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Cambridge has again received the highest rating, AAA, from all three major U.S. credit rating agencies. It is one of only 34 municipalities across the country to do so this year and has received AAA rating from the three agencies since 1999.
The reports credit a tax base anchored by the presence of Harvard and MIT as one of the reasons for Cambridge’s strong finances.
The agencies assigned a AAA score for all outstanding long-term government debt as well as another $75.7 million of new municipal bonds for 2015. The reports judged Cambridge to be likely to repay its loans due to its financial stability. Its strong finances mean that the city can issue bonds with lower interest rates.
According to Cambridge city manager Richard C. Rossi, the money is earmarked for infrastructure development. He said the majority of it will go to the reconstruction of Martin Luther King Elementary School as well as of the sewer system. The bonds will also fund smaller projects such as open space and improvements to municipal buildings.
Cambridge City Councilor Marc C. McGovern said that municipal projects such as these are viable because of the low borrowing costs that result from having such a consistently high credit rating.
“The reason we can put extra money into our food pantries, extra money into our schools, extra money into all of the services that we offer in this city, the reason we can do that is because of our financial stability, is because of the industry we have here, is because of our AAA bond rating,” he said.
Rossi said that the continued AAA ratings “gives people confidence that this is a good community to work in, to live in, to invest in. It’s a whole picture about a community.”
According to the Moody’s report, the presence of Harvard and MIT contributes significantly to the city’s continued economic stability. It stated that the the two institutions directly employ almost 20,000 full-time workers, as well as attracting biotechnology, pharmaceutical, and life sciences firms.
Although Harvard and MIT, as non-profit universities, do not pay property taxes, they still make voluntary payments to the city. The report states that payments from tax-exempt institutions are financing approximately $5.8 million, or 1.1 percent, of the city’s budget for the 2015 fiscal year.
Thomas J. Lucey, the University’s director of government and community relations, said that the city is one of the most financially secure communities in the commonwealth.
“It is a city that benefits from a very robust economy, in which Harvard and MIT are really the core,” he said. “It is a very financially stable [city]...Other cities and towns look at Cambridge with a lot of envy.”
—Staff writer Samuel E. Liu can be reached at firstname.lastname@example.org. Follow him on Twitter @samuelliu96.
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