GREENFIELD — Two independent financial companies — Standards & Poor’s and Moody’s — have reviewed Greenfield’s bond rating, individually declaring the rating is AA and A, respectively.
The city undergoes a rating review each time there is a bond issuance, according to a Greenfield press release. 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 Greenfield High School.
The scores for Moody’s range from the highest score of AAA down to C. According to Moody’s, cities with an A “are judged to be upper-medium grade and are subject to low credit risk.”
Standard & Poor’s scores range from a AAA to a D rating, with a AAA being the best score. Greenfield received a AA, meaning the city’s “capacity to meet its financial commitments on the obligation is very strong.”
“It is pleasing to receive affirmation of the city’s strong financial management and policies by independent third parties,” said Greenfield’s Director of Finance Liz Gilman. “A strong bond rating allows the city to finance projects at lower costs to the taxpayer.”
The Moody’s rating states that the A rating reflects Greenfield’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 (other post-employment benefits) liability.”
Moody’s reviewed Martin’s future debt plan, commenting that “the additional debt, while significant, should remain manageable dependent on how the debt is layered in as other debt matures.” Potential future projects include a new library, anaerobic digester (funded from sewer fees), a fire station, and ongoing capital expenditures for infrastructure improvements and upgrades.
Both Standard & Poor’s and Moody’s identified the OPEB liability and pension liability as areas upon which Greenfield can improve. These contingent liabilities are a major contributor to the “very weak debt and contingent liabilities” assessment provided by the two rating agencies.
In August, the City Council approved the dedication of revenue from a 3 percent marijuana local excise tax to reduce OPEB liability, which Moody’s recognized as “a positive long-term measure.” Martin also planned and the City Council approved dedicating $100,000 of free cash to the OPEB account, according to the release.
Both Standards & Poor’s and Moody’s indicated that progress in reducing OPEB and pension liabilities could result in upgrading Greenfield’s bond rating.
Reach Melina Bourdeau at 413-772-0261, ext. 263 or mbourdeau@recorder.com.