Moody’s Investment Services Upgrades City of Framingham

FRAMINGHAM – Moody’s Investors Service has revised the City of Framingham, outlook from negative to stable. The Service also has affirmed the city’s Aa2 issuer rating on outstanding bonds.

“The outlook revision to stable is driven by fiscal 2022 and 2023’s improved operations and the expectation that the city’s strong and diverse economy will continue to bolster the credit profile supporting ongoing improvement in the city’s financial position and the city’s ability to manage its long-term liabilities,” said Moody’s

“The Aa2 issuer rating reflects the city’s strong economy and sizeable tax base that includes a large commercial and industrial sector. Framingham’s resident income and full (equalized) value per capita are above-average and in line with the rating category. The rating also incorporates a recovering financial position that has reduced its use of reserves to balance the operating budget, raised utility fees, and stabilized reserves and liquidity,” said Moody’s

“The city’s available reserves and net unrestricted current assets at the end of fiscal 2022 totaled almost $62 million representing 14.3% of revenue. While the nominal amount is large, the amount as a percent of revenue is the lowest of any Aa2 rated city or town in Massachusetts,” said Moody’s

“The stable outlook reflects the strength of the city’s economy and expectation that the tax base will continue to grow and provide the city with sufficient operating flexibility to maintain a stable financial position and gradually increase reserves while maintaining manageable long-term liabilities and fixed costs,” said Moody’s.

Moody’s said factors that could lead to an upgrade of the rating include:

• Significant increase in reserves as a percent of revenue to at least 35% of revenue
• Material growth in city income and wealth metrics

 Moody’s said factors that could lead to a downgrade of the rating include:

• Decline in available reserves as a percent of revenue to less than 12%
• Decline in commercial/industrial/personal property (CIP) tax base value in 2025 or 2026
• Large increase in leverage and a fixed costs ratio of 18% or greater

Interim Chief Financial Officer Jennifer Pratt worked hard with Moody’s to secure the better rating for the City, said Mayor Charlie Sisitsky last week to the City Council.