Framingham Credit Rating Stable, Even After Water-Sewer Deficit

FRAMINGHAM, MA — In Framingham, the coronavirus pandemic has not had a major impact on city revenues but the shift to remote work and the significant drop-off in commercial water and sewer use last year now has residents facing a double-digit rate hike this summer.

The structural deficit of more than $2 million in Framingham's water and sewer fund and the city's plan for a 12 percent water and sewer rate increase beginning July has been previously reported, but last week it caught the attention of the credit rating agency Moody's Investor Services.

The firm assigned a Aa2 rating to the $13.345 million worth of the city's general obligation refunding bonds and said the COVID-19 pandemic was "not a material driver" in its Aa2 rating since the city relies mostly on dependable property taxes as its primary revenue source.

"Although, the pandemic has impacted the city's utility enterprise fund that accounts for water and sewer operations. The fiscal 2020 financial report is expected to reflect a negative $2.5 million fund balance in the utility fund, equal to approximately 5% of operating revenue, due to the dramatic decline in commercial property water and sewer usage during the fourth quarter of the year," Moody's said.

The American Rescue Plan Act recently signed by President Joe Biden will steer $3.4 billion in relief funding to Massachusetts cities, towns and counties to be used for, among other things, water and sewer projects.

But the precise details around what cities can and cannot use the federal money for will not be available for several more weeks.

"What constitutes a water or sewer project or broadband project?" Bharat Ramamurti, deputy director of the National Economic Council, asked lawmakers rhetorically in late March as he explained that federal officials expect a lot of back-and-forth over what cities and towns can use the federal assistance for once the U.S. Treasury released guidelines in May.