Township Council Meeting — Packet

DEBT & CAPITAL AMORTIZATION SUMMARY Year 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 Starting Net Debt 170,571,638 153,971,466 149,540,083 145,300,174 123,910,799 119,815,525 115,339,251 110,460,977 105,160,702 99,436,351 93,261,000 86,598,000 79,437,000 71,760,000 66,315,000 60,755,000 55,065,000 49,240,000 43,270,000 37,155,000 30,980,000 24,750,000 18,460,000 12,105,000 5,675,000 4,175,000 2,600,000 1,300,000 New BAN Authorization 6,700,000 5,000,000 5,000,000 5,000,000 2,625,000 2,450,000 2,050,000 1,950,000 1,225,000 1,100,000 850,000 600,000 - New SEN Authorization 800,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 - Annual Pay-Go Capital 2,375,000 2,550,000 2,950,000 3,050,000 3,775,000 3,900,000 4,150,000 4,400,000 5,000,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 Principal Adjustments Amortization (15,468,335) (8,631,838) (9,931,383) (9,739,909) (17,133,600) (9,755,774) (7,220,274) (7,426,274) (7,428,274) (7,750,274) (7,449,351) (7,775,351) (8,013,000) (8,261,000) (8,177,000) (5,445,000) (5,560,000) (5,690,000) (5,825,000) (5,970,000) (6,115,000) (6,175,000) (6,230,000) (6,290,000) (6,355,000) (6,430,000) (1,500,000) (1,575,000) (1,300,000) (1,300,000) Ending Net Debt 153,971,466 149,540,083 145,300,174 123,910,799 119,815,525 115,339,251 110,460,977 105,160,702 99,436,351 93,261,000 86,598,000 79,437,000 71,760,000 66,315,000 60,755,000 55,065,000 49,240,000 43,270,000 37,155,000 30,980,000 24,750,000 18,460,000 12,105,000 5,675,000 4,175,000 2,600,000 1,300,000 0 Net Debt Percentage 1.96% 1.87% 1.78% 1.49% 1.41% 1.33% 1.25% 1.16% 1.08% 0.99% 0.90% 0.81% 0.72% 0.65% 0.59% 0.52% 0.46% 0.39% 0.33% 0.27% 0.21% 0.15% 0.10% 0.05% 0.03% 0.02% 0.01% 0.00% Debt Service + Deferred Charges 13,450,810 13,705,615 13,975,399 14,246,646 12,111,848 12,171,498 12,027,341 12,186,246 11,713,932 11,851,397 11,855,334 11,851,614 11,505,648 8,649,645 8,519,933 8,401,820 8,284,610 8,172,625 8,055,638 7,848,825 7,634,056 7,420,975 7,209,500 7,004,625 1,791,075 1,791,425 1,443,000 1,371,500 Debt

11,851,397 11,855,334 11,851,614 11,505,648 8,649,645 8,519,933 8,401,820 8,284,610 8,172,625 8,055,638 7,848,825 7,634,056 7,420,975 7,209,500 7,004,625 1,791,075 1,791,425 1,443,000 1,371,500 Debt Service Carrying Charge 12.5% 12.5% 12.5% 12.5% 10.4% 10.2% 9.9% 9.8% 9.3% 9.2% 9.0% 8.8% 8.4% 6.2% 6.0% 5.8% 5.6% 5.4% 5.2% 5.0% 4.8% 4.5% 4.3% 4.1% 1.0% 1.0% 0.8% 0.7% (1) Adjustments include: (i) the removal of $15.5 million of authorized but not issued debt in 2025 to better reflect the Township’s actual debt profile; and (ii) assume ordinance 2651-21 is reduced by $10.8 million from sale proceeds in 2028 (55 Lakeside) and ordinance 2564-19 is reduced by $6.3 million from green acres grant funds in 2028 (Rock Spring).

