OGDENSBURG — City leadership announced Thursday that the city’s bond credit rating has been upgraded, and they said it’s a “testament to progress and decisive action being taken to save the city.”
Moody’s Investor Service, also known as Moody’s, on Thursday completed its periodic review of the city, and as a result, the bond rating was upgraded to investment grade status of Baa3 from an non-investment grade — or junk bond — status of Ba1. The score is still on the low end of the investment grade scale.
The action affects about $6 million of outstanding debt, according to the report.
“The upgrade to Baa3 reflects a significant turnaround in the city’s financial position as management has worked to restore balanced operations,” the Moody’s report reads. “Governance is a key driver for the rating as previous city management drew down fund balance levels to very minimal levels before a new management team began implementing conservative budgeting practices, which helped generate three consecutive surpluses.”
The bond credit rating represents the credit worthiness of corporate or government bonds — essentially it’s a credit score for a company or municipality.
City Manager Stephen P. Jellie said that the city’s recent budget changes have led to a restoration of “balanced operations,” as well as increased liquidity. He cited some key factors in the credit opinion as they related to the upgrade, which include: reduction of city tax rate — 10% — that reduces the constitutional tax limit; reduction of expenses; reduction of employees; ceasing the use of short-term borrowing to support cash flow; increasing fund balances to “healthy” levels.
“The opinion offers clear insight to the basis for their decision and contains some cautionary notes,” Mr. Jellie said in an email.
The Moody’s report points to the limited ability to raise revenue based on the constitutional tax limit and further notes that the limit, while improved, remains “high amount compared to other local governments in the state,” according to Mr. Jellie. The report further states there’s caution that the city should maintain and/or increase current liquidity levels and avoid material growth in long-term liabilities and fixed costs.
Mr. Jellie said the city is “elated” that Moody’s has recognized the “decisive action” City Council is making, and it’s paying off.
“This increase in credit rating will potentially save the taxpayer’s of Ogdensburg thousands of dollars when applying for credit, and their assessment affirms the positive direction Mayor Jeffrey M. Skelly and City Council majority are moving the city,” Mr. Jellie said in an email. “For too long, the city struggled with high property taxes, crippling long-term debt and imbalanced personnel spending practices.
“Those days are over and the revival of the city is taking shape,” he added.
He offered special thanks for the increased rating to the city’s new comptroller, Angela M. Gray, “for taking charge of restructuring the city’s financial practices and restoring absolute integrity to our business operations.”
Ms. Gray, of Gray & Gray and Associates Certified Public Accountants, Canton, was appointed to the position during the March 24 City Council meeting.
Moody’s Investor Service provides international financial research on bonds issued by commercial and government entities, according to its website.