township of milford...oct 03, 2018 · service debt service service debt service service debt...

BOND SALE DOCUMENTGeneral Obligation Bonds

Series of 2018

Results of Competitive Sale

$4,970,000

October 3, 2018(Parameters Ordinance adopted on October 2, 2018)

Prepared by:Jamie Schlesinger

Director&

Garrett MooreSenior Analyst

Township of Milford

PFM Financial Advisors LLC2533 Yellow Springs Road

Malvern, PA 19355610.647.5487 (P) 610.647.2467 (F)

www.pfm.com

MMD YIELD CURVE

HISTORICAL MMD CURVE ILLUSTRATION ‐ SINCE JANUARY 1, 2007

SPOT ANALYSIS ‐ 10 YEAR MMD ‐ SINCE JANUARY 1, 2007

MUNICIPAL MARKET UPDATEOctober 3, 2018

The MMD Yield Curve is a high grade municipal yield curve published daily by Municipal Market Data. It is one of the most commonly used benchmarks in municipal finance. The yields within the curve reflect the current yields for each maturity yearat which bondholders would be likely to sell high quality (AAA rated) general obligation backed bonds. The yield curve is typically influenced by new issuances in the primary market as well as post‐issuance trading in the secondary market.

Municipal bonds typically trade at a "spread to MMD", meaning the difference between the yield in a specific year of a bond issue and the respective yield in the MMD Yield Curve. While these spreads vary over time, they can be a meaningful and powerful tool in trying to compare relative yield levels in a volatile interest rate environment.

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Range Average Current

Maturity Year

Yield (%

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1.10

1.60

2.10

2.60

3.10

3.60

4.10

4.60

1/1/07 1/1/08 1/1/09 1/1/10 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18

Yield (%

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Since 1/1/2007 Amount Date

Min 1.290 6/27/2016Max 4.860 10/15/2008

Average 2.573 n/a

Current 2.580 10/2/2018

1

PFM Financial Advisors LLC

TOWNSHIP OF MILFORD (Bucks County, Pennsylvania)

General Obligation Bonds, Series of 2018

October 3, 2018

1 2 3 4 5 True Interest Bond Interest Number

Bidder Cost Discount Rate Range* of Bids 1. Janney Montgomery Scott 3.262205 6.0000 1.850-5.000 17 2. FTN Financial 3.262539 5.00 2.700-4.000 9 3. Robert Baird 3.325826 11.42 3.000-5.000 1 4. UBS Financial Services 3.341969 N/A 3.000-5.000 12 5. Raymond James 3.412246 13.00 3.000-5.000 2 6. Morgan Stanley 3.413244 8.91 2.250-4.000 2

TOTAL 43

Based on Preliminary Issue Size of $5,065,000* *2019 through 2038 1. S&P: AA+ (Stable Outlook)

Bid Alone

2. S&P: AA+ (Stable Outlook)

Bid Alone


Bid Alone


Syndicate Member: Roosevelt & Cross


Bid Alone


Syndicate Members: Fidelity Capital Markets, Ziegler

PAYING AGENT: TD Bank, N.A.

2


Township of MilfordInternet Bond Sale

Wednesday, October 3, 2018

Bid SummaryBidder: # of Bids Submitted:

Janney Montgomery Scott 17FTN Financial 9Robert Baird 1UBS Financial Services 12Raymond James 2Morgan Stanley 2

