You may have caught wind of this news already through comments/letters on the blog.
On Friday, the Town announced that Standard and Poor’s upgraded Southborough’s bond rating to the highest level: AAA.
It’s a status shared by only 12% of municipalities in the state.
In April 2014, voters approved a $3,600,000 Public Works project to replace a trouble-prone water main along Route 9.* The bond rating review was part of the town’s steps to finance that project.
Town Administrator Mark Purple tells me this was the first time a Town management team sat down in person with analysts instead of holding a conference call. Prior to S&P’s announcement, he updated the Board of Selectmen on that meeting and the review.
Last Tuesday, the TA told the board that S&P was considering the AAA rating. But he warned members that it was unlikely, since the Town doesn’t keep a stabilization fund.
Rooney, who participated in the sit down, told the board:
they said that a AAA is reserved for those cities and towns that are ‘bulletproof’ and part of the bulletproof vest, if you will, is a large savings account
Rooney and Purple emphasized with S&P reps that the Town’s decision not to have the fund is political, not financially driven. (In past Town Meetings, voters have debated the issue and opted not to have a reserve fund.)
Purple said he and Treasurer Brian Ballantine drove the point home explaining that the Town incorporated a $220,000/year settlement ruling into its operational budget “not to the detriment of any budgets”, fully funded its capital, increased its obligation to OPEB $250,000, and remained under “the 2 1/2”, which increased its Levy capacity. He summed up:
My comment to them was, “if that’s not bulletproof, I need a better example.”
Apparently, S&P listened. The summary analysis explaining the upgrade from AA+ stated:
The town’s strong management conditions with good financial management policies and practices provides further rating stability. We believe management will continue to make the necessary budget adjustments to maintain an adequate budgetary performance, and strong budgetary flexibility. As such, we do not expect to change the rating within the two-year parameter of the outlook period.
Purple expects the higher bond rating to translate into lower interest costs. This week the Town is receiving bids on the bond this week. Selectmen are scheduled to award the winning bid next Tuesday.
In Purple’s press release, he shared the credit for the improved rating with many, thanking Town personnel and committee members. You can read that here.
For the S&P ratings service summary of our Town’s obligation, click here.
*Wondering what this project we are borrowing to fund is? It was under Article 9 of the 2014 Annual Town Meeting:
This request is part of the town’s Water System Master Plan. Southborough’s water system consultant is currently developing the specifications for replacement of the 1931, unlined cast iron water main that generally runs along the east bound, high speed lane on Route 9 from Breakneck Hill Road to its end near Brook Lane. Breaks in this main, near Oak Hill Road, in January 2013 and in January 2014 caused significant back-ups on Route 9 and hours of overtime. This main is prone to breaking due to its age and its material. The replacement project will replace the main by installing 12 inch cement lined ductile iron pipe in the breakdown and shoulder of Route 9 eastbound. There will also be new 8 inch main installed on the westbound side of Route 9 from Pleasant Street to the reservoir. The DPW has brought this project forward this year due to MassDOT plans to pave Route 9 from Breakneck Hill Road to the Framingham Town Line starting in spring 2016, and this should provide the Town with some cost savings on roadway rehabilitation.