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Worcester Gets Highest-Ever Bond Rating from Fitch

For Immediate Release: 11/28/2016 3:10 pm

Worcester, MA (November 28, 2016) - City Manager Edward M. Augustus Jr. announced Monday that the City of Worcester has received its highest-ever municipal bond rating from Fitch Ratings, a global independent credit rating agency.

The agency upgraded the City's municipal bond rating to AA, up from AA-.

The City of Worcester is rated annually by three independent rating agencies. In addition to the Fitch Ratings AA (stable) rating, Moody's Investors Service and Standard and Poor's Rating Service have reaffirmed the City's strong ratings of Aa3 (stable) and AA- (stable), respectively.

Private sector investors depend on the rating agencies ratings and reports of the City's fiscal health when investing by purchasing the City's bonds. Higher ratings mean lower borrowing costs. An upgrade can potentially save taxpayers millions when the City uses bonds to pay for schools, roads and other infrastructure and capital projects.

"The entire community should take great pride in the City's improved credit rating," said City Manager Edward M. Augustus, Jr. "It is a statement that the City has strong management, demonstrated positive financial performance over time and continued economic development growth. It required us to execute a coordinated long-range plan, making difficult decisions in order to deliver consistent, steady progress to expand our tax base, grow our reserves and address our long-term liabilities."

The credit announcement comes as Worcester is experiencing tremendous development downtown and around the City, spurred by $2.8 billion in public and private investment over the past five years. Last week, City Assessor William Ford reported that Worcester's total property value this year experienced its largest jump in a decade, climbing by $1 billion, a 9.16 percent increase.

Some key comments from Fitch's rating report:

  • "The upgrade... to AA from AA- reflects a combination of Worcester's sustained improvement in its financial profile over the past several years buoyed by tax base growth and maintenance of excess levy capacity."
  • "The City's steady revenue growth combined with prudent fiscal policies and conservative budgeting practices has led to consistently positive operating results."
  • "Fitch expects Worcester to realize continued healthy revenue growth based on anticipated increases to its tax base due to new development underway and planned for the future."
  • "Other post-employment benefits are elevated but the City continues to manage growth in these costs through health insurance plan changes and additional funding above pay-as-you-go amounts"

Over a two day period in November, the three rating agencies visited Worcester and were presented with the comprehensive details of the City's financial performance. All aspects of city government and the community are evaluated objectively through a strict set of criteria and city-wide statistics and data. Collectively, the City administration team presented a comprehensive and compelling review of Worcester's strong financial management, initiatives to create new revenue streams, plans to address long-term liabilities such as Pension and OPEB liabilities, investments in infrastructure and core services and the robust economic development agenda including the Downtown Urban Revitalization Plan.

City Manager Augustus thanked the city team that prepared and presented the comprehensive information to the rating agency representatives, including Chief Financial Officer Thomas Zidelis, City Auditor Robert Stearns, Assistant City Manager Kathleen Johnson, Chief Development Officer Michael Traynor, as well as Kimberly Mooers and Brianne Susel of UniBank Fiscal Advisors.

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