The Town has just completed it’s 5-year ratings review conducted by Moody’s, one of the primary credit agencies tasked with ascertaining credit worthiness for municipalities in the Commonwealth, and one of the big three credit rating agencies renown globally (Moody’s;

Standard & Poor’s; Fitch). Municipal credit ratings impact our ability to bond projects and receive favorable rates and indicate to the public a general financial health snapshot as to where the Town’s strengths, weaknesses, and opportunities lie. The Town of Hopedale has remained stable in its Aa3 rating since being upgraded in 2010 from an A2. From Moody’s:

Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.

During the last review conducted in 2019, Moody’s noted in their press release that the Town’s

financial position had “weakened somewhat in recent years,” indicating the possibility for poor

future outlook and potential future downgrade.

Beginning in 2023, Interim Town Administrator Jeff Nutting started to make concentrated efforts to improve the Town’s financial position, and with the support and vote of the Town, was able to pass a substantial override. Continuing that momentum, my administration – directed by the

Selectboard, has worked to improve the Town’s position by: strengthening financial policies and procedures and internal controls; improving our finance team through the hiring of a new

Treasurer/Collector and in-house Accountant; paying off short term Bond Anticipation Notes (BANs) and other debt; implementing medium and long range capital planning; eliminating the use of free cash to balance the operating budget for the first time in more than two decades; fixing a systemic healthcare premium issue that had long been identified as a financial liability; investing in targeted capital projects to maintain the town’s assets appropriately.

Moody’s new Rating Action press release was issued July 25, 2024. 

As the new press release from Moody’s reflects, hard work has begun to pay off; there is no mention of a weakened financial position; rather, the new release states that the town presently has a positive outlook, noting new growth and a liquidity level that compares well to similarly situated municipalities. Specifically, Moody’s 2024 Hopedale scorecard notes:Hopedale’s financial position will remain stable, supported by modest operating surpluses and conservative management practices. New administration has bolstered some of the town’s financial practices, including development of a five-year capital plan and the cessation of using free cash to balance budgets.

This demonstrates that, with the improvements put in place, we are headed in the right direction.

I would specifically like to thank the Town Treasurer/Collector Tom Merolli, Town Assessor Cheryl Hanly, and Town Accountant James Barron who have worked together tremendously over the past months to be able to strengthen and streamline the Town’s financial processes through the aforementioned efforts.

These press releases and scorecards act not only to signal creditworthiness to financial institutions, but also to build trust within the public that appointed municipal officials are working hard to make best use of taxpayer dollars. We understand that the people of Hopedale were asked to make a difficult decision to pass an override; it is now our mission, through improved services and investments back into the community, to demonstrate to them every day that it was a worthy endeavor.

Sincerely,

Mitch F. Ruscitti

Town Administrator

Summary

The Town of Hopedale, Massachusetts’ (Aa3 issuer and GOLT) credit profile is supported by the recent implementation of stronger budgetary practices, which should enable the town to continue balanced to modestly positive operations. The town additionally benefits from some new development and a strong resident base, as evidenced by the high resident incomes and full value per capita. Leverage and fixed costs are manageable inclusive of future capital plans. These strengths help mitigate the town’s relatively low reserve levels and somewhat limited operational size.

Credit strengths

» High resident incomes and full value per capita

» Manageable leverage and fixed costs

» Conservative budgetary practices

Credit challenges

» Reserves below similarly-rated municipalities

» Somewhat limited operational size, net Board of Education activities

Rating outlook

Moody’s does not assign outlooks to local governments with this amount of debt outstanding.

Factors that could lead to an upgrade

» Maintenance of available fund balance in excess of 30% of revenue

» Reduction in long term liabilities

Factors that could lead to a downgrade

» Operational imbalances resulting in reserves falling and remaining below 10% of revenue

Bureau, Hopedale (Town of) MA’s financial statements and Moody’s Ratings, US Bureau of Economic Analysis

Profile

The town of Hopedale is located in Worcester County in southeastern Massachusetts, approximately 30 miles southwest of Boston.

Detailed credit considerations

The local economy of Hopedale will remain stable, supported by new development and strong resident incomes. A new distribution warehouse and storage unit complex will be added to the town’s tax rolls in 2025 and 2026, with the warehouse alone projected to increase revenue by $1 million. There’s also a former mill site that is ready for development that has garnered interest. Residential development is limited, constrained by the town’s small geographic size of five square miles. Population is stable and resident incomes typically exceed 150% of the US median, reflecting a strong foundation for town operations.

Hopedale’s financial position will remain stable, supported by modest operating surpluses and conservative management practices. Newer administration has bolstered some of the town’s financial practices, including development of a five year capital plan and the cessation of using free cash to balance budgets. At the close of fiscal 2023, per the town’s draft audit, the town held $4.2 million in available fund balance, equal to 10.3% of revenue. This represents a year-over-year decline of $1.5 million that is entirely attributable to a deficit unassigned position among nonmajor governmental funds as opposed to an operational imbalance. The town achieved modest surpluses across all of its governmental and business-type (water and sewer) funds.

Preliminary estimates for fiscal 2024 show a $645,000 positive variance in revenue to expenditures, which management will put towards its reserves, including its capital stabilization fund. Revenue growth from new development is projected for 2025; there were

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the issuer/deal page on https://ratings.moodys.com for the most updated credit rating action information and rating history.

No significant changes in expenditure composition as compared to prior budgets. In addition to eliminating free cash appropriations in budgets, the town also includes a $30,000 contingency reserve for overruns that has gone unutilized so far.

Hopedale’s leverage is manageable as future issuances are fairly limited. The town has about $6 million in unissued authorization that will finance water treatment plant PFAS remediation upgrades and land conservation projects. Management typically adds a 12% to 15% contingency to its capital project estimates to account for any market changes or overruns, providing further insulation of the town’s financial and debt position.