30-26 Township of West Orange Debt & Finance Presentation Presented by: John C. Ditinyak, CFO Phoenix Advisors December 9, 2025

The State of the Township’s Debt! • The Township’s net debt as of 2024 is over $171 million! • Net debt has increased by 56% over the last five years! • Payment of debt is 12.5% of the budget! • The Township, recognizing that allowing the debt to increase exponentially places a financial burden on the residents, has developed a long-term debt management plan that will guide this and future councils’ capital planning. 2

Debt Management Plan Goals: • Continue to pay down outstanding debt thereby reducing the related debt services over time • Look to take advantage of lower interest rates, when possible, to permanently finance outstanding notes, thereby reducing interest rate risk • Over time, replace borrowing with “pay-as-you-go” funding using cash rather than credit for capital investment • Carefully manage capital spending with strategic planning to build “pay-go” capability • Achieve strategic success by freeing up millions of debt service dollars annually to support operations, capital investment, and when possible, return value to the taxpayers through increased usage of surplus rather than taxation. 3

What is Municipal Debt? • The Township has both Operating Expenses and Capital Expenses: • Operating Expenses include the salaries and wages of employees, utility expenses, garbage and community programming - just to name a few. Operating Expenses are broadly defined as the ongoing expenses to run the day-to-day Township services. • Capital Expenses are individual purchases for land, infrastructure improvements, equipment, vehicles and major renovation/construction projects. Capital Expenses are typical high value purchases. For that reason, the cost is too great to include the full amount of the purchase in one budget year. • For example, let’s say the Township wants to construct a new public works building. The cost of the construction could be $30M. The Township will go out into the capital markets and issue bonds for $30M so that we have the funds to pay for the project. The bonds will then be repaid, with interest, via annual appropriations in the budget. The repayment schedule follows the useful life of the asset that was purchased to spread the cost over the generations of residents who benefit from the project. In this example, the repayment would be over 25 years. 4

What is Municipal Debt? (cont.) • Municipal debt can best be compared to a resident’s mortgage. Most homeowners do not have the funds to pay cash for their home, so they go to a bank and get a longterm loan (i.e. a mortgage). The homeowner pays principal and interest every month until the loan is repaid. • The interest rate on the loan determines the amount of interest the homeowner will pay over the life of the loan. For example, a 30-year mortgage for $500,000 at 5% will cost the homeowner $465,000 in interest. If the rate moves up 1%, then the homeowner will pay $580,000 in interest over the life of the loan. • Just as market conditions can raise or reduce interest rates for homeowners, the Township’s short and long-term debt is impacted by changes in the municipal bond market. As rates climb, the Township’s debt service expense will increase and will generally be passed along to the taxpayer. • Due to the size and credit rating of municipal entities, municipal bond rates are generally lower than those of a resident. For example, a 30-year mortgage rate is currently 6.25% and a 30-year tax-exempt municipal bond rate is currently 4.25%. 5

Historical Municipal Bond Rates Percentage of Time "AAA" Municipal Rates Have Been Lower than Current Levels (Since 1985) 48% 45% Municipal Rates ° 42% a % Ht 33%33%33%33% | Maturity (Year) | (Year) mma % of Time Rates Have Been Lower Than Current Levels (Since1985) ====Current Municipal Rate Curve ====Average Municipal Rate Curve (Since 1985) 8% 37% 36% 36%37%37%38%38% 38% 38%38% 38%38% 38% 38% 38% 35%, 138% £33,33% 94 % of Time Municipal Rates Have Been Lower Than Current Levels

Current Debt Profile • The Township’s Statutory Net Debt is approximately $170 million. This includes: • • • • • • $54 million of long-term, fixed rate bonds $11.4 million of bond anticipation notes (“BANs”) coming due in March 2026 $62.7 million of BANs coming due in November 2026 $3.3 million of special emergency notes (“SENs”) coming due in November 2026 $38 million of authorized but not issued debt (includes JMEU authorizations) $700k of NJIB loans (JMEU) • For 2025, debt service and deferred charges (SENs) combined for $13.5 million, or 12.5% of the total budget. • There are large drops in aggregate debt service in 2029 and 2038. • The Township’s current bond rating is “AA” (3rd highest) by S&P Global and was last affirmed in October 2025. A bond rating is similar to a resident’s credit score, as it impacts their cost to borrow. • The CFO and Phoenix review the outstanding debt annually to make sure the debt is managed in the most cost-effective way possible given market conditions, future debt authorizations, budgetary concerns and current capital needs. 7

Outstanding Bonded Debt Service by Series (1) Excludes special assessment bonds, authorized but not issued debt, short-term debt (BANs) and deferred charges (SENs). (2) Long-term bonds may be refinanced from time-to-time based on market conditions and redemption provisions. 8