Cambridge Maintains Rare Distinction of Earning Three Triple A Ratings
Cambridge City Manager Robert W. Healy proudly announced that the City of Cambridge was one of 27 municipalities in the U.S. to earn three AAA ratings from the nation's three major credit rating agencies, Moody's Investors Service, Standard & Poor's and Fitch Ratings. The city has attained this rare distinction every year since 1999.
These ratings were in conjunction with the City's sale of $40.5 million in General Obligation bonds on February 15, 2012 to finance such capital projects as Sewer Reconstruction, Old Police Station Renovation Project, Roadway Improvements in Kendall Square, Improvements to the Harvard Square Tunnel, Building Improvements, Open Space Improvements, Elementary School Renovations, and Street and Sidewalk Improvements.
Standard & Poor's also reaffirmed its "strong" Financial Management Assessment (FMA) of the City of Cambridge. An FMA of "strong" indicates that practices are strong, well embedded and likely sustainable. The strong rating indicates that the government maintains most best practices deemed critical to supporting credit quality and that these are well embedded in the government's daily operations and practices. Formal policies support many of these activities, adding to the likelihood that these practices will continue into the future and transcend changes in the operating environment or personnel.
“As a result of our three Triple A ratings, the city received a significantly favorable interest rate of 1.64%, with the recent sale of our General Obligation Bonds,” said City Manager Robert W. Healy. “This will enable us to move forward with our major capital projects at significant savings to our taxpayers. It is especially important as we begin work on the elementary school rebuilding program.”
Below are some highlights from Fitch Ratings, Moody's and Standard & Poor's credit reports.
Fitch Ratings -- Key Rating Drivers
Exceptional Financial Management: Management's conservative budgeting practices and prudent use of reserves has helped keep tax levy increases at moderate levels while the city faces growing operating costs.
Above-Average Liquidity Levels: The city's positive financial profile is characterized by large reserves and ample liquidity. Additionally, the city's levy margin continues to grow favorably to the highest level in the city's history.
Economic Diversity Promotes Stability: The stable presence of higher education, healthcare, biotechnology, and life sciences industries supports the well-diversified economy with low unemployment and above-average wealth levels.
New Development Continues: Ongoing development within the city is projected to promote growth in assessed value, providing the city with tax levy flexibility for operations and debt service.
Moderate Debt Levels: Debt levels are moderate and expected to remain manageable, aided by the city's rapid amortization rate.
Moody's Investors Service -- Summary Rating Rationale
The Aaa rating reflects the city's large, diverse and stable tax base, which is anchored by prominent higher education institutions and a growing research and development sector.
Also incorporated into the Aaa rating are a strong financial position which has performed well through the national economic downturn, management's consistently conservative approach to budgeting and expenditure management and a favorable debt profile supported by healthy enterprise systems and historically strong commonwealth school construction aid.
- Large and diverse tax base anchored by stable universities
- Robust financial position guided by sound management policies
Standard & Poor's Corporation -- Rationale
Standard & Poor's Ratings Services has assigned its 'AAA' long-term rating to Cambridge, Mass.' general obligation(GO) municipal purpose loan of 2012 bonds and affirmed its 'AAA' long-term rating on the city's GO parity debt. The outlook is stable.
Standard and Poor’s continued
The ratings reflect our opinion of the city's:
- Strong and dynamic local economy, anchored by Harvard University and Massachusetts Institute of Technology (MIT), as well as biotechnology and high-tech firms;
- Above-average wealth and income factors, including an extremely strong market value per capita;
- Very strong financial position, despite general fund decreases in fiscals 2010 and 2011, coupled with an experienced management team and strong management policies; and
- Low debt burden and manageable capital plan.
Standard & Poor's considers Cambridge's financial management practices "strong" under its Financial Management Assessment methodology, indicating practices are strong, well embedded, and likely sustainable.
The outlook is stable. We do not expect to change the rating within the two-year outlook period given the city's very strong financial position, experienced management team, and strong financial management policies and practices. Providing additional rating stability are the city's strong and resilient local economy and property tax base.