ANSONIA — The following statement was released by Mayor David Cassetti’s office Wednesday in response to a Valley Indy question about the city’s new debt rating. Click here for a full story.
The City’s recent bond rating review was triggered by our need to borrow for the new police station.
While the revised bond rating is AA‑, it still leaves Ansonia in the high performing “AA” category. Ansonia is now rated higher than its municipal neighbors Derby and Shelton, which just recently were downgraded below the AA category. Anything in the double A category is solid rating.
The fund balance was purposely reduced in order to put taxpayer funds back in the hands of taxpayers and not just to stockpile the funds. Funds were used to pay for one-time expenses, badly needed infrastructure upgrades and to bolster city services. Some unexpected expenses further reduced the fund balance.
The real good news here is that Ansonia’s cost of borrowing was not impacted. Much to the contrary, the results of the bond sale that necessitated the review were spectacular. The City’s recent sale of 20 year bonds received an interest cost of 2.11%, a historic low, and was actually lower than recent bond sale rates received by much wealthier towns like Norwalk, Stamford and Darien. Ansonia borrowed $5 million for the police station project and secured a 2.11% rate over 20 years. Ansonia outperformed every other community. This is a clear victory for taxpayers and the entire community.
With respect to S&P’s analysis, it is important to note that the priorities of the community are not always identical to the priorities of the rating agency. Would residents prefer a relatively higher fund balance in exchange for higher taxes, or lower spending on education? Ansonia’s financial strategy was tailored to meet the needs of our community first and foremost. This has allowed Ansonia to stabilize taxes, increase funding for city services, and still maintain a very solid bond rating. The Mayor and his administration stand behind this strategy and its results.
That said, the City has set a goal of maintaining undesignated fund balance at 8-10% of the total budget. This is where we are now at about 9%. As explained during the budget season, reliance on the undesignated fund balance has been greatly reduced going forward, which is completely in-line with the S&P comments. The plan has always been to return the reserves to a reasonable level without undue accumulation of tax dollars or overtaxing.
Finally, there is no better measure of the condition of the City then what the market place charges Ansonia to finance its capital projects. So by that measure, we are doing very well.
