The recent approval of plans to sell Pension Obligation Bonds did not adversely impact the town’s bond rating as Moody’s and Standard & Poors have both reaffirmed the Town of West Hartford’s top rating.

By Ronni Newton

The Town of West Hartford plans to sell $17 million of General Obligation Bonds on March 2, and in advance of that has received reports from both Moody’s Investor Services and Standard & Poors with both agencies once again assigning their highest ratings along with a “stable” outlook.

Standard & Poors uses “AAA” while Moody’s uses “Aaa,” but both denote a top rating, indicating a very low risk to lenders. Less than 1% of municipalities nationwide earn the top rating from both agencies, and West Hartford, which has maintained the triple-A rating since 1974, is one of very few that has maintained the top rating for decades.

The top rating provides municipalities with the opportunity to secure the best possible interest rate when selling bonds because they are considered the lowest risk to lenders.

General Obligation Bonds are used to finance capital projects such as road construction, storm water management, park improvements, capital improvements to town and school buildings, and investment in financial management, rolling stock, and technology.

When the Town Council approved the sale of Pension Obligation Bonds in combination with a reserve fund in January as a strategic financing plan to take care of unfunded pension liabilities, there was discussion about the possibility of the action resulting in a temporary downgrade by one or both of the rating agencies, but Peter Privitera, the town’s chief financial officer, said at the time that even if that happened, the overall cost savings would far outweigh the potential impact.

Privitera said in January that he was confident that the town’s “conservative process” and approach of combining the sale of POBs during a time of historically low interest rates, investing proceeds using dollar cost averaging over the next six to eight quarters, and establishing the $27 million pension bond reserve fund to guard against future economic downtown, would be well-received by the rating agencies – and that proved true.

“This is great news for West Hartford,” Privitera said. “The affirmation of our AAA credit ratings with a stable outlook by both Moody’s and Standard & Poors is a recognition of sound financial management, along with positive fiscal and economic attributes the town possess. These ratings will allow the town to sell bonds at very low interest rates resulting in future savings.”

“The Aaa/AAA credit ratings from both Moody’s and Standard & Poor’s reflects West Hartford’s solid economic health, growing tax base, booming economic development, sound and conservative financial strategies, its experienced management team, and long range plans for infrastructure improvements, all desirable factors to the credit rating agencies,” Town Manager Matt Hart said.

Mayor Shari Cantor also said she was pleased, as well as proud, that West Hartford has retained the prestigious top rating and that the town’s “strong and solid fiscal strategies and management” have been reaffirmed.

“West Hartford’s economy is strong. We see investments throughout our town,” Cantor said. “In 2020, despite the obstacles created by the COVID-19 pandemic, there were 51 new businesses that opened and another 10 that are in the pipeline. In addition, four major residential projects are underway. Twenty-six units at Residences at Berkshire Road, 294 units at One Park, 52 units at 540 New Park, and 25 units at Ringgold Estates. Home values remain strong and West Hartford is the town many people are relocating to from nearby major cities.”