Collingswood's financial troubles continued Monday when the credit-rating agency Moody's failed to back off its decision to downgrade the borough's rating to junk status and said a further downgrade was possible.
The agency, which issued its rating in September, acknowledged that analysts had miscalculated the borough's liability on a $8.5 million loan for a struggling redevelopment project in downtown Collingswood.
But it said Collingwood's financial position remained perilous because the $4.5 million the town owes on the project is more than a quarter of the municipal budget and more than four times its current cash reserves.
Collingswood Mayor Jim Maley, who assured residents in September that he could convince Moody's to adjust the rating, called the agency's decision "an outrage" and accused analysts of changing the criteria by which the town's finances were judged.
"It's a shell game," he said. "This review changes the whole analysis and ignores the things they said were important the first time around. It's clear they're not changing this rating because if they do it too quickly, they were wrong."
Moody's did not immediately respond to a request for comment.
An older Camden County suburb that transformed itself through a series of redevelopment projects in the 1990s and 2000s, Collingswood now finds itself in a tenuous position.
With its credit rating unlikely to be upgraded soon, interest rates the borough pays on its debt are expected to rise significantly.
Maley is planning a $4.5 million bond issue to cover the money owed on the redevelopment project and estimated the hike in interest rates would cost the township an additional $100,000 a year. The town's annual budget is $16.7 million.
That $4.5 million payment is due Dec. 7, but Maley said he was confident the lender, Thrift Institutions Community Investment Corp. of New Jersey, a subsidiary of the trade group New Jersey Bankers Association, would extend the loan again, as the did in September.
TICIS did not immediately return a phone call for comment.
The town will have to work on renting the remainder of the approximately 75 condominiums built at the LumberYard, which once was marketed to young professionals due to its proximity to the PATCO High-Speed Line.
The borough has rented three units with another 10 waiting to be leased, Maley said.
"With the increase in the interest rates, we're probably going to need to rent them all," Maley said.
Contact staff writer James Osborne at 856-779-3876 or firstname.lastname@example.org.