Standard & Poor's Rating Services has kept the city's bond rating at AA, a level it considers stable.
AGAWAM– Agawam’s bonding rating continues to be good, something that enabled the city to recently refund a bond issue, a move projected to save about $313,500 in borrowing costs through 2020, according to officials.
The refunding of the bond issue was possible because Standard & Poor’s Rating Services continues to rank the city’s bonds at AA, Mayor Richard A. Cohen and City Treasurer-Collector Laurel A. Placzek said Thursday.
“I’m very proud of it,” Cohen said of the city’s ability to maintain that rating, which is considered stable by the rating agency’s standards. “It shows we are a very stable community, financially.”
The last time the city got a bond rating was in 2009, when Standard & Poor’s moved it up a notch from AA minus to AA. The rating agency ranks bonding capacity from AAA to D, with AAA being the highest rating.
“We have strong financial reserves. We have a strong tax base and we have never had to have a Proposition 2 1/2 override,” Cohen said.
Placzek was able to generate the expected savings by refunding a debt of $2,991,000, which has resulted in borrowing costs of 1.63 percent a year, an improvement over the old rate of 4.14 percent. The debt is part of a general obligation bond floated in 2001 and that includes money for renovations at the high school library, costs associated with a combined sewer overflow project, library expansion and sewer improvements on Camp Street and Florida Drive.
Savings of $313,594 are expected to accrue to the city until the bond is paid off Dec. 1, 2020, according to Placzek.
In its report on the city’s finances, the rating agency described Agawam as having a stable economic base with a strong tax base, a very strong reserve position and low debt burden. Seventeen percent of the city’s tax base is commercial and industrial property, according to the report.
Among other things, the rating agency noted that the city has a business development center, the Agawam Small Business Assistance Center, that provides counseling, training and mentoring for entrepreneurs and businesses.
The city’s total assessed value comes to $2.7 billion or $97,744 per capita. The report also states that as of the close of fiscal 2010 the city had $15.1 million in reserves, which increased to an estimated $15.5 million by the end of fiscal 2011.
The city also has about $5.5 million of unused levy capacity under Proposition 2 1/2, according to the report.