Total Bids 43

Chronology of BidsTime: Bidder: Bid (TIC): Winner?11:00:17 am UBS Financial Services 3.655405 no11:07:11 am FTN Financial 3.447219 * no11:09:18 am UBS Financial Services 3.53563 no11:09:34 am UBS Financial Services 3.476413 no11:09:51 am UBS Financial Services 3.441094 * no11:10:07 am Janney Montgomery Scott 3.462087 no11:10:14 am Janney Montgomery Scott 3.432595 * no11:10:46 am FTN Financial 3.362126 * no11:10:55 am Janney Montgomery Scott 3.403213 no11:11:03 am Janney Montgomery Scott 3.384455 no11:11:11 am Janney Montgomery Scott 3.355251 * no11:11:53 am FTN Financial 3.333638 * no11:12:02 am Janney Montgomery Scott 3.32288 * no11:12:16 am UBS Financial Services 3.405931 no11:12:33 am UBS Financial Services 3.394245 no11:12:58 am UBS Financial Services 3.391015 no11:13:02 am Robert Baird 3.325826 no11:13:34 am UBS Financial Services 3.388097 no11:13:53 am FTN Financial 3.319203 * no11:13:58 am Janney Montgomery Scott 3.308378 * no11:13:59 am UBS Financial Services 3.373525 no11:14:20 am UBS Financial Services 3.359289 no11:14:38 am FTN Financial 3.287125 * no11:14:50 am UBS Financial Services 3.350849 no11:14:54 am Janney Montgomery Scott 3.301759 no11:15:01 am Janney Montgomery Scott 3.29452 no11:15:05 am Morgan Stanley 3.429838 no11:15:15 am UBS Financial Services 3.341969 no11:15:18 am Janney Montgomery Scott 3.290181 no11:15:42 am Morgan Stanley 3.413244 no11:15:54 am Janney Montgomery Scott 3.285957 * no11:16:38 am FTN Financial 3.282142 * no11:16:54 am Janney Montgomery Scott 3.282686 no11:17:47 am Janney Montgomery Scott 3.276622 * no11:18:05 am FTN Financial 3.273422 * no11:18:14 am Janney Montgomery Scott 3.273736 no11:18:33 am Janney Montgomery Scott 3.270852 * no11:19:38 am FTN Financial 3.265978 * no11:19:47 am Janney Montgomery Scott 3.265086 * no11:20:40 am FTN Financial 3.262539 * no11:20:48 am Janney Montgomery Scott 3.262205 * (2) YES11:21:54 am Raymond James 3.441614 no11:22:35 am Raymond James 3.412246 no

* Indicates new leading bid.

(2) Twelfth and final activation of two-minute rule - extended auction period until 11:22:48(1) First activation of two-minute rule - extended auction period until 11:15:53

3


TOWNSHIP OF MILFORDSUMMARY OF REFINANCING OPTIONSINTEREST RATE RESET SENSITIVITY ANALYSIS

Description

Principal

Term

Structure

Variable RateVariable Rate Preiod

Assumed Reset Rate of 2016 Note

Gross Savings ($)Gross Savings (%)

Present Value Savings ($)Present Value Savings (%)

4 5 6 7 8 9 10 11

Fiscal Existing Proposed New Proposed New Proposed NewYear Debt Debt Net Debt Net Debt Net

Ending Service[1] Service Debt Service Service Debt Service Service Debt Service12/31/2018 929,097 838,824 838,824 838,82412/31/2019 868,653 339,572 850,647 339,572 850,647 339,572 850,64712/31/2020 860,950 339,800 848,797 339,800 848,797 339,800 848,79712/31/2021 942,371 342,600 848,994 342,600 880,635 342,600 888,01812/31/2022 850,133 344,025 682,127 344,025 742,596 344,025 756,70512/31/2023 835,848 339,150 679,217 339,150 735,936 339,150 749,17012/31/2024 815,563 343,775 679,807 343,775 732,776 343,775 745,13512/31/2025 805,116 340,788 682,622 340,788 731,841 340,788 743,32512/31/2026 779,931 340,363 673,262 340,363 718,731 340,363 729,34012/31/2027 768,246 344,025 681,489 344,025 723,208 344,025 732,94312/31/2028 755,248 341,900 682,617 341,900 720,586 341,900 729,44512/31/2029 396,688 339,625 338,032 339,625 372,251 339,625 380,23512/31/2030 380,503 342,125 340,597 342,125 371,066 342,125 378,17512/31/2031 364,318 343,663 342,199 343,663 368,918 343,663 375,15312/31/2032 348,133 339,300 337,902 339,300 360,871 339,300 366,23012/31/2033 331,948 339,675 338,342 339,675 357,561 339,675 362,04512/31/2034 315,763 339,700 338,432 339,700 353,901 339,700 357,51012/31/2035 299,578 339,375 338,172 339,375 349,891 339,375 352,62512/31/2036 283,393 343,613 342,474 343,613 350,443 343,613 352,30312/31/2037 267,208 342,413 341,339 342,413 345,558 342,413 346,54312/31/2038 127,535 340,863 340,350 340,863 341,053 340,863 341,21812/31/203912/31/2040

TOTAL 12,326,223 6,826,347 11,546,242 6,826,347 12,096,086 6,826,347 12,224,383

Purpose : Refinance the Township's existing QNB Bank loan in order to level out annual payments and eliminate interest rate risk associated with the rate reset feature of the loan. Potiential existing maximum payment related to current existing 2016 Note = $509,000.

