding the Township’s LOSAP shall be included as a separate line item in the Township’s budget, commencing with the year 2001.
Periodic Increases - Notwithstanding the provisions above, the annual contribution to be made by the Township for each active volunteer member shall be subject to periodic increases based upon the “consumer price index factor” pursuant to subsection f. of section 3 of P.L. 1997, c. 388 (N.J.S.A. 40A:14-185).
Criteria for Eligibility; Contributions; Points - Any active volunteer member shall be eligible to participate in the LOSAP Plan immediately upon commencement of the member’s performance of active voluntary services in the emergency service organization. Annual contributions shall only be made by the Township, however, for those active volunteer members who have earned the minimum number of points for performing certain volunteer services on a yearly basis.
B-49 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 15. LENGTH OF SERVICE AWARD PROGRAM (“LOSAP”) - UNAUDITED (CONTINUED)
Determination as to Eligibility - Each emergency service organization shall provide to the Township Administrator, acting as the Plan Administrator of LOSAP Plan, a certified list as to the active volunteer members who are initially eligible to participate in the Plan and those who are eligible to participate as each January 1 thereafter. The Plan Administrator shall forward said certified list to the Township Council for approval, in accordance with the provision of N.J.A.C. 5:30-14.10. The decision of the Township Council as to such active member’s eligibility shall be binding upon the Plan Administrator, participants, beneficiaries and any and all other persons having an interest hereunder, subject to appropriate judicial review.
Terms of Participation - The Plan Administrator shall have the right to require any active volunteer member at the time of his or her becoming a participant to agree, in writing, to be bound by the terms, covenants and conditions of the LOSAP and accompanying trust. Each participant shall furnish to the Plan Administrator all pertinent information required for the administration of the LOSAP. The Plan Administrator shall rely upon all such information furnished.
Vesting - The active volunteer member shall not be permitted to receive a distribution of the fund in his or her LOSAP account until the completion of a five-year vesting period.
Termination of Service - Any participant who terminates service as an active volunteer member shall cease to participate hereunder. A former participant my resume participation immediately upon returning to the service of the emergency service organization as an active volunteer member. Any active volunteer member who terminates service with the emergency service organization, subsequently returns to service and again becomes a participant shall be treated as a new participant for purposes of eligibility unless said participant was fully vested prior to his or her termination from service.
Reporting Requirements - N.J.A.C. 5:30-14.49 requires that the Township perform a separate review report of the Plan in accordance with the American Institute of Certified Public Accountants Statements for Accounting and Auditing Review Services.
NOTE 16. DEFERRED COMPENSATION
The Township has instituted a Deferred Compensation Plan (“Plan”) pursuant to Section 457 of the Internal Revenue Code and P.L. 1977, C. 381; P.L. 1978, C. 39; P.L. 1980, C. 78; and P.L. 1997, C. 116 of the Statutes of New Jersey.
The Plan is an arrangement whereby a public employer may establish a Plan and permit its employees to voluntarily authorize a portion of their current salary to be withheld and invested in one or more of the types of investments permitted under the governing regulations.
The Township has engaged a private contractor to administer the Plan.
B-50 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 17. OTHER POST-RETIREMENT BENEFITS - GASB 45
The Township provides post-employment medical, prescription drug, dental and vision benefits to eligible retired employees and their spouses. The Township pays a majority of the insurance cost for the retiree.
The Township’s annual Other Post-Employment Benefit (“OPEB”) cost is calculated based on the Annual Required Contribution. The actuarial cost method used to determine the Plan’s funding requirements is the “Unit Credit” method. Under this method, an actuarial accrued liability is determined as the present value of the earned benefits, which is allocated to service before the current plan year. The Plan is currently unfunded. The unfunded actuarial liability is amortized over thirty years. The following table shows the changes in the Township’s annual OPEB cost for the year, the amount actually contributed to the Plan and changes in their net OPEB obligation to the plan:
Annual Required Contribution (“ARC”) $ 5,792,000 Interest on the net OPEB Obligation 1,026,000 Adjustments to ARC (1,400,000)
Annual OPEB Cost 5,418,000 Payments Made (1,200,000)
Increase in Net OPEB Obligation 4,218,000 Net OPEB Obligation - Beginning of Year 22,797,000
Net OPEB Obligation - End of Year $ 27,015,000
The Township’s annual OPEB cost, the percentage of annual OPEB contributed to the Plan, and the net OPEB for the year ending December 31, 2017 is as follows:
Annual OPEB Cost Year Annual Percentage Net OPEB Ended OPEB Cost Contributed Obligation 12/31/14 $ 5,418,000 22% $ 27,015,000
Unfunded Ratio of Actuarial Actuarial Actuarial UAAL to Value of Accrued Accrued Funded Covered Covered Year Valuation Assets Liability (AAL) Liability (UAAL) Ratio Payroll Payroll Ended Date {a} {b} {c}={b}-{a} {a}/{c} {d} {c}/{d} 12/31/14 12/31/14 - $ 64,203,000 $ 64,203,000 0% $ 11,766,000 18%
B-51 TOWNSHIP OF WEST WINDSOR - COUNTY OF MERCER
NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2017
NOTE 17. OTHER POST-RETIREMENT BENEFITS - GASB 45 (CONTINUED)
Actuarial assumptions were used to value the post-retirement medical liabilities. Actuarial assumptions were based on the actual experience of the covered group, to the extent that creditable experience data was available, with an emphasis on expected long-term future trends rather than giving undue weight to recent past experience. The reasonableness of each actuarial assumption was considered independently based on its own merits, its consistency with each other assumptions, and the combined impact of all assumptions.
