Somerville Achieves AAA Bond Rating: City Garners Highest Long-Term Debt Rating from S&P Global Ratings
Mayor Katjana Ballantyne is proud to announce that the City of Somerville has been awarded the highest long-term debt rating of 'AAA' from S&P Global Ratings, a municipal bond credit rating agency, solidifying the City’s financial stability and creditworthiness. The upgraded rating, which benefits residents by lowering the City’s borrowing costs, reflects more than 20 years of prudent financial management, strong economic growth, and commitment to fiscal responsibility from both the current and previous Mayoral administrations.
"Somerville’s new bond rating is a testament to the hard work and dedication of the City’s public servants, both past and present, and it is great news for our community. Higher ratings reduce the City’s borrowing costs making critical investments such as school, road, or sewer reconstruction more affordable,” said Mayor Ballantyne. “I want to extend my deepest thanks to former Mayor Joe Curtatone for laying such a robust financial groundwork, as well as every one of the City’s dedicated staff members whose hard work helped us reach this achievement. Our ‘AAA’ rating highlights Somerville’s commitment to responsible financial management and provides a strong foundation for our community's future. My administration will continue to prioritize fiscal responsibility and investment in projects that build progress for all."
Somerville Named A Key Economic Hub in Greater Boston
The report from S&P Global ratings recognizes Somerville as a key economic hub in the greater Boston area due to the city’s significant development and population growth, resulting in ongoing market value and income growth.
The report also lauded the City’s commitment to long-range planning informed by sustainability efforts to reduce the risk of financial impacts due to climate change, as well as proactive planning to mitigate cybersecurity risks. Somerville was also rated “above the sovereign,” meaning that due its stable, independent income sources, the City has a stronger credit rating than the national government.
After reviewing Somerville’s projected and actual budget for the last fiscal year, the report found that City revenues came in over projections and expenditures were under budget.
The 'AAA' rating also reflects the following as quoted from the S&P report:
A very strong local economy, anchored by a stable residential sector, with new growth driven by regional demand for life science space and housing in proximity to local employment centers and universities, evidencing its participation in the broad and diverse Boston metropolitan area.
Well-embedded financial management policies and practices that are reviewed on a consistent basis, a focus on long-term planning, and a strong institutional framework score.
Consistently positive performance, with reserves higher than most comparably rated state peers and very strong liquidity.
Sizeable debt burden, driven by ongoing capital projects supporting development projects and growing service demands, and high pension and other postemployment benefit liabilities.
“The ‘AAA’ rating is a culmination of over 20 years of consistent hard work, careful planning, and innovative thinking. Somerville is now part of an elite group of organizations that can secure financing at the most favorable interest rates available, saving taxpayers hundreds of thousands of dollars,” said City Finance Director Edward Bean. “S&P’s new report recognizes the City’s dedicated efforts to maximize every tax dollar through conservative budgeting and strategic investing, and I am proud that our upgraded rating allows us to continue investing in Somerville’s future, while keeping the burden on taxpayers low.”
The upgraded rating also reinforces Somerville’s attractiveness to potential investors, bolstering the City’s position as a reliable and secure community to invest in. This will also support Somerville’s future investment in critical infrastructure projects, ensuring continued progress toward the community-driven growth envisioned by the City’s comprehensive plan SomerVision (somervision2040.com) and sustainability goals outlined in Somerville’s Climate Forward Climate Action Plan (www.somervillema.gov/ClimateForward).
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