3.94%$194,621

4.65%

Level Payments

20 Years

$4,970,000

SCENARIO 3: 4.65% BREAKEVEN

5.94%

SCENARIO 1: CAP RATE

321

14.54%$718,075

Assumes rate resets to 4.65% after fixed rate period



$293,305

5.00%

Level Payments

20 Years

$4,970,000

SCENARIO 2: 5.00% RESET

6.50% (Cap Rate)

Level Payments

20 Years

$4,970,000

2.06%4.66%15.80%

66% of QNB Prime66% of QNB Prime66% of QNB Prime

From 9/1/2021 through maturityFrom 9/1/2021 through maturityFrom 9/1/2021 through maturity

779,981 230,137 101,840

ESTIMATEDFor Illustrative Purposes

4


TOWNSHIP OF MILFORDSERIES OF 2016

1 2 3 4

Fiscal YearDate Principal Interest* Debt Service

12/31/2018 62,500 27,773.44 90,273.4412/31/2019 250,000 107,578.13 357,578.1312/31/2020 250,000 101,953.13 351,953.1312/31/2021 250,000 154,335.94 404,335.9412/31/2022 250,000 201,562.50 451,562.5012/31/2023 250,000 189,062.50 439,062.5012/31/2024 250,000 176,562.50 426,562.5012/31/2025 250,000 164,062.50 414,062.5012/31/2026 250,000 151,562.50 401,562.5012/31/2027 250,000 139,062.50 389,062.5012/31/2028 250,000 126,562.50 376,562.5012/31/2029 250,000 114,062.50 364,062.5012/31/2030 250,000 101,562.50 351,562.5012/31/2031 250,000 89,062.50 339,062.5012/31/2032 250,000 76,562.50 326,562.5012/31/2033 250,000 64,062.50 314,062.5012/31/2034 250,000 51,562.50 301,562.5012/31/2035 250,000 39,062.50 289,062.5012/31/2036 250,000 26,562.50 276,562.5012/31/2037 250,000 14,062.50 264,062.5012/31/2038 125,000 2,343.75 127,343.75

TOTALS 4,937,500 2,118,984.38 7,056,484.38

*Assumes a five year fixed rate of 2.25% and a resetrate of 5.00% thereafter

5


TOWNSHIP OF MILFORDRequired to Call Note

SETTLE 11/5/2018

1 2 3 4

SERIES OF 2016

Date Principal Interest Total

11/5/2018 4,937,500.00 19,710.94 4,957,210.94

TOTALS 4,937,500.00 19,710.94 4,957,210.94

6


TOWNSHIP OF MILFORDSERIES OF 2018 Settle 11/5/2018REFUNDS THE SERIES OF 2016 Dated 11/5/2018

1 2 3 4 5 6 7 8 9

Semi-Annual Fiscal Year ExistingDate Principal Coupon Yield Interest Debt Service Debt Service Debt Service Savings

43,160.009/1/2018 90,273.44 90,273.443/1/2019 200,000 1.850 1.850 55,422.22 255,422.229/1/2019 84,150.00 84,150.00 339,572.22 357,578.13 18,005.903/1/2020 175,000 4.000 2.000 84,150.00 259,150.009/1/2020 80,650.00 80,650.00 339,800.00 351,953.13 12,153.133/1/2021 185,000 4.000 2.140 80,650.00 265,650.009/1/2021 76,950.00 76,950.00 342,600.00 404,335.94 61,735.943/1/2022 195,000 5.000 2.150 76,950.00 271,950.009/1/2022 72,075.00 72,075.00 344,025.00 451,562.50 107,537.503/1/2023 200,000 5.000 2.250 72,075.00 272,075.009/1/2023 67,075.00 67,075.00 339,150.00 439,062.50 99,912.50

