Cambridge Awarded AAA Ratings for 22nd Consecutive Year. Nation's three major credit rating agencies affirm City’s continued strong fiscal management despite economic challenges from COVID-19 pandemic .

The City of Cambridge has retained its distinction of being one of approximately 27 cities in the United States to earn AAA ratings from each of the nation's three major credit rating agencies. Each year since 1999, the city has received these noteworthy ratings from Moody's Investors Service, Standard & Poor's and Fitch Ratings.

“These ratings are especially significant this year, as the COVID-19 Pandemic resulted in unexpected levels of uncertainty and financial impacts not seen by the city previously,” said Cambridge City Manager Louis A. DePasquale. “The city has and continues to fund many new COVID-19 initiatives despite not being in the FY20 or FY21 budgets. Our ability to support these unforeseen initiatives is possible in part because of strong city management, sound fiscal policies set by the City Council, and a strong financial position that allows us to strategically use free cash reserves to assist in our COVID-19 pandemic response. Over the past year, we have demonstrated our ability to provide essential city services while also supporting COVID-19 related services and programs.”

Since March 2020, when the COVID-19 crisis first emerged in Cambridge, the city developed, implemented, and monitored its public health strategies to slow the spread of the virus and also provided almost $25 million in direct financial and community support to its most vulnerable residents. This support -- funded through various city, community, and federal funding sources – was distributed to the Housing Stabilization Program, small business community, non-profit community, arts sector, various homeless support programs, and Cambridge Public Schools.
In addition, the city also appropriated $10.5 million through the Coronavirus Relief Fund received as part of the Federal Cares Act to the State of Massachusetts and allocated to cities and towns. Funds were used towards staff overtime costs related to COVID-19 testing sites and other projects; personal protective equipment; services and supports to Cambridge residents; meals for the homeless program; and activities and supports related to homeless services. The city has set up a COVID-19 Federal Emergency Management Agency (“FEMA”) grant project. To date, the city has spent approximately $18 million on COVID-19 related expenses, and is anticipating that a portion of that amount will be reimbursed by FEMA.

Additionally, despite the Pandemic's impacts, the city has remained committed to expanding support for important community initiatives, including affordable housing, homelessness initiatives, infrastructure improvements and maintenance, equity and diversity efforts, and supporting the small business community.
Achieving this credit rating allows the city to finance important projects throughout Cambridge at the most favorable interest rate, which results in property tax savings to our taxpayers and increased financial flexibility, which has proven to be critical over the past year.

These ratings are in conjunction with the city’s sale of $84.7 million in General Obligation bonds as well as a refinancing of $21.3 million of existing debt. It should be noted that refinancing of this existing debt is anticipated to result in significant savings to the city over the next several years. The competitive sale will take place on March 3, 2021.

Capital projects funded in this bond issuance include Department of Public Works facilities repairs; street and sidewalk reconstruction; fire station renovations (River street and Lexington Avenue); River Street reconstruction; City Hall improvements; Tobin Montessori and Vassal Lane Upper School construction; school improvement projects; sewer reconstruction; and the Harvard Square Kiosk. The refinanced debt was originally issued in 2010 and 2011 for the CRLS renovation, and 5 Western Avenue improvements (former Police Station).

While the city's priorities over the past year have primarily focused on addressing impacts of the COVID-19 Pandemic, the administration has carefully managed and monitored revenue and expenditures. This has become more complex during the Pandemic. Despite these challenges, the city has continued to address ongoing needs, basic services, and many key initiatives.

The following are excerpts from the Rating Agencies reports that highlight the city’s strong financial position; a large, stable, and diverse tax base; ample excess levy capacity under Proposition 2 ½; budgetary flexibility; and a strong and experienced management team.

“Cambridge (Aaa stable) benefits from a large and diverse tax base that continues to experience strong growth. Cambridge's financial position is strong with very healthy reserves and liquidity that are maintained by formal policies and conservative fiscal management.”
Moody’s Investors Service

“Cambridge is an affluent suburb immediately adjacent to Boston. Home to both Harvard University and the Massachusetts Institute of Technology (MIT), the city is at the epicenter of biotech, pharmaceutical, and other knowledge-based sectors, which continue to generate growth in the tax base. It faces challenges in addressing housing, transportation, and other infrastructure needs. However, it has a history of significant forward-looking financial planning and a track record of consistently outperforming the budget. We expect Cambridge to remain a desirable location to live and work, sustaining economic growth that will assist management in meeting future challenges.”
S & P Global

"The City’s ‘AAA’ GO bond rating and IDR reflect Fitch’s expectation for Cambridge to maintain a high level of financial flexibility through economic cycles, consistent with a history of strong operating performance and budget controls. The rating further reflects the City’s wealthy resource base and future potential for continued tax base increases, along with moderate expenditure growth and demonstrated ability to reduce expenditures during economic downturns. Fitch expects long-term liabilities to remain low based on the city’s capital needs, very rapid pace of principal amortization, continued growth in economic resources and a practice of fully funding actuarially determined pension contributions.”
Fitch Ratings

Page was posted on 3/1/2021 6:04 PM
Page was last modified on 3/1/2021 6:05 PM
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