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Mayor David Cassetti pitches the WPCA sale to residents in a video from April 2024.
ANSONIA – The City of Ansonia is relying on the sale of its sewer system to keep its financial position afloat, according to a report from a global bond rating agency.
In a report dated Dec. 5, S&P Global Ratings announced that it was revising Ansonia’s debt outlook from “stable” to “negative” – meaning that, if the city’s financial direction stays the same, its bond rating could be downgraded.
A bond rating is a measure of a city’s financial health. It affects interest rates whenever a city borrows money – the stronger the rating, the lower the interest rate.
The report says that Ansonia produced operating deficits for the last two years, and that it is planning to pay for regular expenses using the proceeds from a one-time sale.
“Ansonia produced operating deficits in fiscal years 2022 and 2023 and plans to use one-time revenues from the $41 million sale of its wastewater assets to fund operations in fiscal years 2025 through 2030, primarily because expenditures have grown faster than the tax levy and other revenue sources,” the report says.
The report also cites the city’s entry into a $37 million lease-purchase agreement for fuel cells as a reason for the revision.
“We could lower the rating if Ansonia does not make meaningful progress toward eliminating its reliance on fund balance for ongoing expenditures. We could also lower the rating if lower-than-anticipated electricity revenues from the fuel cell project pressure operations or if management practices otherwise deteriorate,” the report says.
S&P Global announced the revision in a press release on Dec. 5. The press release was first shared locally on Facebook community pages.
The city’s current rating remains at AA‑, which indicates a “very strong capacity to meet financial commitments,” according to S&P’s website.
The Ansonia Fuel Cell Statutory Trust, meanwhile – the trust that Ansonia will make lease payments to for the fuel cells – was rated A+, which indicates a “strong capacity to meet financial commitments, but somewhat susceptible to economic conditions and changes in circumstances.”
The report says that S&P Global could change the city’s outlook back to “stable” if it becomes less dependent on its fund balance. It says the city plans to do just that – through increasing taxes and getting money from new developments.
“The fiscal 2025 budget includes $5 million in fund balance for current operations and the city plans to use the increased fund balance position to appropriate an average of $3 million in reserves annually from fiscal 2026 to 2030 while phasing in tax rate increases and expecting revenues from new development. Management aims to eliminate the fund balance appropriation by fiscal 2031,” the report says.
Reaction
Ansonia Democratic Town Committee Chairman Dave Hannon said the report backs up what city Democrats have been saying.
“It’s not all that surprising. We’ve been talking about the mismanagement of city funds for a while, and this is in line with that. Other people are noticing,” Hannon said.
“As far as the sale of the WPCA, we’ve been saying this for a while, it’s a huge asset to the city and getting rid of it is the wrong move. But it’s a done deal now,” he said.
Ansonia Corporation Counsel John Marini said the report doesn’t worry him. He referenced the city’s recent foreclosure of the Ansonia Copper & Brass Site and said that developments there will keep the city stable – even if the fuel cell project brings in less money than anticipated.
“Our mission is to create more regular revenue coming into the city, more dependable revenue streams. And so when we’re talking about the answer to that, it’s not just this project. That’s why we have a whole 60 acres of (Ansonia) Copper & Brass on tap, to be able to cultivate projects that are going to bring in more revenue,” Marini said.
He said redeveloping Ansonia Copper & Brass will be the key to the city’s financial future.
“It (Copper & Brass) going dark left us in the position we are in as a distressed municipality, so we need to replace those revenue streams and keep it going. We’re not going to just be stopping at the Johnson Controls (fuel cell) project. We’ve got a lot more work to do, but at least we have the canvas to paint that on right now with Copper & Brass,” he said.
Marini said that a change in outlook doesn’t affect the city’s interest rates when it goes out to bond.
The Valley Indy was unable to reach Ansonia Chief Fiscal Officer Kurt Miller.
