Andover wins top bond rating

Town’s debt service, growth potential cited

By Jerry Taylor, Globe Staff, 1/21/2001

NDOVER - The town’s bond rating has been raised a notch, to triple-A, by Moody’s Investors Service, only the 11^th municipality in Massachusetts so honored and the first in the Merrimack Valley.

Moody’s highest rating, bestowed in recognition of the town’s “aggressive pay-as-you-go approach” and potential for continued growth, means Andover will save nearly $1 million in interest costs on its $73 million in construction projects for new schools, a new public safety center, and sewers.

Reginald Stapczynski, Andover’s town manager, said he believes other Merrimack Valley communities will gain from the town’s good fortune.

“Our growth has benefited others, because every company that comes knocking on the door that we can’t accommodate, we send to Methuen, Lawrence, Haverhill, Lowell,” Stapczynski said. “An executive of a manufacturing company with a 100,000-square-foot plant elsewhere in the valley came in a few weeks ago asking to build 150,000 square feet in Andover. We simply don’t have that kind of space here. I referred him to Bill Luster,” Lawrence’s planning director.

Andover, its bond rating upgraded last month, joins an elite group: Belmont, Brookline, Cambridge, Concord, Lexington, Newton, Wayland, Wellesley, Weston, and Winchester are the others with Aaa ratings from Moody’s.

The 11 communities represent just 4.3 percent of the 254 Massachusetts municipalities rated by Moody’s. Nationwide, of the 3,271 cities and towns rated by Moody’s, 81, or 2.5 percent, have an Aaa rating.

“When Moody’s analyzes a town, it looks at the economics, the finances, management, and the debt,” said Allan Tosti, chairman of Arlington’s Finance Committee, who works at Fleet Bank advising municipal officials preparing bond issue proposals.

“The economy is the biggest factor, and there’s only so much you can do with it. What matters is your ability and willingness to pay debt service on time. Status and prestige go with a high rating, but just because you have a low-rated community doesn’t mean you’re not well-managed. Andover is blessed. Not only is the town at the corner of [interstate] routes 495 and 93, but town fathers long ago set aside a lot of land with access to those roads as industrial parks.”

Tosti and Andover’s finance director, Anthony Torrisi, agreed Andover’s Aaa rating and Arlington’s Aa2, Moody’s third-highest, could be translated into 10 or 15 basis points on debt interest.

“If Andover is at 4.75 percent,” Tosti said, referring to interest on bonds, “we’d be at 4.85 or 4.90 for a 20-year-issue.”

“It’s been phenomenal,” Torrisi said of the growth in town revenues, reflecting both high-end commercial construction and home-building as well as rising property values, which have pushed total assessed valuations up 26 percent since 1998, to $4.3 billion, and the average residential property bill in Andover to $4,000.

“We’ve averaged $1.5 million a year in additional tax revenue the last eight years,” Torrisi went on. “It was $1.8 million in 1999, $1.7 million in 2000, and $2.0 million this tax year. And we’ll be saving close to a million because of the upgrade.”

In addition to Raytheon and Gillette, Andover’s other top-drawer companies include Putnam Investments and CMGI. The town has four hotels, with two more planned.

“The Merrimack Valley was always considered the birthplace of the Industrial Revolution in America,” said Stapczynski, town manager since 1990.

“But it never had the glitz of computer technology of Route 128 and metro west, or the benefits of that technology, the solid industrial growth and tax base. We were able to show the Moody’s people that we have high-end growth as well. It’s not simply heavy manufacturing, but biotech, biomed, biopharmaceutical, financial services, Internet giants. The challenge is to keep the growth going and to make sure it happens in other places, too.”

Andover is embarking on its $73 million in public improvements - $14 million for the police-fire center, $33 million for a new middle school and elementary school, and $26 million for sewers in the southern section of town - after voters exempted the borrowing from the limits of Proposition 21/2.

Voters in 1994 made the same decision regarding $42.5 million for expanding and renovating Andover High School and two elementary schools. The state is footing 60 percent of all school construction costs, including interest, and property-owners will pay for their new sewers.

“When a community steps up to the plate and excludes these amounts from Prop. 21/2, it shows a commitment to these projects,” the town manager said.

Stapczynski is quick to share credit for Moody’s accolades with Andover’s collector-treasurer, David Reilly, its chief assessor, Bruce Symmes, planning director Steve Colyer, management analyst Peter Johnson Staub, and town accountant Rod Smith.

The spacious atrium at Andover High, with a 40-foot vaulted ceiling, from which hang yellow and blue banners, is an example to the town manager of an amenity that Andover’s tight-fisted management has made possible.

“You walk in and there’s this grand open space,” Stapczynski said. “It was designed that way. They sell tickets and soft drinks at basketball games. Cheerleaders work out there. After school, it’s a meeting place.”