CITY RECEIVES LOW BORROWING RATE AFTER HIGH CREDIT RATING

Moody's

assigned an Aa2 rating to the $13.94 million general obligation loan the City

bonded to permanently finance short-term borrowing, originally issued for

various capital projects including the newly reopened East Somerville Community

School, additional school remodeling and construction of the Founders Ice Rink.

Because of the very favorable credit rating assigned to that loan, the City

received a low 3.29 percent interest rate over 20 years.

In

assigning the credit rating, Moody's cited the City of Somerville's

conservative budgetary practices, strong reserve levels, ongoing "healthy"

redevelopment, above average overall debt burden and the City's financial

position remaining stable despite historical state aid declines. Moody's also maintained

the City's Aa2 long-term rating on its outstanding general obligation debt, the

highest ever long-term credit rating in the City's history.

"It

is costing taxpayers less to fund projects that are propelling the City of

Somerville forward due to our great long-term credit rating, and the credit

rating on this borrowing and subsequent low interest rate is an example of

that," City Finance Director Edward Bean said. "Moody's says our financial

position will remain stable in the near term because of the City's conservative

budget approach and ample reserve levels, noting that we balanced the budget

despite another reduction in state aid of $2.4 million. We continue to offer

far more services than most cities and continue to invest in projects while spending

nearly the least per capita in Massachusetts. It shows we're maximizing every

tax dollar."

Moody's

report positively notes that the City of Somerville has "embarked on an

ambitious economic development plan," pointing to Assembly Square and Union Square

specifically. It also notes the positive impact of the forthcoming Green Line

Extension, the City's new partnership agreement with Tufts University through

which Tufts pays the City $275,000 a year, that income levels in the city have

improved over the past 13 years, and that unemployment rates trend comfortably

below state and national averages.

"The

financial markets see Somerville's growth, our prudent, thoughtful planning and

budgeting, and taxpayers are being rewarded through favorable rates. It's

costing us less to do more," said Mayor Joseph A. Curtatone. "Smart, targeted

investments are unlocking the City's economic opportunities, broadening our tax

base and increasing the quality of life for residents, while remaining at manageable

debt levels. This administration's fiscal policy and the stewardship of our

Board of Aldermen has put Somerville on this upward trajectory, and Moody's

recognizes that and is telling the financial markets that Somerville is a great

investment."