Fitch Ratings has assigned an 'AA' rating to the city of
Boston's approximately $80 million general obligation (GO) bonds, 2006
series A. The bonds are scheduled to sell via competitive bid on Jan.
18. Fitch affirms its 'AA' rating on about $809 million in outstanding
GO bonds, its 'AA-' rating on about $108 million in special obligation
refunding bonds (Boston City Hospital Issue) series 2002, and its
'F1+' rating on $96 million in bond anticipation notes (BANs) due Feb.
1, 2006. The BANs are expected to be redeemed with Massachusetts
School Building Assistance funds. The city also has authorization to
roll over the BANs. The Rating Outlook is Stable.
The 'AA' rating reflects Boston's strong financial management and position, low debt burden with rapid amortization, and diverse economic base. Financial flexibility is evident in strong reserve levels and the maintenance of an ample cushion under the Proposition 21/2 ceiling, the state-imposed property tax limitation. Effective capital planning and management and high tax base growth should keep the city's debt burden manageable. Credit concerns include continued job losses within the city and sizable retiree benefit costs.
Despite a recent negative trend in employment levels, Boston's long-term economic prospects remain sound. The city is a national leader in higher education and medical research, supported by diverse academic and corporate institutions. Major public investments in regional infrastructure, including the nearly complete central artery, are generating significant private interest that should be of lasting benefit to the city. Even with an estimated 4% loss in jobs from 2002-2004, the city's unemployment levels remain either at or below the national averages, reflecting the job opportunities in the larger region. Per capita income is above national averages. Office vacancy rates are among the lowest for the major urban markets, and hotel occupancy and room rates have started to recover from post-Sept. 11 levels.
The city's financial stability is a result of tight expenditure controls and healthy property base growth. The city maintained steady growth in reserve levels, with a fiscal 2005 general fund undesignated fund balance of $415 million, or 22% of expenditures and other uses. The city's fiscal 2006 budget reflects a 6.2% increase over fiscal 2005's, includes reasonable revenue estimates, and incorporates the spending impact of collective bargaining contracts settled last year.
Boston's debt service is manageable and within the city's target of 7% of fiscal 2005 spending. Overall debt is $1,830 per capita and 1.4% of market value. Amortization is above average, at 72% in 10 years. The five-year capital plan is manageable and keeps debt levels well within policy limits.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
The 'AA' rating reflects Boston's strong financial management and position, low debt burden with rapid amortization, and diverse economic base. Financial flexibility is evident in strong reserve levels and the maintenance of an ample cushion under the Proposition 21/2 ceiling, the state-imposed property tax limitation. Effective capital planning and management and high tax base growth should keep the city's debt burden manageable. Credit concerns include continued job losses within the city and sizable retiree benefit costs.
Despite a recent negative trend in employment levels, Boston's long-term economic prospects remain sound. The city is a national leader in higher education and medical research, supported by diverse academic and corporate institutions. Major public investments in regional infrastructure, including the nearly complete central artery, are generating significant private interest that should be of lasting benefit to the city. Even with an estimated 4% loss in jobs from 2002-2004, the city's unemployment levels remain either at or below the national averages, reflecting the job opportunities in the larger region. Per capita income is above national averages. Office vacancy rates are among the lowest for the major urban markets, and hotel occupancy and room rates have started to recover from post-Sept. 11 levels.
The city's financial stability is a result of tight expenditure controls and healthy property base growth. The city maintained steady growth in reserve levels, with a fiscal 2005 general fund undesignated fund balance of $415 million, or 22% of expenditures and other uses. The city's fiscal 2006 budget reflects a 6.2% increase over fiscal 2005's, includes reasonable revenue estimates, and incorporates the spending impact of collective bargaining contracts settled last year.
Boston's debt service is manageable and within the city's target of 7% of fiscal 2005 spending. Overall debt is $1,830 per capita and 1.4% of market value. Amortization is above average, at 72% in 10 years. The five-year capital plan is manageable and keeps debt levels well within policy limits.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.