The City of Batavia's financial health is looking a lot better, according to Moody's Investor Services.
The bond-rating agency recently upgraded the city to A1, which not only makes it cheaper for the city to borrow money, if needed, but it's also a vote of confidence and affirmation that the city's financial outlook is improving, City Manager Jason Molino said.
"Moody's bond-rating agency downgraded the city in 2005 and the upgrade says we're on the right path," Molino said.
From the upgrade memo:
Moody's expects the city's financial position to improve as of the close of fiscal 2012 given the city's practice of conservative budgeting of both revenues and expenditures. In previous years, the city had failed to maintain a balanced budget and accumulated a General Fund balance deficit, topping $1 million at the close of fiscal 2007, necessitating several years of issuing revenue anticipation notes. A new management team came in and generated four consecutive years of operating surpluses through conservative budgeting, increasing revenues and controlling expenditures.
Last fall, Moody's issued a "positive outlook" report for the city, but did not upgrade the bond rating.
Moody's said the city's strengths are management's ability to restore fiscal health and Batavia's proximity to employment centers.
The city's weakness is "Limited tax base with below-average wealth levels."
In order for the city's rating to go up even further, the city must improve reserves and liquidity and increase the city's socio-economic profile.
The rating could be hurt if the fund balance declines and the city's socio-economic profile declines.
Batavia's median family income is 74.4 percent that of the rest of New York, a ranking Moody's believes needs to improve.
While the city currently carries $7.5 million in debt, Moody's found this amount modest compared to property value of $535.8 million and overall annual revenue.
Moody's anticipates the city's average direct debt burden of 2.0 percent of full valuation to remain stable given the absence of major borrowing plans. Debt service is modest, accounting for 5.1 percent of fiscal 2011 expenditures. No borrowing is expected over the next two years.
"This lays the foundation for us to earn some of the trust back from the public," Molino said. "What's happened over the past several years, because of the finances, that's been lost a little bit. This builds on what it's going to take to stabilize our local economy over the long term."
