ANSONIA — The city plans to use nearly all of the $41 million from selling its Water Pollution Control Authority to lower taxes — a move that sparked political tension at the end of the legislative session and drew criticism and a warning from credit agency Standard & Poor’s.
The Board of Aldermen unanimously voted to approve Mayor David Cassetti’s $68.1 million municipal budget, which uses $34.6 million from the sale to plug budget holes. The rest of the proceeds from Aquarion Water Co.’s purchase will go into the city’s rainy day fund, City Counsel John Marini said.
“The bulk of the funds has been used for tax stabilization,” Marini told CT Examiner on Tuesday. “Approximately $17 million was used to provide tax relief, allowing the city to maintain a mill rate in the high 20s — projected to be 28.9 mills in FY 26. This is the ‘Taxpayer First’ philosophy embraced by Mayor Cassetti and his team.”
The city also plans to spend $2.3 million from the sale on solar carports, which produce a recurring revenue stream of $120,000 per year. A large chuck of this money is being recouped through investment tax credits that the city is applying for, Marini said. Another $13 million will go toward paying off WPCA debt and $375,000 for infrastructure projects.
‘Budgetary stress’
The strategy compelled S&P Global Ratings to downgrade its long-term outlook for the city from stable to negative, as part of maintaining Ansonia’s AA- credit rating.
Ansonia has a low default risk and has a strong ability to repay its debts, but using the sale proceeds to cover operating costs through 2030 while revitalizing several downtown brass mill sites could backfire, the company said in a statement.
“The negative outlook reflects our view of the city’s plans to use proceeds from a one-time asset sale … could lead to budgetary stress absent implementation of measures to reduce its reliance on fund balance,” S&P Global Ratings credit analyst Michael Ryter said.
The credit agency said in its annual report that it “could revise the outlook to stable if Ansonia minimizes its use of reserves to fund current operations, leading to balanced results, or makes substantial progress reducing its use of reserves to fund operations with a credible plan to minimize them.”
“We would also view increased formalization of long-term planning practices positively given its use of asset sale proceeds to support general operations,” it said.
Had the city not used the sale proceeds, Ansonia’s tax rate would have been nearly 40 mills. The city kept its AA- rating because city officials told S&P they plan to gradually reduce and stop using sale proceeds over the next few years, Marini said.
The $6.1 million added to the rainy day fund helps give Ansonia a healthy fund balance for the 2026 fiscal year, said Kurt Miller, the city’s chief financial officer.
“It was always one of the goals to pull between 8% and 10% of the sale completely off the table and stick that into fund balance to build up the fund balance that we already have,” Miller said.
For fiscal year 2026, Ansonia’s debt ratio is 3.31%, which is very low, Marini added.
But that didn’t stop State Rep. Kara Rochelle, D-Ansonia, from pushing through a bill that would place city finances under the review of the state’s Municipal Finance Advisory Commission.
The commission advises municipalities with significant financial issues as a prelude to being placed under the control of the Municipal Accountability Review Board if economic conditions worsen.
Rochelle said she proposed the bill in response to residents’ complaints about the uncertainty of city finances. She filibustered during the last hour of the legislative session to defeat an amendment written by State Reps. Nicole Klarides-Ditria, R-Seymour, Joe Zullo, R-East Haven, and Rep. Vincent Candelora, R-North Branford, to block her initiative.
The move prompted Gov. Ned Lamont to pledge to look into the situation. Ansonia’s Democratic mayoral candidate, Frank Tyszka, promised to go further and seek a forensic audit of city finances if he defeats Cassetti in the November elections, he told CT Examiner.
Forensic auditors examine financial records to uncover potentially illegal activity. Although Tyszka said he has no evidence of financial crime, he sees “a big fiscal mess.”
“I’m missing something here. We sold a $41 million project. We’ve got [several] million left,” he said. “… I can’t accept what’s going on. I stepped into the fray because I think somebody’s got to do something. I believe I’m the right guy to do it, to turn it around.”
