NB Politicus

Legislature Takes On Water Issues; Rep. Lopes Bill Requires Fair Market Value For City To Sell Wells, Watershed Land

Posted in environment, environmental protection, water resources by nbpoliticus on February 13, 2017

By John McNamara

State Rep. Rick Lopes (D-24) has filed a bill requiring municipalities or water companies to “complete  a fair market appraisal of any property encompassing a watershed, well or reservoir before such property may be sold, and to make such appraisal public at least 90 days prior to such sale.”

Lopes’ proposal is due for a public hearing on Wednesday, February 15th, at the Legislature’s Planning and Development Committee.

Rep. Rick Lopes

Rep. Rick Lopes

The legislation (6481) stems directly from Mayor Stewart’s second attempt to sell the Patton Brook well in Southington to the Town of Southington for $1 million last year. The New Britain Common Council authorized the sale  in a controversial move that brought strong public opposition at a public hearing last July.  The sale remains under review by the state Department of Public Health. The city administration,  through the Board of Water Commissioners, also quietly approved the sale of watershed land in Burlington last last year, land that is also a part of New Britain’s coveted and extensive watershed  in the region.

The effort to sell city watershed, along with a Stewart administration-back proposal by Tilcon, Inc. to lease watershed land on the New Britain-Plainville line for mining operations, has met with growing resistance from the Bradley Mountain Alliance . A citizen coalition has coalesced around protecting the watershed and its members regularly attend City Hall, the Board of Water Commissioners and state regulatory agency meetings.  Year-long drought conditions that have forced the city to purchase water from the Metropolitan District Commission has further increased citizen opposition to the sale of Patton Brook.

According to a commentary raising objections to a Patton Brook sale last July: “The real value of Patton Brook Well – whether it is to be leased or sold – should be calculated on its capacity to produce potable water for residents and businesses.  At no time have New Britain officials, including Stewart and Water Services Director and Southington resident Gil Bligh,  provided a professional or independent appraisal of the Patton Brook Well’s actual value in setting a sale price of $1.2 million two years ago and $1 million this year.  Basing a sale or lease on a real property assessment of the pumping station and the small amount of acreage alone is absurd and irresponsible.”

Rep. Lopes, who represents the 24th assembly district inclusive of New Britain neighborhoods close to watershed land, opposed the attempted sale of Patton Brook in 2014 and 2016 saying in a letter to the editor “water and access to water will always remain a valuable asset. The city of New Britain had the foresight to purchase property with access to water all over the state and these water rights remain among our most valuable assets. Giving up wells and reservoirs are short-term fixes that will only cost the city in the long run.”

Lawmakers are also taking up a series of bills supported by the Save Our Water , a non-partisan citizens’ group that initially mobilized to oppose MDC and Bloomfield decisions to give Niagara Bottling Company of California access and favorable rates to MDC reservoirs. Its membership is growing and includes New Britain as concern over protecting the water supply and natural resources is growing throughout the state.

Save Our Water’s legislative agenda includes law changes on drought protection (HB-6349), permits for large water bottlers (HB6341), water rates for water bottlers (HB6319),  uniform clean water project charge rates (HB6342) and regulation of bottle water (HB5619).   Save Our Water opposes Senate Bill 753 — an act concerning the viability of expanding the bottled water industry in Connecticut. Instead Save Our Water favors its own legislative package “to ensure the prudent management of our state’s valuable water resources, establishing priorities for water usage during droughts and requiring that water rates for large-scale water bottlers are not lower than rates for residential customers.”

 

 

City Hall Watch: Deferring Municipal Debt Payment Means Cash Now, Higher Interest Next Year

Posted in city government, municipal budget, New Britain, property tax by nbpoliticus on February 10, 2017

By John McNamara

The Stewart administration is shifting $6 million from a scheduled payment on the city’s rising municipal debt— creating an election year windfall to avert yet another tax increase.  The Common Council approved what representatives of William Blair & Company, the city’s bond counsel, called a “re-structuring” of  a $28 million bond at a special meeting  on January 11th.

