Bond Rating Confirmed

Moody’s and Standards & Poors confirm Bond Ratings for Greenfield

Moody’s and Standards & Poors confirm Bond Ratings for Greenfield

Greenfield, MA - Mayor William Martin is pleased to announce that both Standards & Poors and Moody’s maintained the City of Greenfield’s bond rating at AA- (4th highest rating) and A1(highest rating) respectively. The City undergoes a rating review each time there is a bond issuance and this review was performed in anticipation of the City bonding for various purposes over the last three years, including the Olive Street Parking Garage, renovations at Green River School, and the final bonding for the High School.
Both Standard & Poors and Moody’s highlighted strong financial management with conservative budgeting that has led to adequate reserves and strong liquidity.

Mayor Martin stated that he was concerned about the misinformation and inaccurate numbers thrown about, but admitted that early information last February was released from a city office inaccurately. According to Martin, “There was information shared with Councilors that portrayed that the city exceeded the allowed debt limit, however, that release was inaccurate in that it failed to follow state regulations. Municipal finance is a different breed then balancing your family checkbook. There are exemptions and regulations that are a requirement to arrive at an official number, or balance.”

The Mayor added, “For example, interest over the term is not included in debt. Basically, it has not happened, may not happen, and cannot be included in a debt calculation. Think of it as applying for a car loan. An applicant would not be required to provide a financial statement with a mortgage balance that included interest until maturity as the balance, or a credit card balance including interest until the card was paid off. Initially, the February numbers quoted by some referring to an $85 Million peak that would require the city to seek a waiver is wrong. The city is
The City of Greenfield is an Affirmative Action/Equal Opportunity Employer,
a designated Green Community and a recipient of the “Leading by Example” Award below $55 million debt, well within its debt range for a municipality and will require no waiver from any agency. The investment in Greenfield has been planned for years and scheduled to accommodate our finance policies to maintain a best practice for debt payments between 8 - 10% of the operating budget and, obviously, to stay below the debt limit. Any statement to the contrary is uninformed and malicious.”

“It is pleasing to receive affirmation of the City’s strong financial management and policies by independent third parties,” said Liz Gilman, Director of Finance for the City of Greenfield. “The City strives to maintain strong financial management and to improve policies. A strong bond rating allows the City to finance projects at lower costs to the taxpayer.”

According to the Moody’s rating, “The A1 issuer rating reflects the town's modestly large tax base, solid wealth and income profile, manageable debt, and modest pension expenses. The rating is modestly challenged by reserve levels and liquidity that have declined over several years and an elevated unfunded OPEB liability.”

Moody reviewed the Mayor’s future debt plan, commenting that, “Additionally the town is contemplating a number of projects over the next several years including a new library, anaerobic digester (funded from sewer fees), a fire station, and ongoing capital expenditures for infrastructure improvements and upgrades. The additional debt while significant should remain manageable dependent on how the debt is layered in as other debt matures.”

Both Standard & Poors and Moody’s identified the Other Post-Employment Benefits (OPEB) liability and pension liability as areas for the City to improve. These contingent liabilities are a major contributor to the “very weak debt and contingent liabilities” assessment by the rating agencies. In August, the City Council approved the dedication of the 3% marijuana local excise tax to reduce OPEB liability, which Moody’s recognized as “a positive long-term measure”. And previously, the Mayor planned, with Council approval, a dedicated $100,000 of free cash to the OPEB account. The City is currently developing a financial strategy to address pension liability. Both Standards & Poors and Moody’s indicated that progress in reducing OPEB and pension liabilities could result in upgrading the City’s bond rating.

Attached is updated projected debt information as well as information on the debt limit.

Attached Files:

Calendar of Events
Mon, Jan 30, 2023, 5:30 pm - 7:00 pm
City Hall Meeting Room, 14 Court Square
Tue, Jan 31, 2023, 5:30 pm - 7:00 pm
John Zon Community Center, 35 Pleasant St. Greenfield, MA 01301
Wed, Feb 1, 2023, 12:00 pm