ELLSWORTH, Maine — Standard and Poor’s rating service has upgraded the city’s credit rating by two steps from A to AA-, citing Ellsworth’s “continually solid financial performance and very strong financial position.”
The upgraded rating comes as the city prepares to borrow $7 million for a bond anticipation note for the new wastewater treatment plant and could translate into lower interest rates for the city.
“We’re very excited about this,” said Ellsworth City Manager Michelle Beal. “People will look at our rating and, with this rating, there will be more competition for our business. That usually will translate into better rates.”
This is the first time the city’s credit rating has increased by two steps. Beal said Ellsworth’s rating has increased over the past decade or so by a total of two steps.
The change in rating follows an intense review of the city’s financial and economic condition in anticipation of the municipal borrowing. Although the city’s share of the wastewater treatment plant project is a proprietary loan and will be paid back by users’ fees, Beal said, the city will have to borrow the funds first.
In announcing the new rating, Standard and Poor’s noted that in addition to the solid financial performance and strong financial position, the rating also reflects the company’s view of the city’s “stable local economy with a strong commercial presence; increasing tax base with good wealth and income levels; and low debt burden with manageable capital needs.”
Standard and Poor’s noted that retail and commercial growth continue to drive economic development, and per capita retail sales were 378 percent of national levels in 2008, “a level we consider very strong.”
The company’s review cites the city’s solid financial performance, its good financial management practices, and its moderate debt burden, including the planned borrowing for the wastewater plant.
Although the city has done some initial borrowing for the new $36 million elementary school project, the major borrowing for that project will be done once the new Regional School Unit 24 is officially in operation after July 1. The city also may borrow some funds for the planned Route 1A water line extension project, but those funds also will be repaid through user fees, Beal said.