* 3/1/2024 215,000 5.000 2.330 67,075.00 282,075.009/1/2024 61,700.00 61,700.00 343,775.00 426,562.50 82,787.503/1/2025 220,000 2.375 2.500 61,700.00 281,700.009/1/2025 59,087.50 59,087.50 340,787.50 414,062.50 73,275.003/1/2026 225,000 2.500 2.600 59,087.50 284,087.509/1/2026 56,275.00 56,275.00 340,362.50 401,562.50 61,200.003/1/2027 235,000 3.000 2.700 ** 56,275.00 291,275.009/1/2027 52,750.00 52,750.00 344,025.00 389,062.50 45,037.503/1/2028 240,000 3.000 2.850 ** 52,750.00 292,750.009/1/2028 49,150.00 49,150.00 341,900.00 376,562.50 34,662.503/1/2029 245,000 3.000 2.950 ** 49,150.00 294,150.009/1/2029 45,475.00 45,475.00 339,625.00 364,062.50 24,437.503/1/2030 255,000 3.000 3.000 45,475.00 300,475.009/1/2030 41,650.00 41,650.00 342,125.00 351,562.50 9,437.503/1/2031 265,000 3.500 3.200 ** 41,650.00 306,650.009/1/2031 37,012.50 37,012.50 343,662.50 339,062.50 (4,600.00)3/1/2032 270,000 3.500 3.200 ** 37,012.50 307,012.509/1/2032 32,287.50 32,287.50 339,300.00 326,562.50 (12,737.50)3/1/2033 280,000 3.500 3.200 ** 32,287.50 312,287.509/1/2033 27,387.50 27,387.50 339,675.00 314,062.50 (25,612.50)3/1/2034 290,000 3.500 3.350 ** 27,387.50 317,387.509/1/2034 22,312.50 22,312.50 339,700.00 301,562.50 (38,137.50)3/1/2035 300,000 3.500 3.350 ** 22,312.50 322,312.509/1/2035 17,062.50 17,062.50 339,375.00 289,062.50 (50,312.50)3/1/2036 315,000 3.500 3.500 17,062.50 332,062.509/1/2036 11,550.00 11,550.00 343,612.50 276,562.50 (67,050.00)3/1/2037 325,000 3.500 3.500 11,550.00 336,550.009/1/2037 5,862.50 5,862.50 342,412.50 264,062.50 (78,350.00)3/1/2038 335,000 3.500 3.500 5,862.50 340,862.509/1/2038 340,862.50 127,343.75 (213,518.75)

TOTALS 4,970,000 1,856,347.22 6,826,347.22 6,826,347.22 7,056,484.38 230,137.15

*Optional Redemption Date of March 01, 2024 Net Present Vallue ("NPV) Savings 293,304.98**Price to and Optional Redemption Date of March 01, 2024

Savings as a % of Refunded Par 4.66%

NPV Savings as a % of Refunded Par 5.94%

7


TOWNSHIP OF MILFORDSERIES OF 2018Composition of the Issue

SOURCES: Bonds 4,970,000.00 Original Issue Premium 99,932.20 Accrued Interest 0.00

Total 5,069,932.20USES: Required to Call Note 4,957,210.94 Underwriter's Discount $6.00 29,820.00 Bond Insurance $0.00 0.00 Financial Advisor 25,000.00 Legal Fees & Expenses 20,000.00 Credit Rating (S&P ) 14,500.00 OS Formatting & Printing 9,000.00 Auction Administrator 2,750.00 Paying Agent 1,550.00 CUSIP Fee 750.00 Miscellaneous Expenses/Rounding 9,351.26

