HOLYOKE — In an announcement welcomed by City officials, the Standard & Poor (S&P) rating agency has affirmed Holyoke’s A+ bond rating and given Holyoke high marks for its financial management policies. Click to review report.
S&P also assigned the City its “SP-1+” short-term rating for $32.2 million in bond anticipation notes (BANs). SP-1+ is the agency’s highest rating for a municipal note. It is given when a borrowing municipality is “determined to possess a very strong capacity to pay debt service.”
“The rating reflects Holyoke’s stable performance, robust reserve levels, and recently adopted policies and practices.
Mayor Joshua A. Garcia said the high ratings affirm the processes he put in place early in his tenure.
“I may be a bit of a numbers nerd when it comes to fiscal management, capital planning, maintaining reserves, and forecasting, but the S&P report card says we have prudent practices in place and we’re going in the right direction,” he said.
Garcia said the positive ratings are especially significant at a time when federal funding is uncertain.
“Having the capability to pivot and respond to uncertainty is important. If federal funds are not forthcoming or if federal grants are withdrawn for example — which has already happened — the City could be forced to borrow to pay for necessary projects if there are no other revenue sources to tap into. That’s when a strong bond rating is very, very helpful: the better the rating, the lower the cost,” he said.
Holyoke Treasurer Rory Casey also took note of the benefits of a superior bond rating.
“I’m thrilled that S&P recognized the hard work that has been put in over the past three years,” Casey said. “Their affirmation is proof that our strategy of focusing on long-term financial health and stability, rather than short-term fixes, is right for Holyoke. By maintaining a strong rating, we are able to borrow at a lower interest rate, allowing us to stabilize one of our largest budget expenses and provide taxpayer relief. More importantly, it gives the Mayor and Council the flexibility to fund critical infrastructure projects that have been put off for far too long.”
The S&P announcement noted that Holyoke’s “revenue outpaced expenses for fiscal 2023, and early projections for fiscal 2024 have officials expecting a surplus in line with the 2023 results. Revenue has performed in line with expectations, while expenses haven’t significantly outpaced budgeted levels.
“The short-term rating reflects our opinion of Holyoke’s general creditworthiness and market risk profile, which we consider low. The low market risk profile reflects our view of the City’s strong legal authority to issue long-term debt to take out the BANs and its ongoing disclosure to market participants. Officials intend to use BAN proceeds to finance its middle school project and other capital projects,” the announcement states.
“Holyoke continues to experience ongoing development throughout the City,” according to S&P. “Management reports expansion of existing employers and possible future development of green energy and supercomputing opportunities within the city.
“Tax base growth within the city continues, with total assessed value growing over $700 million to its current valuation that exceeds $3 billion. Ongoing tax base growth is particularly important for Holyoke since it is fairly close to its Proposition 2½ levy ceiling. The city has a limited ability to raise the levy, and it will have to rely on new growth to help maintain budgetary alignment.
The S&P analysis concludes that “given its current growth patterns, coupled with future developments, we expect its [Holyoke’s] economic indicators to continue to improve.”