Town of Saugus Makes History With Highest Ever Bond Rating, S&P AA+/Stable

(Saugus, MA) August 10, 2016 – Town Manager Scott C. Crabtree is pleased to announce that the Town of Saugus’ bond rating has increased three grades from an A1 rating with Moody’s Investors Service to the second-highest tier, a AA+/Stable rating with national rating agency S&P Global Ratings.

This ranking, which is the highest in Saugus’ history, signifies the Town’s credit worthiness and that the Town has a very strong capacity to meet its financial commitments. A AA+/Stable rating “differs from the highest-rated obligors, [a AAA rating], only to a small degree.”

S&P’s rating reflects their opinion of the Town’s:

  • Strong management with good financial policies and practices under Financial Management Assessment methodology;
  • Strong budgetary performance, with a slight operating surplus in the general fund and break-even operating results at the total governmental fund level in fiscal 2015;
  • Strong budgetary flexibility, with an available fund balance in fiscal 2015 of 9.6% of operating expenditures;
  • Very strong liquidity, with total government available cash at 11.4% of total governmental fund expenditures and 3x governmental debt service, and access to external liquidity considered strong;
  • Very strong debt and contingent liability position, with debt service carrying charges at 3.8% of expenditures and net direct debt that is 29.9% of total governmental fund revenue, as well as low overall net debt at less than 3% of market value and rapid amortization, with 66% of debt scheduled to be retired within 10 years;
  • Very strong economy, with access to a broad and diverse metropolitan statistical area; and
  • Strong institutional framework score.

This new rating will help the Town become an even more desirable candidate for borrowing money, and help the Town achieve better borrowing rates.  The improved bond rating and lower interest rates will increase taxpayer borrowing savings, which then can be re-allocated for other taxpayer Town services and operating budgetary necessities.  

Under the new AA+ bond rating and improved interest rates, savings for the Town’s immediate borrowing obligation alone is estimated at $320,000 over the life of the new bonds.  Crabtree and the Town will research and assess opportunities to refinance and save additional tax dollars with the new, upgraded AA+ bond rating. 

The improved rating will have a dramatic impact in savings to the taxpayers if and when they ultimately decide to fund a debt exclusion for the new Saugus High School/Middle School project in the coming years, Crabtree explained.  The taxpayers may now anticipate a borrowing savings of millions of dollars over the life of the bonds with large capital improvement investments such as the 5-year Capital Improvement Plan and a new High School/Middle School project, as well as refinancing of existing debt.

According to S&P Global Ratings’ Outlook Report for Saugus, “Over time, if Saugus were to continue its strong budgetary performance, leading to an increase in reserves while mitigating long-term liabilities, coupled with an increase in economic indicators, we [S&P] could raise the rating.”    

“I am absolutely thrilled with Standard & Poor’s AA+/Stable bond rating of the Town of Saugus,” said Town Manager Crabtree. “This is excellent news for the taxpayers in our community, as it displays concrete evidence that our appointed and elected officials and Town staff are managing the residents’ tax dollars responsibly, efficiently, and effectively. I would like to thank the Board of Selectmen, the Finance Committee, Town Meeting, and Town department heads and employees for their dedication to achieving the soundest financial practices in Saugus’ history. We can accomplish anything when we all work together respectfully and professionally as we speak in one voice for our community.”

This is the second time in two years, under Crabtree’s administration, that the Town’s bond rating has increased. In 2014, national rating agency Moody’s Investors Service upgraded the Town’s bond rating from an A2 to an A1. During this upgrade, Moody’s removed the “negative outlook” status attached to the Town.

“The Finance Committee is extremely proud that the Town of Saugus has received an AA+/Stable bond rating,” said Finance Committee Chairman Kenneth L. DePatto. “It is an amazing feat to jump three grades in the rating scale within a short period of time. This is a testament to our Town Manager’s extremely strong commitment to financial stability and sound decision-making. As a taxpayer I am grateful, and as a Finance Committee member I am proud to be a part of this accomplishment. I would like to thank the Manager, as well as the rest of the Finance Committee, Town Meeting members, and Town employees for their unwavering commitment to these financial policies.”

“This proves to me and to the Town that the management practices are benefitting this community,” said Town Meeting Member Al DiNardo. “This is historic for the Town of Saugus. This is why personally I supported and spearheaded the recall because I believed in the fiscal practices and vision of this administration. Thanks to our administration and Finance Committee, the Town is poised to deal with these long-term projects, such as the parks and playgrounds, a new high school, and the rezoning of Route 1. I’m glad and I hope that we have finally ended the revolving door of town managers in Saugus, because this is the only way that we’re going to be able to deal with a lot of these major issues. I hope now the entire Town of Saugus can come together and work on these issues once and for all.”

 

About The Town of Saugus

The Town of Saugus, Massachusetts, is a family-friendly, historic neighborhood Town located along the north shore, ten miles north of Boston. First settled in 1629, Saugus is home to historic sites, top-tier public services, and a thriving business community. Strong community support, a forward-thinking approach to town government, rich recreational opportunities, affordable choices, and easy access to all the amenities that Boston has to offer – they all contribute to make Saugus a Town where businesses flourish and families make their home.

For more information about the Town of Saugus, visit www.saugus-ma.gov.

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