Report gives town improved bond rating

By Scott Merzbach
Staff Writer

Published on December 04, 2009

Amherst has received an improved bond rating that will allow the town to borrow money at lower premium rates, according to the town manager.

Standard & Poor's recently issued an "AA" long-term rating and a stable outlook for the town, a step up from the "Aa3" rating Amherst had previously obtained from Moody's.

"We believe the town is well positioned, with good reserves, to address any unexpected revenue declines due to the recession," the summary report reads. "For the long term, the town's stable economy and diverse property tax base should ensure revenues remain strong and consistent."

Town Manager Larry Shaffer informed the Select Board last week of the upgraded bond rating. Shaffer said the bond rating speaks to the financial health of the community and the work done by the financial team, including Assistant Town Manager and Finance Director John Musante and Comptroller Sonia Aldrich.

In its report, Standard & Poor's financial analysts positively note the stable economic base provided by the University of Massachusetts, Amherst College and Hampshire College; financial management that has left Amherst with high reserve levels; the town's low overall debt burden; and the good income and wealth indicators in Amherst, in spite of the large student population.

The agency also pointed to good financial management practices. "The town is thorough in its budget preparation and forecasting processes, conservative in nature with assumptions borne out by variance analyses," the report reads.

Musante said the December bond issue totals $3.095 million. Of this, $1.165 million is in municipal general purpose bonds, which encompasses $505,000 for Town Hall exterior renovations that included repointing the brick and repairing the clock tower, $420,000 for roof replacement and HVAC repairs at the Bangs Community Center and $240,000 for the remaining money authorized and borrowed for the Plum Brook Recreation Area.

The remaining $1.93 million comes from refinancing the bonds associated with the Boltwood Parking Garage construction and the Jones Library and Atkins Water Treatment Plant projects.

The report from Standard & Poor's does touch on the budget challenges facing the town, including the $4 million projected shortfall between revenue and expenses, and continued state aid cuts.