Total 5,069,932.20

Dated Date 11/5/2018 -0.36

Settlement Date 11/5/2018 -0.36

Yield of the Issue 3.166355

Date Price (OID)/OIP3/1/2019 100.000% 0.003/1/2020 102.594% 4,539.503/1/2021 104.189% 7,749.653/1/2022 109.087% 17,719.653/1/2023 111.263% 22,526.003/1/2024 113.288% 28,569.203/1/2025 99.271% -1,603.803/1/2026 99.335% -1,496.253/1/2027 101.475% 3,466.253/1/2028 100.733% 1,759.203/1/2029 100.242% 592.903/1/2030 100.000% 0.003/1/2031 101.454% 3,853.103/1/2032 101.454% 3,925.803/1/2033 101.454% 4,071.203/1/2034 100.722% 2,093.803/1/2035 100.722% 2,166.003/1/2036 100.000% 0.003/1/2037 100.000% 0.003/1/2038 100.000% 0.00

TOTAL 99,932.20

(OID)/OIP Calculations

8


TOWNSHIP OF MILFORDSUMMARY OF OUTSTANDING INDEBTEDNESS

1 2 3 4 5 6Fiscal G.O. Bonds Est. Del Val Est. G.O. Note G.O. Bonds Total

Year Series of Series of Series of Series of DebtEnded 2013 2015 2016 2018 Service

12/31/2018 351,838 170,530 146,875 669,24312/31/2019 341,838 85,334 339,572 766,74412/31/2020 339,963 85,221 339,800 764,98412/31/2021 337,950 85,094 342,600 765,64412/31/2022 340,150 344,025 684,17512/31/2023 342,050 339,150 681,20012/31/2024 337,950 343,775 681,72512/31/2025 343,688 340,788 684,47512/31/2026 334,688 340,363 675,05012/31/2027 339,188 344,025 683,21312/31/2028 342,375 341,900 684,27512/31/2029 339,625 339,62512/31/2030 342,125 342,12512/31/2031 343,663 343,66312/31/2032 339,300 339,30012/31/2033 339,675 339,67512/31/2034 339,700 339,70012/31/2035 339,375 339,37512/31/2036 343,613 343,61312/31/2037 342,413 342,41312/31/2038 340,863 340,86312/31/203912/31/2040

Totals 3,751,675 426,179 146,875 6,826,347 11,151,076

Principal*: 3,095,000 252,000 0 4,970,000 8,317,000

Method: Bonds Del Val Bank Loan Bonds

Call Date: 5/15/2019 TBD Anytime 3/1/2024

Purpose: Cur Ref 2008 Salt Storage/FireCompany Open Space Cur Ref 2016

* Outstanding as of October 4, 2018

Debt Service Requirements

PFM Financial Advisors LLC 10/4/2018 9

TOWNSHIP OF MILFORDGENERAL OBLIGATION BONDSSERIES OF 2018

SUMMARY OF FINANCING

2018 Bonds Principal: $4,970,000

Pricing Date: 10/3/2018Settlement Date: 11/5/2018

Credit Rating: S&P AA+ (Stable Outlook)

Arbitrage Yield 3.166355%

Use of Proceeds:

Proceeds of the Bonds will be used to currently refund all of the Township’s General Obligation Notes, Series of 2016, currently outstanding in the principal amount of $4,937,750 (the “2016 Notes”) and to pay the costs and expenses related to the issuance of the Bonds.

FINANCING TEAM MEMBERSIssuerBond CounselFinancial AdvisorUnderwriterPaying AgentRating Agency

Township of Milford Eastburn and Gray, P.C. PFM Financial Advisors LLC Janney Montgomery ScottTD BankS&P

10


S&P Rating Report

11


Summary:

Milford Township, Pennsylvania;General Obligation

Primary Credit Analyst:

Kevin Barry, New York (1) 212-438-7337; [email protected]

Secondary Contact:

Errol R Arne, New York (1) 212-438-2379; [email protected]

Table Of Contents

Rationale

Outlook

Related Research

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 19, 2018 12

Summary:

Milford Township, Pennsylvania; GeneralObligation

Credit Profile

US$5.065 mil GO bnds ser 2018 due 03/01/2038

Long Term Rating AA+/Stable New

Milford Twp GO rfdg bnds (General Obligation Bonds, Series Of 2013)

Long Term Rating AA+/Stable Affirmed

Milford Twp GO (AGM)

Unenhanced Rating AA+(SPUR)/Stable Affirmed

Many issues are enhanced by bond insurance.

