NEW YORK - Standard & Poor's Ratings Services said it raised its underlying rating (SPUR) on Haverhill, Mass.' General obligation debt one notch to A-minus from BBB-plus based on the city's improved financial position and performance. The outlook remains stable.
The rating service also assigned its AA-minus standard long-term rating, and stable outlook, to the city's $16.285 million series 2006 GO state-qualified municipal purpose loan bonds and its SP-1-plus short-term rating to the city's $8.727 million bond anticipation notes. The bonds and notes are scheduled to sell on Nov. 2.
Simultaneously, Standard & Poor's affirmed its AA-minus SPUR, with a stable outlook, on the city's preexisting GO state-qualified debt.
The A-minus SPUR and SP-1-plus reflect the city's wealth measures that are slightly above national averages; strong growth of the primarily residential property tax base; participation in the Boston, Mass. and Portsmouth, N.H. economies; and moderate debt burden.
The city's growing unfunded pension liability is an offsetting credit feature. When factored into the overall debt burden, debt ratios more than double.
"After a prolonged period of fiscal stress, Haverhill has sustained a trend of positive operating results over the past four fiscal years. New growth, higher state aid, and expenditure control have led to a steady increase in financial reserves," said Standard & Poor's credit analyst Colin MacNaught. "While Haverhill's economic development will likely be modest, the property tax base's stability will be an important factor in maintaining structural balance between revenues and expenditures."
Haverhill's financial position continues to experience slow, but steady, improvement as the city emerges from a recent period of fiscal stress. The sale of Hale Hospital; new management; and strong property tax base growth, coupled with expenditure controls and departmental reorganizations, have contributed to this improvement. In addition, the city's financial management has been assessed as strong according to Standard & Poor's financial management assessment criteria. According to draft audit results, the city closed fiscal 2006 with general fund revenues, before transfers, that exceeded expenditures by $2.5 million, which will allow management to increase reserves for the fourth consecutive year. Although reserves are below average compared with reserves of similar-size cities across the nation, they provide adequate revenue flexibility at the current rating.
The city's overall net debt burden is a moderate $1,105 per capita, or 1.1% of total market value. Amortization of principal is above average with about 66% of existing debt being retired over 10 years.
The rating action affects roughly $14 million of debt outstanding.
