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Debt Consolidation Agreement Reached

debt-restructuring

It appears the two parties have reached an agreement and debt consolidation bonding could be passed at next Wednesday’s Council meeting.

Mayor Pro-tempore Eva Magnuszewski said a leadership meeting on March 17 took place to discuss the new bonding package with Mayor Erin Stewart, John Healey, Robert Smedley and Carlo Carlozzi. She said the groups are and have been working together on this issue.

The Democratic led caucus asked for four things in order to pass the debt consolidation.

  1. Steady payments (no spikes)
  2. Payments that wouldn’t cause our bonding rate to be downgraded
  3. Debt Payments between 20-26 years
  4. The ability to take on more bonds if needed for big projects down the road

“We received new the bonding proposals tonight & I have forwarded them to the Democratic Caucus for discussion,” said Magnuszewski on Tuesday. “We hope to pass a new bonding package at the next Council meeting.”

Mayor Erin Stewart said, “Our recent Council Leadership meeting was very productive and yielded some healthy debate. I feel confident that our discussions will move the City forward in a positive direction and I look forward to continuing our work to ensure New Britain is on firm footing in the future.”

“Today was a great day,” Alderman Robert Smedley posted on Facebook Saturday. “Glad to have been part of a bipartisan open discussion about our Cities debt and future projects. I am sure all of the council will agree to move forward with our leadership team decision.”

This debt restructuring has been in the works for several years, but in order to restructure that debt, the City waited for the State to pass a law to allow for municipalities to issue debt for longer than 20 years. The original restructuring would lower the city’s maximum annual debt service payment from about $40 million to about $25 million this year while adding an additional 10 years of payments.

If the restructuring was not done, then next year cost of bonds increases to $29.188 million. The following year the city would owe $36.373 million. In 2021 the debt bill would be $39.357 million.

Savings will be accomplished by restructuring the existing principal and interest payments and amortizing, or reducing, them until later years.

There has been much controversy surrounding the issue as several meetings were canceled or held without the full council.

It began on Jan. 17 as at 5:28 p.m. Democratic Councilman Richard Reyes canceled a bonding meeting planned for 6:30 p.m on the same day. Many Councilman, mostly Republican, told the City Journal they did not get the text message until late that night. Meanwhile, Mayor Stewart refused the request and still held the meeting and the Special Council meeting planned following the bonding meeting. No one from the Democratic party showed up to either sparking outrage from many Republicans.

Then on Jan. 25 Alderman Carlo Carlozzi, Democrat, argued with Corporation Counsel on whether or not the last meeting was legal. Carlozzi claimed Smedley should not have led the meeting and that finance board members were allowed to vote and were not approved to do so by this Council.

Gennaro Bizzaro, of the Corporation Counsel, disagreed with Carlozzi. Carlozzi then promptly adjourned the meeting without discussing or voting on debt restructuring.

Since then no public meetings on the debt consolidation had taken place, but Mayor Stewart stated the delay cost the City millions of dollars.