Washington Township reviews $10.1 million short-term borrowing plan as grants, debt profile drive strategy

Township officials on March 17 reviewed a draft financing strategy to fund $10.1 million of capital needs in 2025, with municipal advisors recommending a short-term approach while awaiting grant proceeds and a naturally large debt-service drop in 2029.

The presentation was led by Josh Nikitow, a presenter from Acacia, and Joe Collagero (Acacia). Mark DeCarlo, township administrator, framed the packet and said the figures are based on the proposed 2025 capital plan and that grant timing is uncertain.

The plan shown to council modeled two scenarios. Scenario 1 assumes issuing $10.1 million in a one-year bond anticipation note in 2025 to cover roughly $7.7 million of previously authorized but unfunded ordinances plus about $2.4 million of newly proposed 2025 capital. Scenario 2 layers in additional capital for 2026–27 and shows a larger temporary note balance in those years.

Acacia advised using short-term notes first, then permanently financing most of the balance later. As Josh Nikitow put it during the meeting, “you have a pretty large drop off, 1,600,000.0 down to about just under a million dollars,” referring to the scheduled reduction in annual debt service around 2029–30 that makes a delayed permanent financing less disruptive to near-term budgets.

Advisors said the township should expect interest-only payments on the notes and noted a key constraint of New Jersey law: tax-exempt bond anticipation notes may remain outstanding for limited years but, after the third anniversary, mandatory principal paydowns begin. Under the model presented, anticipated grant receipts of about $1.1 million (assumed in 2026 for modeling) would be applied to reduce the outstanding note balance when received.

The advisers offered approximate market assumptions used in the models: competitive one-year note pricing in the low-to-mid 3% range (about 3.35% in the presentation) and a conservative estimate for permanent bonds later near 3.8–3.85%. They emphasized amortization, not interest rate, as the primary driver of long-term debt-service costs and suggested the township could structure a permanent bond issue in 2029 so the first principal payment aligns with the year the larger 2019 bonds drop off.

Council members pressed for detail on how much of the existing ordinances remain unfunded, which ordinances already had expenditures or partial bonding, and the timing choices for borrowing specific projects such as vehicle purchases. Township staff said they will supply a breakdown showing, by ordinance, amounts funded, expended and remaining unfunded so council can refine the borrowing amount and timing.

Advisors also outlined alternatives and trade-offs: borrow only what is needed in the near term; use short-term notes for flexibility while grant timing remains uncertain; or include additional out-year capital in temporary financing and consolidate into a single permanent issuance later. They said short-term notes are a common municipal tool in New Jersey and that the township could mix notes and bonds to manage short-term and long-term amortization impacts.

No formal borrowing resolution to sell notes or bonds was adopted at the meeting. Council did, however, take other budget- and finance-related votes during the session (see "Votes at a glance").

The township administrator and municipal staff said they will provide the ordinance-level breakout of funded versus unfunded amounts, the exact list of projects encoded in each ordinance, and updated revenue/grant timing so council can decide how much to take to market and when. Advisers said they will continue to model scenarios and provide recommendations closer to sale dates.

The finance presentation concluded with advisers telling the council they would maintain the plan as a living model and update it annually as capital decisions, grant awards and market conditions change.