HARPSWELL — The town is now one of only eight in the state to receive the highest bond rating from Standard & Poor’s.

The town got a AAA rating for $3.5 million in general obligation bonds it will issue for the Mitchell Field pier demolition. Moody’s Investors Service, the second agency to evaluate Harpswell, gave the town an Aa2 rating, which is equivalent to S&P’s AA, or second-highest, rating.

The contract for the $3 million demolition was reduced by $125,000 in December. The demolition began in January and is slated to be complete by September, although the contract with Reed & Reed allows for work through May 2019. 

The bonds were priced on March 20 at an interest rate of 2.9 percent and will close April 6.

The ratings are a fundamental way for investors to form an opinion on whether they are likely to be repaid, and then decide whether the interest rate is high enough to compensate for the risk they may get back none or only a portion of their investment. The ratings also effectively set benchmarks for how much interest the town will have to pay; the higher the rating, the lower the interest rate.

S&P rated Harpswell higher than the U.S., according to its ratings summary, which said “we believe Harpswell can maintain better credit characteristics than the sovereign in a stress scenario based on its predominantly locally derived revenue base.”

The document also said that in fiscal year 2017, local property taxes generated 94 percent of town revenue, which the company said “demonstrated a lack of dependence on central government revenue.”

At the March 14 Board of Selectmen meeting, Treasurer Marguerite Kelly said the only other Maine municipalities with a AAA rating are Bar Harbor, Cape Elizabeth, Falmouth, Freeport, Kennebunk, Raymond, South Portland and York.

“When this came through it was really excellent news,” Kelly said. “I think it’s important to recognize the (town) staff, how much time we put into this.”

She added the cooperation of local businesses, Region 10 Technical School, Harpswell Coastal Academy and School Administrative District 75 was helpful during the evaluation process.

Dolphin Marina & Restaurant, Great Island Boat Yard, R.A. Webber & Sons and Cook’s Lobster House were listed on the application as representative employers of the town.

Kelly said all of the businesses and each of the schools involved were “extraordinarily responsive.”

Harpswell was rated by S&P in seven categories: economy, management, budgetary performance, budgetary flexibility, liquidity, debt and contingency liability profile, and institutional framework. 

The town was rated “very strong” in three of the categories, and “strong” for its institutional framework, budgetary performance and management.

Chairman Rick Daniel echoed Kelly’s appreciation for staff and all involved. He added he thinks the town’s proactive attention to issues such as sea level rise through work with FEMA and its Conservation Commission “really played a significant part in weighing this out.”

“It was a very interesting process, and it wouldn’t have happened without the town already being the town that it is, (and) the things it’s looking after and looking out for,” Daniel said.

Elizabeth Clemente can be reached at 781-3661 ext. 100 or eclemente@theforecaster.net. Follow Elizabeth on Twitter @epclemente.

Harpswell Town Office

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