PROVIDENCE – Following recent payment-in-lieu-of-tax agreement negotiations, the city received an improved mark on its Fitch General Obligation Bonds rating, rising from an A to an A+ designation.
The rating, which city officials announced on Nov. 1, measures a government, corporate, public, financial, leasing or sovereign entity's ability to meet financial commitments.
In a statement, the city attributed the upgrade to "strong financial management and consistent improvement in finance and reserve levels," noting that the Fitch report observes that Providence' improved this metric from negative levels in fiscal 2016 to 5.3% of spending for fiscal 2023.
The Fitch report also highlights Providence's "recent negotiation of payment-in-lieu-of-tax agreements with various tax-exempt institutions within the city," which the global financial services company anticipates "will support new revenue growth, helping to offset future increases in the operating budget."
Last month, the city announced a proposed PILOT agreement that would require Lifespan Corp. to provide Providence with $1.5 million in voluntary financial contributions throughout the next three years. The agreement is set to result in the health care system's first voluntary payment to the city in three years, and its largest annual contribution since 2014.
Providence also entered a 20-year PILOT agreement with its four private higher education institutions – Brown University, the Rhode Island School of Design, Providence College, and Johnson & Wales University – in fall 2023, and has an ongoing agreement with Care New England.
The city also entered a 20-year PILOT agreement with its four private higher education institutions – Brown University, the Rhode Island School of Design, Providence College, and Johnson & Wales University – in fall 2023, and has an ongoing agreement with Care New England through fiscal 2025.
“We have worked diligently to balance our financial operations while making strategic investments in our city’s future," Providence Mayor Brett P. Smiley said in a statement. "Our recent rating upgrades are a testament to our responsible fiscal management, positioning our city for long-term success and lower interest costs.
"We will continue to focus on making responsible investments that strengthen our financial position and benefit all Providence community members, ensuring a stable and prosperous future for our city," Smiley continued.
Jacquelyn Voghel is a PBN staff writer. You may reach her at Voghel@PBN.com.
