S & P Affirms Melrose's AA+ Rating

Standard & Poor’s has affirmed Melrose’s AA+ bond rating once more, with a stable outlook, meaning they do not expect the rating to change in the next two years.

Melrose has moved from a negative outlook to A+ in 2003, to AA- in 2008, and to AA+ in 2013.

In affirming the AA+ rating, the Standard & Poor’s analysts cited the following:

Very strong economy: Melrose is an affluent community with direct access to employment centers in Boston, Cambridge, and other communities. The city’s market value grew by 8.7% over the past year to $5.3 billion. The report also cited development and economic initiatives such as the medical marijuana facility and rezoning near transit stations to allow for smart growth. “Due to these and other various economic developments, backed by a healthy real estate market, expanding tax base, and access to the Boston [metropolitan area], we expect the city’s economy will likely remain strong,” the report concluded.

Strong management, with good financial policies and practices: “Highlights include management's conservative budget assumptions and regular monitoring of budget performance with monthly reports on budget-to-actual results to the [City Council]” the report noted, adding that the city manages reserves in accordance with its stated policy and that it is in the process of completing its Capital Improvement Plan.

Strong budgetary performance: Melrose’s budgetary performance is strong and produced an operating surplus. This results from conservative estimates of both revenues and spending. The city’s finances have been stable for at least the last three years, and that is expected to continue.

Strong budgetary flexibility: Melrose maintains stabilization reserves of 5% of the budget. The report also noted that the FY 2020 budget does not anticipate using budget reserves for operations. Budgetary flexibility is likely to remain strong because of the passage of the $5.2 million override earlier this year.

Strong debt and contingent liability profile: Melrose’s debt management program is strong. Total debt payments are 5.4% of total spending, overall net debt is low, and 78.2% of direct debt is scheduled to be repaid within 10 years.

The report reached the following conclusion: “The stable outlook reflects our view of Melrose's very strong economy and stable financial operations, which have led to strong budgetary flexibility and a very strong liquidity profile. Although we expect rising retirement costs to continue to pressure the budget in the long term, we believe management will continue to make the necessary budgetary adjustments to maintain balanced operations. Therefore, we do not expect to change the rating within the two-year outlook horizon.”

“I am very pleased with this report, which confirms what I already knew: That our CFO and our department heads are managing our finances in accordance with best practices,” said Mayor Gail Infurna. “I want to commend our Chief Financial Officer, Patrick Dello Russo, for his sound management of our city’s finances.”