The city got a stunning but entirely welcome gift Friday: a bond ratings upgrade that will save taxpayers at least $100,000 in the years ahead.
"We're happy campers," said Mayor Art Ward, who pumped his fist in the air in joy at the unexpected news.Astonishing city officials who only sought to maintain Bristol's existing bond rating, Standard & Poors awarded the city an upgrade Friday on its credit rating so that it is only one step behind the best-rated municipalities in the country.
City Comptroller Glenn Klocko called it "freaking phenomenal," saying it would save taxpayers $100,000 in next week's bond sales alone.
“We’re shocked,” Klocko said. “I’m just amazed. Never in my wildest dreams did I think we’d get this.”
City Finance Chairman Rich Miecznikowski said the higher rating will be "a big plus for us" in future bond sales as well.The other two rating agencies, Moody's Investor Service and Fitch Ratings, left the city's rating as it has been.
But Fitch's report indicated it might upgrade Bristol in the months ahead as the firm revises its way of dealing with municipal bond ratings generally. Moody's is also eyeing changes that could push Bristol's rating higher.
Bristol's new Standard & Poor’s rating is significantly higher than the city's demographics would normally indicate.
That’s because it has managed to take care of its money so much better than most towns, officials said.
“Bristol’s management is very, very impressive,” said Matthew Spoerndle of Milford’s Phoenix Advisors, the city’s financial consultant.
He said that upgrades these days are “few and far between” but Bristol’s financial record indicated that it deserved one.
Spoerndle called it “really tremendous” for the city and “extremely good news” for taxpayers.
He said that within minutes of getting word of the upgrade he heard from four or five firms asking about purchasing Bristol’s bonds at Wednesday’s planned sale of $8.9 million in long-terms municipal bonds and $7.4 million in taxable notes.
The top tier municipal bonds are in high demand nowadays, Spoerndle said, because there’s so much uncertainty about many other bonds.
That’s likely to translate into lower interest rates for the city when it sells its bonds next week, officials said.
The city made its pitch to the rating agencies on Tuesday, spending about 90 minutes on conference calls with each. A number of city officials spoke, including Ward, Klocko and economic development director Jonathan Rosenthal.
The Standard & Poor’s final report won’t be ready until Monday, officials said, but Spoerndle said he was told directly by the S&P analysts that the upgrade was a sure thing.
Moody’s said that it expects Bristol’s “overall financial position to remain healthy over the near term given the track record of strong fiscal management, conservative budgeting practices and adherence to prudent fiscal policies.”
Fitch said that “despite below average economic indicators,” Bristol has “sound financial flexibility” and a “well-managed overall fixed-cost burden.”
It touted Bristol’s “conservative financial management” for creating healthy reserve funds, flush pension funds, and relatively low debt.
Bristol’s bond ratings
Moody’s – Aa3
S& P – AA+
Fitch – AA
For the city’s fiscal overseers, having bond rating analysts pore over the books every two or three years leads to a kind of report card on Bristol’s finances.
So it’s no surprise they’re ecstatic about getting what amounts to an A- from Standard & Poor’s, one of America’s top two ratings firms.
Though the written analysis used by the Wall Street firm isn’t yet available, it’s pretty clear from the judgments of Moody’s Investor Service and Fitch Ratings what Bristol’s been doing right even in these tough economic times.
At lunchtime Friday, city Comptroller Glenn Klocko read the ratings reports from Moody’s and Fitch.
He proclaimed himself thrilled to have convinced them to hold the city’s bond rating steady despite rising unemployment, sinking state aid and a cloudy economic future for the entire country.
Klocko said it would have seemed “absurd to seek an upgrade” in such hard times.
But a few hours later, the city’s financial consultant called to say that’s exactly what Bristol pulled off as he passed on word from Standard & Poor’s that Bristol would take a step up in the financial world to join other towns with AA+ ratings, including Cheshire and Danbury.
Only a smattering of towns outside Fairfield Country have the higher AAA rating – Avon and West Hartford among them – but most of Connecticut’s 169 cities and towns have significantly lower ratings than Bristol.
Snagging the higher rating from S&P puts Bristol ahead of many towns that are generally wealthier, including Newington, South Windsor, Trumbull Middletown, Wethersfield and Enfield.
Klocko said that’s the result of many years of building up reserves in Bristol and refusing to fork over money for projects that cost too much.
He said, for instance, that a key moment in recent times came when the Board of Finance blocked a City Council move to create a recreation complex on the former Roberts property, a controversial call that enraged some but kept spending in check.
“Now we are receiving the benefit of their unpopular decisions,” Klocko said.
That ability to sock away money during good times has made it possible for Bristol to cope with downturns, Klocko said.
“We can weather this storm because we have reserves,” Klocko said.
Another financial highlight is that Bristol is one of only a few cities in New England that has its employee pension fund completely paid for – and then some.
Klocko said he told the ratings analyst the city lost more than $100 million on its pension investments during last fall’s market freefall. There was a long silence at the other end, the comptroller said.
Then he told them that the city still had well over what it needed to pay expected pension obligations, Klocko said, adding that city leaders for three decades deserve credit for the policy that made it possible.
The upgrade from S&P, Mayor Art Ward said, “speaks very well of the process that’s been practiced for many, many years through many administrations” in Bristol.
He said that city officials, including city councilor and finance board members, generally act as a team with the same aim: to keep Bristol’s solid financial standing intact while providing necessary services.
Ward said the upgrade “gives us hope for the future” because outside experts can see what the city can do.
“We’re still healthy,” the mayor said, at a time when many municipalities are laying people off and wondering how to stay afloat.
The rating upgrade also sends a message, Ward said, that “we need to maintain our prudent financial oversight” because it pays off.
Check back later. I hope there will be some documents linked here that go into this in much more detail.
PDF of Moody's bond rating report on Bristol
Questions that Fitch askd city officials to answer during their presentation (PDF)
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Contact Steve Collins at firstname.lastname@example.org