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March 27, 2018

Hartford councilors ink $550M bailout offer from state

HBJ File Photo Hartford City Hall, 550 Main St.

The Hartford City Council on Monday unanimously approved a contract assistance agreement clearing the way for the state to pay off the city’s approximately $550 million general obligation debt over the next 20 years, according to Mayor Luke Bronin.

Under the bailout, the state will pay off Hartford’s annual debt payments up to $40 million, and begin making payments over the next week in time for an upcoming $12 million debt payment that's due April 1.

Hartford's annual debt payments last week were estimated to top $56 million by 2021, however, the city will refinance its debt to reduce its yearly contributions by pushing payments into the future, according to a spokesman at the state’s Office of Policy and Management.

Projections show the state’s annual payments will be about $35 million, he said.

Hartford would still be required to make annual payments of $5 million on its new minor league ballpark, a mayor’s office spokesman said last week.

Meanwhile, S&P Global Ratings on Tuesday placed Hartford’s general obligation “CCC” bonds rating and the Hartford Stadium Authority’s lease revenue bonds on credit watch with positive implications.

S&P credit analyst Victor Medeiros said there is a 50 percent chance Hartford’s debt rating will improve in the next 90 days with potentially significant changes.

Monday’s accord comes after lawmakers created a Municipal Accountability Review Board in October as part of a bipartisan $41.3 billion budget deal, setting up a process to bailout Hartford and other financially struggling municipalities. MARB began its oversight of the city in January.

Hartford has prioritized its fiscal standing over the last two years, Bronin said, while applying for financial assistance agreeing to oversight under MARB.

Without state aid, Bronin last fall threatened to file for bankruptcy, citing the city's debt, lack of taxable property and pension obligations.

“We cut tens of millions of dollars in spending, negotiated dramatic savings with our labor unions, and secured a commitment from our biggest employers to be part of a comprehensive solution,” the mayor said Monday.

Still, Bronin said dramatic spending cuts would not make Hartford financially solvent, again citing half of the city’s tax-exempt properties and rising fixed costs earmarked years ago.

The mayor said the city can “see a path to balanced budgets” over the next five years following Monday’s bailout agreement, its recent spending cuts and financial commitments from Hartford corporations.

The Hartford, Travelers Cos. and Aetna pledged in 2017 to invest $50 million in Hartford if city leaders made long-term changes to put the city on a more stable and sustainable fiscal path.

“Those budgets will be very tough and very tight, but for the first time in decades, we will be able to look people in the eyes and tell them that their capital city is looking at balanced budgets instead of a sea of red ink,” he said.

After the state offered the proposed bailout last week, New Haven Mayor Toni H. Harp and Bridgeport Mayor Joe Ganim released a joint statement questioning whether the bailout was an “equitable practice.”

The mayors said the state must uphold comprehensive urban policy that benefits all cities strapped by current tax laws.

“It seems the state continues to shortchange New Haven and Bridgeport – its two largest cities, with comparatively stable finances, while rewarding the past practices of other cities that put them on the edge of financial collapse,” the mayors said.

Harp and Ganim this week plan on presenting a “consistent” municipal aid program to help cities across the state.

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