Chelsea earns strong credit rating
By EMILY SPARACINO / Staff Writer
CHELSEA – The future looks bright for Chelsea, based on the city’s most recent credit rating.
Chelsea received a AA rating and stable outlook from Standard & Poor’s Ratings Services for 2015.
The city’s new rating increased from AA-minus to AA.
“That’s very good for a city of our size,” Chelsea Mayor Earl Niven said during a City Council meeting on March 17. “We took it a notch up.”
The rating reflects Standard & Poor’s assessment of factors including strong economy, very strong budgetary flexibility, strong budgetary performance, very strong liquidity, adequate management conditions, adequate debt and contingent liabilities, strong institutional framework and outlook.
Regarding strong economy, the assessment noted Chelsea’s population has grown from about 3,000 in 2003 to about 12,000 today.
“Representatives attribute the sizeable growth to the city’s availability of land for home development and its proximity to Birmingham,” a report read. “Income levels (are) strong, evidenced by median household and per capita effective buying incomes at 137 (percent) and 117 (percent) of the national level, respectively.”
The report stated the city has maintained very strong reserve levels for several years.
“Per audited results for fiscal 2013, the city’s fund balance totaled $1.1 million or 23.4 (percent) of operating expenditures,” the report read. “For the foreseeable future, management anticipates reserve levels to remain in line with the city’s informal target of three months operating expenditures.”
In the past three audited years, Chelsea has posted operating surpluses, and tax receipts remain the major source of revenue and account for about 77 percent of total general fund revenues in the 2013 fiscal year, according to the report.
City officials also adhere to financial management policies, and “management and elected officials have monthly meetings to review the budget and the city maintains an informal fund balance target of three months’ operating expenditures.”
“The stable outlook reflects our view of Chelsea’s strong financial profile,” the report read. “We do not expect to revise the rating over the next two years because we believe the city’s management team will remain committed to maintaining the existing financial position.”
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