N.J.’s Mountain Lakes Surprised by S&P Suspension of AAA Rating
The mayor of Mountain Lakes, New Jersey, where more than half the households earn $150,000 or more, was surprised when the borough had its AAA credit rating removed by Standard & Poor’s after it didn’t respond to requests for information.
S&P on Nov. 14 warned Mountain Lakes, which is about 25 miles (40 kilometers) west of Manhattan, that it would suspend the top grade unless it received timely answers about finances.
“We did ask just for some updated current-year information,” Nicole Ridberg, an S&P analyst, said in a telephone interview Nov. 30. “We asked for additional information regarding future debt and their local economic activity. We just never got a response.”
S&P said it may reinstate the rating once Mountain Lakes supplies the data. The New York-based company left phone messages and sent e-mails asking for the information beginning in August or September, Ridberg said.
Mayor Charles Gormally said yesterday he wasn’t aware of any issue with S&P until he received a Bloomberg News reporter’s e-mail for comment on Nov. 30.
“I’m not familiar with what they requested or what was furnished,” he said in a phone interview.
Robert Tovo, the borough manager, said he also learned about the suspension from the e-mail. He said he received two e- mails from S&P and thought the company was drumming up business, not seeking information.
“It read to me as though it was a solicitation for S&P to do more business with the borough,” Tovo said yesterday. “In the past, we’ve always used Moody’s.”
D. Timothy Roberts, the borough’s chief financial officer, will contact S&P this morning, Tovo said. Roberts didn’t respond to an e-mail and phone message requesting comment on the rating Nov. 30.
In July, Pinnacle Foods Group LLC, maker of Duncan Hines products and Birds Eye frozen foods, moved its headquarters from Mountain Lakes to neighboring Parsippany, said Chris Spina, a spokesman for Pinnacle. The company employs more than 4,300 people in North America, according to its website.
While the borough may receive less tax revenue because of Pinnacle’s departure, the area has “a diverse regional base” where workers can find employment elsewhere or travel to Parsippany to continue working at the food company, Ridberg said.
“Obviously, we haven’t spoken to them, so we’re not sure about the loss in taxation and things like that,” Ridberg said.
Mountain Lakes had about $6.3 million of long-term debt as of Dec. 31, 2011, according to financial documents. Moody’s Investors Service rates the locality Aa1, its second-highest grade, David Jacobson, a spokesman for the ratings company, said in an e-mail.
The borough’s median household income was $155,139 in 2010, according to U.S. Census data. Of its 1,293 households, 685 earned at least $150,000.
Mountain Lakes has “good economic indicators” and is “very wealthy, but it’s just making sure that we have that updated information,” Ridberg said.
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