Rationale

S&P Global Ratings assigned its 'AA+' long-term rating to Milford Township, Pa's series 2018 general obligation (GO)

bonds. At the same time, S&P Global Ratings affirmed its 'AA+' rating on the township's existing GO debt. The outlook

is stable.

The township's full faith and credit pledge and an agreement to levy ad valorem property taxes, without limit as to rate

or amount, secure the bonds and existing debt. Bond proceeds will refund the township's series 2016 GO notes.

The ratings reflect our view of the township's:

• Very strong economy, with access to a broad and diverse metropolitan statistical area (MSA);

• Adequate management, with standard financial policies and practices under our Financial Management Assessment

(FMA) methodology;

• Strong budgetary performance, with operating surpluses in the general fund and at the total governmental fund

level;

• Very strong budgetary flexibility, which we expect the available fund balance to remain above 75% of expenditures

for the current and next fiscal years, which we view as a positive credit factor.

• Very strong liquidity, with total government available cash at 1.5x total governmental fund expenditures and 12.2x

governmental debt service;

• Adequate debt and contingent liability profile, with debt service carrying charges at 12.6% of expenditures and net

direct debt that is 168.1% of total governmental fund revenue, as well as rapid amortization, with 65.1% of debt

scheduled to be retired in 10 years; and

• Strong institutional framework score.

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 19, 2018 13

Very strong economy

We consider Milford Township's economy very strong. The township, with an estimated population of 10,045, is

located in Bucks County in the Philadelphia-Camden-Wilmington MSA, which we consider to be broad and diverse.

The township has a projected per capita effective buying income of 120% of the national level and per capita market

value of $105,832. Overall, the township's market value was stable over the past year at $1.1 billion in 2017. The

county unemployment rate was 4.2% in 2017.

The township is primarily rural, but access to the northeast extension of the Pennsylvania Turnpike has fostered

growth in residential development. The industrial land adjacent to the turnpike is being developed for warehousing,

hotels, and the service industry. Residents generally find employment in the northern rim of Philadelphia or locally in

Allentown and Bucks County.

Assessed value (AV) has grown approximately 1% each year since 2015, and we expect this to continue over the next

two years. The top 10 taxpayers represent 8% of AV, which we consider very diverse.

Adequate management

We view Milford Township's management as adequate, with standard financial policies and practices under our FMA

methodology, indicating the finance department maintains adequate policies in some but not all key areas.

During the township's budget process, management performs a line-by-line approach among all departments and uses

five years of historical data. The board receives monthly budget-to-actual reports, and the township can make

amendments. The township maintains a five-year capital plan that is updated annually for transportation projects such

as roads and bridges and large equipment purchases. It does not have a long-term financial plan or a formally adopted

debt management policy. Investment reporting follows state guidelines, and the township presents a monthly report on

holdings and performance. It lacks a formal reserve policy, but has an informal target to maintain at least 50% of

expenditures in the general fund, which it is currently meeting.

Strong budgetary performance

Milford Township's budgetary performance is strong, in our opinion. The township had operating surpluses of 39% of

expenditures in the general fund and of 31.1% across all governmental funds in fiscal 2017.

The township has maintained strong financial performance, primarily due to conservative budgeting, along with steady

growth in earned income and real estate transfer taxes. Despite its transportation needs, we anticipate the township,

aided by its long-term capital plan, will continue to address its funding needs.

For fiscal 2019, the township does not expect any material budgetary stresses and anticipates at least balanced

operations.

For unaudited fiscal 2018, Milford Township anticipates an operating surplus of $1,028,084, which it plans to draw

down $830,000 for capital needs, for an overall year-end general fund result of $198,084. The operating performance

was largely consistent with fiscal 2017 results. The drawdown for capital will be used primarily for transportation

needs ($700,000), with the remainder for equipment purposes ($130,000). Notable transportation projects include

reconstruction of Mill Road and Parkview Drive.

