NP gets first 'A' grade in 34 years
NP gets first 'A' grade in 34 years
NORTH PROVIDENCE - Mayor Charles Lombardi had long struggled to believe this day would come. When the call finally came, he said, "I couldn't even speak."
Seven years after Lombardi came into office to a credit rating one grade above "junk" bond status, representatives from Standard & Poor's Rating Services announced last week that they had boosted the town's rating two spots, from "BBB+" to "A," a strong indicator of the community's improving fiscal health.
"This is a day I've been waiting for a long, long time," said Lombardi.
The rating upgrade was attributed to "very strong cash levels" and a "significantly improved" police pension fund, which received an infusion of $20.6 million this year from a settlement with Google. Repeated budget surpluses were also cited as a factor.
Standard & Poor's is one of three major rating agencies.
Lombardi said the "A" rating is the town's first one in 34 years, and one all residents, whether they're homeowners or not, should be "very happy" about.
A sparkling bond rating makes a community an attractive place to both home and business owners, said the mayor. If people know they're not going to be slammed with big taxes and disappearing services, as has happened in communities like Central Falls and Woonsocket, they're much more likely to come.
While political infighting often takes center stage in this town, said Lombardi, "these are the things that are important to the community."
"I always knew the answer to improving the quality of life in our town was to improve our financial health," he told The Breeze.
While he is "happy, elated, and excited" about the bond upgrade, said Lombardi, "in no way am I satisfied." There are still plenty of steps to take to improve the town's financial position, including getting its current five-year deficit reduction bond paid off.
The bond upgrade will save the town big money on current debt and future borrowing, according to Lombardi and Finance Director Justin Cambio. With a better bond rating comes lower interest rates.
Town officials, who are currently in the process of refinancing significant debt, were expecting to save about $60,000 a year with their upgrade to "BBB+" earlier this year. With the added boost to the rating, that savings amount should jump another $5,000 to $10,000, said Lombardi.
The benefit of an "A" rating for business owners and residents "is all about dollars and cents," said Cambio. A top-shelf bond rating means a "preferential rate" for town taxpayers on debt and more money available for capital improvements like road repaving, he said.
"It's indicative of a community that is self-sustainable," he said.
Everyone wants to know that their basic services, like good schools, regular trash pickup and snow plowing will not be impacted, said Cambio, and people are more likely to move here if they feel comfortable with how the town is doing to maintain those services.
Kimberly Welsh, a managing director with Janney Capital Markets, the company the town uses to sell its bonds, raved about the job North Providence officials did to get an "A" grade. In a Dec. 4 letter to Lombardi, Welsh said North Providence's comeback "is the most impressive turnaround" she has seen over 25 years in the business.
"I had to send along my congratulations and remark on the unbelievable turnaround I have witnessed with the town of North Providence over the past five years," wrote Welsh. "When we first became involved in the town's financings in early 2009, we struggled in the market to get buyers for your tax anticipation notes, and frequently had to take over half of the notes into our own inventory in order to get the deals done."
Of the town's deficit bonds the company underwrote in 2010, "Janney also heard crickets in our struggle to find buyers amid skepticism regarding the town's ability to overcome a sluggish economy, as well as its long history of seemingly intractable structural deficits," wrote Welsh.
Most impressive, according to Welsh, have been the stories she's heard over the past five years, from "the mayor jumping in the snowplow to show his public works employees how to remove snow at 2 a.m." to "hiding the keys of the municipal trucks that are left running for hours," among others.
Some might point to the $60 million Google settlement and say, "yea, no wonder the town is doing great," said Welsh, "but the reality is the settlement was just icing on the cake" for the turnaround that "began when the mayor took office."
"Doing the right thing became the way to do the town's business," she said. "The mayor surrounded himself with talented people, structural deficits turned to surpluses, and in five years we've gone from rating lows of Baa3 (negative)/BBB-(negative) to Baa1 (positive)/A (stable)."
"The deficit bonds will be paid off in full and on time, and the $8 million rainy day fund will be achieved in half the time anticipated," she said. "Remarkable."