Expect Mayor Stewart to trumpet a “savings” to avert her third property tax hike or claim a hefty boost to the city’s “rainy day fund” as municipal budget talks get underway in a few weeks.

CITY HALL WATCH

CITY HALL WATCH

But using the city’s credit card to increase cash flow in the current fiscal year is hardly a savings or proof of Stewart’s fiscal prudence. It obligates the city to shell out more to bond holders in the out years. Pushing debt obligations to 2018 and beyond  guarantees all the borrowed money (short and long-term debt for capital projects and allowable expenses) will come with considerably higher interest rates.

“We’ve been seeing  the rates increasing from last year,” William Blair’s Richard Thivierge told the Common Council. “Some debt rates have gone up 60 to 80 basis points.”

Ward 5 Alderman Carlo Carlozzi, who extensively questioned bond counsel along with Alderman Manny Sanchez on January 11, expressed some frustration on the new deal with creditors which will lower the payment this year from $28,315,000 to $21, 600,000. “The city always seems to be restructuring its debt.”  Carlozzi said,  wondering out loud if moving the debt was kicking the can down the road at higher interest rates.

Bond counsel representatives explained that the city is not re-financing — which is usually done to get lower rates — but is deferring the debt a portion of which stems from borrowing  in Stewart’s first two terms. Because of the city’s “high debt base” Thivierge said the city needs to “levelize” its debt service by slowing down its payments. Always the obliging middle man in extending the debt, Thivierge called it “budgetary prudence.” In political terms that’s a euphemism for not having to raise taxes or cut services in an election year.  Pressed by Carlozzi’s questions, the Mayor,  Finance Director Lori Granato and Bond Counsel tacitly acknowledged the city could pay down its debt at a lower interest rate this year, but that the extra $6 million will be needed in the next budget after July 1.

Obligating the city to pay more for debt at the start of 2017 stems from structural factors that cash-strapped cities face. New Britain, according to the state Office of Policy and Management (OPM), is the slowest growing grand list in the state with 97% of the land developed and a considerable amount of real property owned by the state or nonprofit institutions. This inelastic tax base, reliance on the property tax and dependence on state aid that this year exceeds $100 million makes the current system unsustainable no matter who is mayor or serves on the Common Council. All of this is why the bond lenders hold cities in a cycle of  borrowing for needed capital improvements not favorable to fiscal stability and residents. Raising taxes is good. Cutting services is better. Selling off municipal assets (such as watershed) is even better for improving your bond rating and pleasing the lenders on Wall Street.

The situation has been made worse in New Britain by “structural deficits” first identified by Mayor Tim O’Brien when he took office in 2011 and quickly acknowledged by Erin Stewart when she succeeded O’Brien despite her politicking that the budget mess was created entirely by O’Brien in one term.

Both mayors pointed to the four terms of former Mayor Tim Stewart who, with the acquiescence of Democratic common councils between 2003 and 2010, relied on one-time fixes and phantom sales of land.  With increases in spending and freezing the tax rate year after year during the first Mayor Stewart’s terms,  a financial hole was created that the city is still climbing out of.

“We had an issue a few years back when someone came into office and said there were structural problems in the budget,” said Carlozzi at the bond authorization meeting, alluding to former Mayor O’Brien sounding the alarm more than five years ago. “That person was heavily criticized. We now have heard for the last three years that we have structural issues with the budget. That individual was correct.”

As Alderman Carlozzi made clear at the Council meeting paying off your credit card debt sooner rather than later would be a good thing.  In 2017, however, the restructuring of debt is a way to paint a hunky-dory financial picture that relies on the city’s mountain of debt getting higher.  What is especially misleading is the “rainy day” or “tax stabilization” fund being counted in the millions of dollars. Implying that the surplus stems from more efficiencies and prudent fiscal management as Stewart boasts is false. It is based almost entirely on restructuring borrowed money and a 2014 property tax increase — the largest in city history.

The bottom line is that in a municipal election year all that glitters is not gold when it comes to city finances. Bond authorizations cannot be used to meet current operations only capital improvements.  But in New Britain and other financially struggling cities increasing debt costs for ready cash carries a heavy price tag due and payable sooner rather than later.