Mayoral wins
Tyszka is likely an underdog in his race.
Once a Democratic stronghold, Ansonia now leans Republican and has an all-Republican Board of Aldermen.
Since Cassetti’s election in 2013, the administration has claimed some economic successes — it acquired and cleaned up the 65-acre former Ansonia Copper & Brass site along the Naugatuck River downtown, although it remains vacant.
According to City Economic Development Director Sheila O’Malley, Cassetti’s administration similarly redeveloped the vacant Ansonia Technology Park at 497 E. Main St. and 165 Main St. with apartments.
It repurposed the former Farrel Foundry and Machine Co. site into a police station and senior center, with Farrel’s corporate offices moving to the Fountain Lake industrial park, O’Malley said.
Several streets including Wakelee Avenue, the west side’s main business and residential thoroughfare, have been redone. Nolan Field, Ansonia High School’s primary athletic complex, is being resurfaced, and the city hopes to redevelop the former Olson Drive housing development land into a privately owned athletic complex.
A collection of restaurants and clubs now line North Main Street.
Tight spending control has helped city property tax rates fall since 2013 from 39 mills to 28.9 mills in 2026, O’Malley said in a statement.
Risky strategies
The administration also aims to spur a city renaissance and generate tax revenue from private investment in the former Farrel and Ansonia Copper properties with low-cost electricity, Miller said.
The city established the Ansonia Fuel Cell Statutory Trust as part of a plan for Johnson Controls to cover a $37 million upfront cost to install nine 440-kilowatt fuel cells at 35 N. Main St. The goal, Miller said, is to power municipal buildings and sell excess electricity to nearby private users, like data centers. Construction is expected to begin this year.
But S&P assigned the project an A+ long-term rating with a negative outlook, saying “we could also lower the rating if lower-than-anticipated electricity revenues from the fuel cell project pressure operations or if management practices otherwise deteriorate.”
The annual city audit also revealed issues. The latest available audit, for the 2023-24 fiscal year, found that “information from various departments related to numerous audit schedules and related information was not available in a timely manner,” according to an Audit Correction Action Plan letter to the state Office of Policy and Management signed by Cassetti and other city officials.
“The city’s audit for the year ended June 30, 2023 did not start until October 2023,” the letter continued. “In addition, some schedules and required information were not available for the audit until December 2023.”
Information was also submitted late during the previous year’s audit process. The city’s audit for the year ending June 30, 2022, did not start until October 2022.
The report listed corrective actions, including a return to pre-COVID staffing levels within the city Finance Department that “has allowed us to establish more efficient job functions,” although staffing on the school department’s financial staff “has been negatively impacted by death, health issues and retirement.”
Finance Department employees are also being trained on new purchase order software, the report states.
The city also recently agreed to pay $615,000 to settle a lawsuit with Benchmark Municipal Tax Services, which had claimed that Ansonia sold it defective debts.
‘They’re clean, they’re sleek’
Still, Marini and Miller expressed confidence that the former brass mill sites downtown will draw worthy investors to Ansonia.
“Mayor Cassetti believes it is better to raise taxes as an absolute last resort, as the city prepares the Copper and Brass site for redevelopment. This massive site — now fully owned by the city and being remediated with grant dollars — represents a realistic opportunity to generate millions in new revenue per year,” Marini said.
The city has requests for proposals out for two data centers that, if built, could pave the way for more such development, as the fuel-cell field has 60 acres available for expansion, Miller said.
“It’s going to bring much more bang for your buck than, let’s say, a mixed-use retail and residential, any type of light industrial, anything like that. Data centers, they’re clean, they’re sleek. They’ll dress up the downtown area,” Miller said. “And now people are going to start saying, why is state-of-the-art technology like a data center going to Ansonia? What’s going on in Ansonia? Do I need to take a look at that place if I’m a business owner?”
The city expects to see some significant investment activity within the next two years, Miller said.