Cambridge secures AAA bond rating for 15th straight year
Cambridge officials gave themselves a pat on the back this week after the city received its 15th-straight AAA bond rating.
Cambridge first received the highest level of credit-worthiness 20 years ago, and has received the rating every year in a row since 1999, according to Lee Gianetti, the city’s communications and community relations director.
At the council’s regular meeting on Monday, Feb. 10, several councilors lauded the city’s administrative team for the designation, and Councilor Mark McGovern even suggested the city find a way to publically celebrate the milestone.
“You can’t get news like this and not take the opportunity to congratulate the city staff,” said Councilor Leland Cheung. “It saves a lot of money for residents. It’s not easy. It’s a lot of hard work.”
Assistant city manager for fiscal affairs, Louis Depasquale, said the rating allows Cambridge to secure better bond rates from creditors, which in turn means taxpayers have to take out less from their own pockets to finance capital projects. Cambridge already has one of the lowest commercial and property tax rates in the state, Depasquale said, and the council even approved a reduction in its tax rate for fiscal year 2014.
According to data from the state Executive Office of Administration and Finance compiled by the Boston Business Journal, Cambridge ranked 317 out of 351 cities and towns for the lowest residential tax rate and 78 out of 351 for its commercial tax rate. If the city wanted, it could legally raise an additional $117 million in tax revenue by maximizing the tax levy, Depasquale said, though he added that is not the direction the city is going.
“Most cities and towns are already at their levy,” Depasquale said, referring to the legal limit municipalities can extract from residents. “Even though we’ve had the flexibility, the city manager and department heads have recognized that’s not where we want to go.”
Cambridge also has some of the highest property values in the country, but Depasquale said despite the high values, roughly three-quarters of homeowners saw no increase, a decrease, or an increase of less than $100 on their tax bill.
“No one cares about assessments or rates. They just want to know how it impacts them,” Depasquale said.
City Manager Richard Rossi attributed the success to both sound financial planning but also collaboration with the council. He said department heads were monitoring their revenues and expenditures and making sure they stay in line with the budget.
The ratings from Moody’s Investors Services, Standard & Poor’s, and Fitch Ratings include a projected $150 million investment in three new middle schools over the next half decade, Depasquale said. The city is currently in the middle of an $85 million reconstruction of the Martin Luther King School.
With an $11 million to $12 million price tag tied to the renovation of the Foundry Building in mind, Councilor Nadeem Mazen asked if the ratings included expenditures that hadn’t been approved yet.
“It’s full disclosure. Anything we know we tell them about,” Rossi said, referring to plans to renovate the 52,000-square-foot building that was gifted to the city in 2010. “This is a balance and we’re really trying to do it the intelligent way. …There’s an awful lot that gets done in this city; some of it just takes a little more time.”