GREAT BARRINGTON — Due to strong and continued economic growth, the town of Great Barrington's bond rating has been upgraded to AAA, the highest rating that a city or town can receive.
Great Barrington is the first community in Berkshire County to receive a AAA bond rating from Standard & Poor's Global Ratings, according to Town Manager Jennifer Tabakin.
The town's previous bond rating was AA+, which is one notch below AAA, according to Standard & Poor's.
"This credit rating was achieved through years of hard work by the entire Great Barrington team," Tabakin said in a statement.
A bond is a debt investment in which an investor loans money to any entity, usually a corporate or governmental body, which borrows the funds for a defined period of time at a variable or fixed interest rate, according to Investopedia.
These investments are frequently used by municipalities to raise money and finance different projects. The owners of bonds are considered to be the debtholders of the issuer.
A bond rating is a rating given to bonds that indicates their credit quality, according to Investopedia. An entity that obtains a AAA rating has "extremely strong capacity to meet its financial commitments," according to Standard & Poor's.
The town's upgraded bond rating reflects Standard & Poor's opinion of the town's continued economic growth and its historically strong budget performance, which has led to the maintenance of very strong reserves of, at least, 25 percent expenditures over the past five fiscal years, according to a report on the town's finances that was obtained from Standard & Poor's.
"We consider Great Barrington's economy strong," the report states.
High marks were also given to Great Barrington's management — "very strong," the report states — and the town's budgetary performance.
Standard & Poor's found Great Barrington to be creditworthy in several other areas, including budgetary performance, budgetary flexibility, liquidity, and its debt and contingent liability position.
According to the report, Standard & Poor's projects Great Barrington's per capita buying income at 120 percent of the national level and a per capita market value of $203,854.
In budgetary performance, Standard & Poor's found Great Barrington to have balanced operating results in its general fund and an operating surplus at the total governmental level in fiscal 2015.
It also found the town has the "flexibility" to raise additional revenue despite commonwealth-wide tax caps. The town's overall net debt is less than 3 percent of market value and rapid amortization, with 76.3 percent debt to be retired within 12 years. Amortization is a term used to describe the ability to pay off debt with a fixed repayment schedule in regular installments over a certain time period.
"I am extremely proud of this major accomplishment," said town Financial Coordinator Lauren Sartori Hobgood. "This rating publicly validates that Great Barrington is well-managed, has strong financial policies and best practices, and is in excellent financial health."
Contact Tony Dobrowolski at 413-496-6224.