City Taps Patton Brook Well For Water After Calling Off Bargain Basement Sale, Hiking Rates To Pay For MDC Water
By John McNamara
More than a year after the Stewart administration and Common Council sought to sell off the Patton Brook Well at an undervalued price of $1 million the unused well is replenishing the Shuttle Meadow reservoir.
Patton Brook Well culvert near Shuttle Meadow Reservoir (Photo taken Sunday, November 5, 2017)
Mayor Stewart and her Council majority authorized the sale in August 2016, seeking to give up the nearby water source that is part of New Britain’s coveted watershed land in the region. The Town of Southington, where the watershed parcel and pump station are located, was the prospective buyer. Previously New Britain shared Patton Brook with Southington at reasonable rates for decades but used its other sources for city residents.
In the her second attempt to jettison Patton Brook altogether, Mayor Stewart and her Common Council allies insisted that repairing the well for New Britain’s use would be too costly and that Patton Brook did not figure prominently in the city’s water reserve plan. The flow of water from Patton Brook through a culvert into the Shuttle Meadow Reservoir with little in the way of repairs and expense contradicts the Mayor’s assertions that the well could not be turned back on for New Britain without a major capital expense.
Water flows from Patton Brook Well into New Britain’s Shuttle Meadow Reservoir on Sunday, November 5th, 2017
In winning an 11-4 Council vote for the sale of Patton Brook Well in the summer of 2016, Mayor Stewart accused opponents of “political posturing” and spreading “outright lies and unfortunate misinformation.” Said Stewart: “We are not selling the New Britain Water Co. and have absolutely no intentions of doing so. We are transferring ownership of a physical well that isn’t connected to the city’s water pipes and hasn’t been used by the city in decades. The Patton Brook well sits on a 0.61 acre parcel of land in Southington and is valued at around $61,000.”
Amid strong public opposition and an ongoing drought that forced the water department to hike rates to pay for $400,000 in Metropolitan District Commission (MDC) reserves this year, Stewart finally relented last April as officials were awaiting state approval of the sale.
Opponents of the well sale say the city administration became aware of a developing drought as early as December 2015, but took no appropriate action to conserve supplies nor warn residents as efforts to sell Patton Brook proceeded.
Water from Patton Brook culvert may be flowing into Shuttle Meadow reservoir. Photo taken on Sunday, November 6, 2017
In a related development the Connecticut General Assembly enacted legislation introduced by State Rep. Rick Lopes (D-24) requiring that municipalities or water departments to obtain an independent appraisal of public watershed before it can be sold.
In early October acting Water Director Ray Esponda told the New Britain Herald that water from Patton Brook can flow into the Shuttle Meadow Reservoir, but that it would take $1 million in repairs to allow the well’s water to reach other reservoirs in the city’s regional reservoir system.
Last month the city Water Department also contradicted Mayor Stewart’s $61,000 value, confirming that the well has a current capacity of at least one million gallons a day. Translated into consumer water rates the city would quickly obtain a return on a $1 million investment whether it leased the well’s water or needed it for use by city residents. Alternatively, funding from the Army Corps of Engineers could be pursued to add capacity to New Britain’s regional watershed and supply.
Numbers Don’t Back Mayor Stewart’s Claim That State Budget Caused City’s Negative Credit Rating
By John McNamara
Mayor Erin Stewart has blamed this year’s state budget crisis for the city’s negative credit rating in response to a November 2nd report of an “escalating” debt and her administration’s own budget that shows interest payments will cost taxpayers tens of millions of dollars over the next four years.
“We were downgraded by Moody’s along with many other cities and towns across Connecticut as a result of the state budget crisis,” the two-term Republican told the New Britain Herald.
Democratic Mayoral Nominee Merrill Gay, citing double-digit tax increases and a debt load rising to “$75 million”, said Ms. Stewart is mismanaging the city’s finances. “Mayor Stewart’s poor financial planning will cost New Britain taxpayers,” Gay said. “New Britain needs real economic development without increasing the debt despite two tax increases.”
The state Legislature, dealing with deficits caused mainly by unfunded pension liabilities, finally adopted a biennial state budget at the end of October after a four-month stalemate.
While the protracted debate in Hartford created short-term uncertainty for cities and towns, New Britain will maintain state aid amounts it gets as an economically distressed community. In the current fiscal year that ends June 30, 2018, state aid will be a projected $101 million to pay for schools and government — the same as it received last year. In 2019 the city will be cut by $191,000 from 2017.
City and town officials, including Mayor Stewart, are correct that state government’s continuing fiscal problems can adversely impact local government finances. Moody’s Investor Services, however, did not cite state budget woes for New Britain’s latest downgrade in the municipal bond market. Instead the investors’ rating agency pointed to the city’s higher debt costs alluding to new deferments on short-term and capital bonding that will spike interest over the next five years or more. Whereas consumers and governments usually look to re-finance for lower interest rates the Stewart administration is doing the opposite, re-financing debt that will result in sharp interest rate increases in the near term.
Early this year the Stewart administration and the Common Council pushed the city’s debt further into the future after being told by bond counsel that interests rates would rise in the out years. The result was a short-term $6 million savings to be paid back with much higher interest after the current fiscal year ends.
Graphic shows New Britain’s escalating debt payments. (Source: Municipal Budget Book)
New Britain’s Bond Rating Drops From Stable To Negative: Huge Spike In Debt Through 2021 Cited By Moody’s
By John McNamara
Republican incumbent Mayor Erin Stewart, in her re-election campaign this year and throughout her second term, has touted improving municipal bond ratings for New Britain’s fiscal solvency, claiming credit for budget surpluses of $15 million and pushing spending up at City Hall with no need for an election year tax increase.
Fiscal stability is the cornerstone of her platform and a main talking point in her aspirations to leave the mayor’s job for statewide office. Her campaign’s website points to New Britain “gracing the cover of the Bond Buyer, a trade publication covering the municipal bond market, “not once but twice. The city under her management is a shining example for how to make a financial turnaround work during a difficult economy.”
The November 2nd edition of Bond Buyer, however, paints a different picture for the city’s finances in the latest analysis, portending a difficult road ahead for the city’s budget over the next four years. Moody’s Investor Services, which along with Standard & Poor’s, assesses the borrowing ability and fiscal health of cities in the municipal bond market, has downgraded general obligation borrowing to Baa2 from Baa1. “Moody’s cited New Britain’s reliance on nonrecurring revenues to stabilize its financial position in recent years. The rating agency also revised its outlook on the 73,000-population city to negative from stable,” Bond Buyer’s Paul Burton reported. “The rating also incorporates the city’s elevated debt profile with rapidly escalating debt service and its modest pension liability,’ the rating agency said Tuesday.”
In contrast to Moody’s downgrade four months into the 2018 fiscal year, Standard & Poor’s has previously affirmed a more favorable A-plus rating for New Britain after upgrading the city four notches through two upgrades. Moody’s last assessment came in 2014.
According to the Bond Buyer story:
Moody’s said the negative outlook reflects the short-term challenge New Britain will face to match recurring revenues with recurring expenditures while managing its debt service pegged to spike through fiscal 2021. New Britain, said Moody’s, could earn an upgrade through a sustained trend of structurally balanced operations without one-shots, a material reduction in debt burden, growth in its tax base or an improved resident wealth and income profile. By contrast, continuing reliance on nonrecurring revenues, erosion of its financial position, taking on more debt or deterioration of New Britain’s tax base or wealth profile could lead to a downgrade.
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