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Haverhill

December 4, 2013

Bond rating upgrade will save money

Rating raised to highest level in city history

(Continued)

The low 2004 rating was primarily the result of $85 million in debt the city assumed when it sold its financially struggling municipal hospital in 2000. The city is paying the so-called Hale debt, which includes mostly pension and health care costs for former hospital workers, through 2020.

Standard & Poor's report on the city's financial condition said the new "short-term rating reflects our view that Haverhill maintains a very strong ability to pay principal and interest when the notes come due."

"We view the city's management conditions as very strong, with strong financial practices that are likely sustainable," the agency's report said.

Standard & Poor's also cited the improved economy and noted a number of large downtown housing developments that have bolstered the city's tax base.

The financial review gives the city the highest possible rating for good management practices and recognizes the city's recent success at building up cash reserves. It also cited the city's ability to negotiate money-saving health care reforms with its labor unions.

The report also credits the city's use of multi-year budgetary planning and better building maintenance, two things the City Council has been pushing.

"Five-year budgets and building maintenance isn't always exciting, but it's important," Councilor John Michitson said. "And if the mayor can use it to improve the city's bond rating and save us money, I'm all for it."

Michitson said the council's resistance to previous efforts by Fiorentini to defer portions of the Hale debt was likely also a factor in the improved bond rating.

"By not putting off any of the Hale debt, we showed that we are committed to paying off our debts as fast as possible," Michitson said.

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