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Bedford’s bond rating falls

Debt burden cited as issue for town

By Deirdre Fernandes
Globe Staff / December 29, 2011
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A new high school, a renovated Town Hall, and upgraded streets have given Bedford a face-lift in recent years. But they may have also cost the town its standing with Moody’s Investor Services Inc., which downgraded Bedford’s bond rating last month.

Moody’s knocked Bedford down a notch, from its list of top-tier, AAA-rated communities in Massachusetts, to Aa1, citing its higher borrowing among other issues.

The rating agency faulted the town for “an above average debt burden,’’ and for dipping into its reserves to pay for daily operations in fiscal year 2010.

“The downgrade to Aa1 primarily reflects the town’s recent structurally imbalanced budgets, which have decreased reserves, an above average debt burden, and a large, wealthy tax base that has experienced recent declines,’’ Moody’s stated in its opinion notice.

Bedford officials said they were disappointed by Moody’s decision, but dismissed the downgrade’s impact.

“We’re not happy with what they rated us,’’ said Victor Garofalo, Bedford’s acting finance director. “It took us by surprise.’’

Town officials instead focused on Standard & Poor’s, which is Bedford’s primary rating agency and still ranks the town AAA.

“We were reaffirmed with S&P,’’ Garofalo said.

He doesn’t expect Moody’s downgrade to cost the town any additional money in higher interest rates. Bedford currently has $86 million in debt; much of the money has been borrowed to pay for building upgrades and improvements to the town’s water infrastructure, Garofalo said.

Bedford was initially among one of about a dozen top-rated Massachusetts towns and school districts that Moody’s put on a watch list last summer, based of their dependence on shaky government funding.

Moody’s reaffirmed the AAA-rating for all of the Massachusetts entities this month, with the exception of Bedford.

Moody’s assessment doesn’t reflect Bedford’s economic standing, said Tom Busa, chairman of the town’s Finance Committee.

“Overall, the town is in stable and good shape,’’ Busa said.

The economic downturn has forced Bedford and many other municipalities to tap into reserves to balance their budgets, but that’s what the money is there for, Busa said.

Bedford used $5.1 million from its reserves to balance the fiscal 2010 budget, and wasn’t able to fully replenish the money. According to the town’s financial reports, Bedford had $2.2 million in reserves left in its general fund budget by the time fiscal year ended.

But in fiscal year 2011, which ended June 30, the town’s unassigned reserves grew by $1.2 million, Garofalo said.

Deirdre Fernandes can be reached at deirdre.fernandes@ globe.com.

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