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 19, 2018

Summary: Milford Township, Pennsylvania; General Obligation

14

For audited fiscal 2017, the township had a general fund surplus of $898,000. Revenues increased approximately 11%

from fiscal 2016, partly due to commercial development of warehouse storage facilities. Real estate transfer taxes

increased to $613,826 from $409,956 in fiscal 2016 (approximately 50%).

We expect these revenues to remain stable, and total governmental performance to be similar to previous years.

Very strong budgetary flexibility

We expect the available fund balance to remain above 75% of expenditures for the current and next fiscal years, which

we view as a positive credit factor.

Reserves increased to $4.1 million in fiscal 2016 from $2.2 million in 2015, due to several years of consecutive

surpluses, which allowed the township to build up its reserves. The township has no immediate plans to spend down

fund balances and overall, we expect flexibility to remain very strong over the two-year outlook window.

Very strong liquidity

In our opinion, Milford Township's liquidity is very strong, with total government available cash at 1.5x total

governmental fund expenditures and 12.2x governmental debt service in 2017.

In our view, the township has strong access to external liquidity, which we expect to continue.

Milford Township has a loan agreement with QNB Bank for $5 million; the proceeds will provide funding for

open-space land purchases and preservation. To date, Milford has drawn $602,000 on the loan, which matures in 2020.

The loan is subject to an interest rate ceiling of 6.5% and there are no acceleration provisions. Therefore, we do not

believe there is liquidity risk on this private placement.

The township also has a loan agreement with Delaware Valley Finance Authority in fiscal 2015 for $745,000 ($250,000

for a salt-containment building for the township, and $490,000 for the fire company). The township has paid off its

outstanding amount for the salt-containment building. The fire company is directly servicing the remaining portion of

the loan of approximately $334,000, and the township would step in if it needed to make a payment. The remaining

portion of the loan is fixed rate at 1.327% and we do not view it as a significant liquidity risk.

Milford Township maintains its investments primarily in checking accounts, money market funds, certificates of

deposits, and other investments that we consider non-aggressive.

Adequate debt and contingent liability profile

In our view, Milford Township's debt and contingent liability profile is adequate. Total governmental fund debt service

is 12.6% of total governmental fund expenditures, and net direct debt is 168.1% of total governmental fund revenue.

Approximately 65.1% of the direct debt is scheduled to be repaid within 10 years, which is, in our view, a positive

credit factor.

Debt service for the GO bonds is paid out of its open space fund, which receives one-quarter of 1% tax on earned

income. The township does not plan to issue additional debt over the next two years.

Milford Township's pension contributions totaled 0.9% of total governmental fund expenditures in 2017. It made 114%

of its annual required pension contribution in 2017.



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The township has a single-employer defined-benefit pension plan that participates in the Pennsylvania Municipal

Retirement System, which acts as a common investment and administrative agent for participating municipal pension

plans. The plan provides retirement, disability, and death benefits to plan members and their beneficiaries.

Eight inactive employees and 11 active employees were receiving benefits as of the last valuation on Dec. 31, 2016.

In 2016, the township paid $41,742, which was above the actuarially determined contribution of $37,041. It anticipates

that contribution rates will remain consistent during the outlook period. The township does not provide any other

postemployment benefit obligations.

Milford Township's total pension liability increased in fiscal 2016 to $1.71 million, up 0.1% from $1.63 million in 2015.

Based on the discount rate of 5.5%, the plan's net position as a percentage of total pension liability is 91.02% (a slight

increase from 90.23% in 2015).

Strong institutional framework

The institutional framework score for Pennsylvania non home-rule cities and all boroughs and townships is strong.

Outlook

The stable outlook reflects our opinion that the township will maintain its very strong flexibility and liquidity profile,

and its strong budgetary performance profile. Therefore, we do not expect to change the rating over the two-year

outlook period.

Upside scenario

If the township improves its debt profile and economic metrics improve to levels commensurate with those of

higher-rated peers, we could raise the rating, holding all other factors equal.

Downside scenario

If budgetary performance were to weaken and reserves declined below 75% of available fund balance with no plans to

correct, we could lower the rating, holding all other factors equal.

Related Research

• 2017 Update Of Institutional Framework For U.S. Local Governments

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors,

have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria.

Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is

available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found

on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left

column.



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