Somerville Bond Rating On The Rise: Moody's

SOMERVILLE, MA – The City of Somerville is on the cusp of receiving a coveted Aaa rating from Moody's Investors Service. The agency bumped up the city's rating from Aa2 to Aa1, the second-highest rating on Moody's credit rating spectrum and the highest rating ever granted to Somerville.

Moody's cited Somerville's healthy financial status, monetary practices, budget management, healthy and growing economy, diverse tax base and healthy reserves, according to a City of Somerville press release. A higher bond rating not only reflects a healthy economy but can also impact projects yet to come, in terms of taking out loans and making long term investments.

"This news affects everyone in the community because better bond ratings ultimately make it more affordable for Somerville to make needed investments in community priorities such as schools, roads, public safety facilities, parks, fields, affordable housing, water and sewer, and other important infrastructure," Mayor Curtatone said in a statement. "These types of projects usually require borrowing, and the higher our bond rating, the lower the interest rate we are charged, which saves the City money."

In FY 2016, Somerville's budget yielded a General Fund balance equal to 25 percent of the city revenues, which Moody's said is "stronger" than the commonwealth median. The following fiscal year, Somerville netted $291.9 million in new growth valuation, up 13.1 percent compared to FY 2016. Drivers of new growth include pending development in Union Square and new development at Assembly Row, according to Moody's.

Moody's also factored in a "manageable debt burden" that is expected to increase over the next decade due to the 10-year Capital Plan, Somerville High School construction and Green Line Extension financing. Development in Somerville is driven by the city's 20-year SomerVision plan.

"As the City continues investing in projects that improve our community, our higher bond ratings will ensure that it costs taxpayers less," City Finance Director Edward Bean said in a statement. "We are maximizing every tax dollar through our conservative budgeting approach, continuing to offer more services than most cities, and strategically investing in projects that improve our quality of life, while our per capita spending remains lower than most cities and towns in the state. Moody’s upgrade of our bond rating is a testament to the City’s strategy."

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