April 8, 2003

City bond rating raised to A1 status

By KATE SPINNER

Staff writer

NEWBURYPORT -- When the city takes out a $4.3 million loan on April 15, it will be able to bargain with lenders and investors for lower interest rates than expected.

The city's bond rating --- a rating that indicates a municipality's financial health to lenders --- has just been upgraded from A2 to A1 status. City Treasurer Mary Lattime said the higher rating will result in lower interest rates on borrowing.

Lower interest on the $4.3 million, 20-year bond, that the city needs to fund the boardwalk renovation project, will save the city about $50,000, said Lattime. She said any future borrowing will also positively affect by the new rating as well.

Anytime the city borrows substantial amounts of money, it asks Moody's Investors Service to rate the city's financial health.

Last time the city's bond rating was reviewed, about two years ago, it was preparing to borrow $8.3 million to fund permanent financing for the library renovation/addition and other smaller projects. The city's bond rating increased at the time form A3 to A2.

Lattime said she has seen the city's financial reserves steadily increase over the past several years, and those increases are recognized by Moody's as signs of fiscal stability. The A1 rating is the fourth highest rating possible. The highest rating in triple A and the lowest is C.

"At one time we were a BAA," said Lattime. "We were close to junk bonds."

Since 1999, Lattime said she has seen the city's financial strength increase, though (sic) good fiscal management.

"It is not just what's been done right now, but its been a trend over a period of time," said Lattime.

City Assessor Daniel Raycroft said Mayor Alan Lavender continued to lead the city in the right financial direction. "This is the result of his commitment to fiscal responsibility," said Raycroft.

Raycroft said the mayor responded quickly to the state's announcement of budget cuts, helping the city to save money in a time of financial difficulty.

Lavender said he did not expect that the city's bond rating would rise this year, because of the economic crisis at the state level. "This is despite the cut-backs in state aid," said Lavender. "... so that's doubly good."

City Auditor William Squillace said the higher bond rating is a "vote of confidence for the city's future." Despite the good news, he said the city faces challenge with the possibility that state aid will only decrease over the next few years. "We're not home free," said Squillace. "We still have to maintain strict controls over this year's budget and next year's.