AVON — Town Administrator Gregory S. Enos is pleased to announce that the Town of Avon has received a AA+ bond rating from Standard and Poor’s Global Ratings.
The AA+ rating is the second highest bond rating available and reflects the high quality financial condition/low credit risk of the Town.
“Avon enters the national recession triggered by the outbreak of COVID-19 with very strong budgetary reserves and flexibility, and improved financial management policies,” the official S&P ratings report reads. “Supporting the long-term rating are the town’s consistent economic growth and positive operating results over the past two years.”
The report notes significant uncertainty around revenue shortfalls and potential state aid cuts resulting from COVID-19 that could weaken towns’ performances heading into fiscal year 2021, but noted that management in Avon has already taken measures to cushion the effects of potential shortfalls and has additional measures at its disposal that the Town could implement should significant cuts happen.
Lending further stability to the rating and the outlook is the town’s very strong liquidity and stable revenue mix, the report notes, with the predominant revenue stream being property taxes, which have historically been collected upward of 99% during the fiscal year.
The rating highlighted many aspects of the Town’s financial outlook, including:
- A very strong economy
- A strong budgetary performance, with operating surpluses in the general fund and at the total governmental fund level in fiscal 2019
- A very strong budgetary flexibility
- A very strong liquidity, with total government available cash at 46.2% of total governmental fund expenditures and access to external liquidity that is considered strong
- A strong institutional framework score
“This very strong bond rating is a testament to the planning and dedication of our financial management team,” Town Administrator Enos said. “Despite the challenges that the COVID-19 pandemic has brought to cities and towns across the state, we feel we are in a solid position moving forward knowing our financial stability is as strong as it is.”
The refinancing of two bonds allowed the Town to lower its current interest rates, while also using $1.3 million of free cash voted at Town Meeting in June to lower debt obligations.
These two items will save the Town more than $1,442,909 over the life of the remaining nine years of the bonds. It will also lower the Town’s annual debt payments by $240,000 for fiscal year 2021, which is important during the pandemic to allow the Town to not cut any services.
“This rating allows the Town to better strengthen our finances and assist with any future borrowing projects,” said Avon Treasurer/Collector Debra Morin. “It made sense to refinance two bonds from 2006 and 2007 to the lower current interest rates and use some free cash to reduce debt, which will help us going forward with future borrowing projects.”