Report says Nashua is in strong financial shape
NASHUA - It has been more than a year since the city issued about $150 million in bonds to acquire Pennichuck Corp., yet Nashua's financial status remains strong, according to a new report just published.
Fitch Ratings has assigned its AAA rating - the highest possible - to the city of Nashua for its 2013 general obligation bonds and existing debt.
"I am very pleased, and so is the mayor," City Treasurer David Fredette said on Monday. "This is our third or fourth year we have received this rating from Fitch."
The report, published Thursday by Fitch Ratings, part of the Fitch Group Inc., indicates that Nashua has a diverse local economy, low debt levels and good wealth indicators with strong financial management practices. The five-page document specifically mentions the acquisition of the private water utility.
"The city's debt burden, including the series 2012 Pennichuck acquisition bonds, is moderate to high, but taking into account the self-supporting nature of the Pennichuck acquisition bonds and state grants for school debt, debt levels are low," says the public financial report.
Fredette said Pennichuck provides the city with monthly payments, and that one year after the acquisition, the city's finances are still very strong. Pennichuck provides the city with $8.8 million in annual debt service payments.
The newest financial analysis was requested since the city will be selling about $21 million in outstanding bonds within a week, according to Fredette, adding about $13 million of the bonds are from the wastewater treatment plant and the remaining $8 million in general fund bonds are from multiple city projects.
"Nashua and New Hampshire have been better off than most of New England during the recession," said Fredette. "We have definitely seen a slow comeback in this area."
The report agrees, stating that Nashua's economy continues to see growth and development, describing the community as a key center within the state for business and government. According to the document, Nashua's management team has made appropriate spending cuts to adequately address rising employee costs and maintain strong fund balances in light of voter-approved spending limitations.
"The city's demographics are generally positive, with wealth levels exceeding both state and national averages," says the Fitch Ratings report, which indicates Nashua has 86,704 residents - about the same as in 2000.
Although there was good news to report, there were a few negative assessments, including existing unemployment levels.
According to the report, the city's unemployment levels increased from 5.7 percent to 6.1 percent at the end of 2012.
Fiscal 2012 results were positive, says the document, which indicates that the city ended the year with a $3.7 million net operating surplus after transfers.
"A combination of better revenues across many areas and lower departmental costs due to conservative budgeting contributed to the surplus. The city's unrestricted fund balance rose to $49 million, or a strong 21 percent of general fund spending," it says.
The report also mentions the city's fiscal 2014 budget, which Mayor Donnalee Lozeau will present to the Board of Aldermen early next month.
While the budget is still in its preliminary stages, the document states that the city's budget cap is 2.3 percent, and that city management has indicated to Fitch that it intends to stay within the cap and not seek an override.
"To help achieve this budget, city department heads and the school district have been asked to cap expenditure growth at 1 percent, and another moderate property tax increase will likely be proposed," it says.
The financial report also mentions Nashua's tax-free shopping perks, with continued development at the city's two industrial parks.
"The city has emerged as a regional center for medical services, and is home to a diverse group of international companies including Oracle, Dell, Fidelity Investments and BAE Systems," says the document.