Two economic assumptions used in the valuation are the discount rate and the health care cost trend rates. The economic assumptions are used to account for changes in the cost of benefits over time and to discount future benefit payments for the time value of money.
The investment return assumption (discount rate) should be the estimated long-term investment yield on the investments that are expected to be used to finance the payments of benefits. The investments expected to be used to finance the payments of benefits would be plan assets for funded pans, assets of the employer for pay-as-you-go plans, or a proportionate combination of the two for plans that being partially funded. A discount rate of 4.5% was assumed for purposes of developing the liabilities and Annual Required Contribution on the basis that the Plan would not be funded; annual claims were assumed to increase starting at 11% and grading down to 5%, with different starting points and different periods over which 5% is reached for different benefits.
NOTE 18. UNEMPLOYMENT COMPENSATION INSURANCE
Effective January 1, 1978, most municipal employees were eligible for unemployment compensation insurance (N.J.S.A. 43:21-3 et seq.) The Township has elected to provide a self-insured plan whereby the municipal cost and employee contributions are deposited in a trust fund from which claims, if any, will be paid. A portion of funds collected from employees are transmitted to the State. The Reserve for Unemployment Trust at December 31, 2017 and 2016 is $157,501 and $184,428, respectively.
B-52 APPENDIX C
FORM OF APPROVING LEGAL OPINION OF BOND COUNSEL
[ THIS PAGE INTENTIONALLY LEFT BLANK ] 75 Livingston Avenue, Roseland, NJ 07068 (973) 622-1800
______, 2018
Township Council of the Township of West Windsor, in the County of Mercer, New Jersey
Dear Council Members:
We have acted as bond counsel to the Township of West Windsor, in the County of Mercer, New Jersey (the "Township") in connection with the issuance by the Township of $10,500,000 General Improvement Bonds, Series 2018 (the "Bonds"). In order to render the opinions herein, we have examined laws, documents and records of proceedings, or copies thereof, certified or otherwise identified to us, as we have deemed necessary.
The Bonds are issued pursuant to the Local Bond Law of the State of New Jersey, a resolution of the Township adopted August 20, 2018 pursuant to N.J.S.A. 40A:2-26(f), in all respects duly approved, and the various bond ordinances referred to therein, each in all respects duly approved and published as required by law.
In our opinion, except insofar as the enforcement thereof may be limited by any applicable bankruptcy, moratorium or similar laws or application by a court of competent jurisdiction of legal or equitable principles relating to the enforcement of creditors' rights, the Bonds are a valid and legally binding obligation of the Township, payable in the first instance from the proceeds of the sale of the bonds in anticipation of which the Bonds are issued, but, if not so paid, payable ultimately from ad valorem taxes that may be levied upon all the taxable real property within the Township without limitation as to rate or amount.
On the date hereof, the Township has covenanted in its Arbitrage and Tax Certificate (the "Certificate") to comply with certain continuing requirements that must be satisfied subsequent to the issuance of the Bonds in order to preserve the tax-exempt status of the Bonds pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"). Pursuant to Section 103 of the Code, failure to comply with these requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. In the event that the Township continuously complies with its covenants and in reliance on representations, certifications of fact and statements of reasonable expectations made by the Township in the Certificate, it is our opinion that, under existing law, interest on the Bonds are excluded from gross income of the owners thereof for federal income tax purposes pursuant to Section 103 of the Code. Interest on the Bonds are not an item of tax preference under Section 57 of the Code for purposes of computing alternative minimum tax ("AMT"); however, during tax years beginning before January 1, 2018, interest on the Bonds held by a corporation (other than an S corporation, regulated investment company or real estate investment trust) may be indirectly subject to federal AMT because of its inclusion in the adjusted current earnings of a corporate holder. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. Further, in our opinion, based upon existing law, interest on the Bonds and any gain on the sale thereof are not included in gross income under the New Jersey Gross Income Tax Act. These opinions are based on existing statutes, regulations, administrative pronouncements and judicial decisions.
This opinion is issued as of the date hereof. We assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may come to our attention or any changes in law or interpretations thereof that may occur after the date of this opinion or for any reason whatsoever.
Very truly yours,
McManimon, Scotland & Baumann, LLC Newark - Roseland - Trenton [ THIS PAGE INTENTIONALLY LEFT BLANK ]