Bronin Resists Offer to Refinance Debt as City Considers Bankruptcy

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From Courant

spite an offer Monday from Hartford’s largest bond insurer to delay payments on outstanding debt, Mayor Luke Bronin said he would resist any plan that financially burdens the city for decades to come.

Assured Guaranty has suggested Bronin refinance Hartford’s debt in a bid to avoid bankruptcy. The company, which insures $311 million in city bonds, suggested spreading Hartford’s payments farther into the future. The mayor said the city has “a structural problem that requires a structural fix.”

“We are focused on addressing this fiscal challenge in a long-term, sustainable way,” Bronin said, “and that means addressing it in a way that does not leave a future mayor or future generations with the same challenge to deal with.”

Assured Guaranty’s proposal would reduce immediate contributions, but ultimately drive up the amount of interest Hartford would pay in future years.

Bronin and lawyers with Greenberg Traurig, a firm hired by the city to explore bankruptcy, asked bondholders and insurers to participate in a conference call Monday. Hartford officials, faced with $545 million in outstanding general obligation debt, shed light on the city’s financial situation as a “first step” in a “constructive dialogue about restructuring alternatives.”

The mayor declined to discuss how city bonds might be restructured, or any requests he made to bondholders and insurers, saying the talks were ongoing.

Bronin said Monday that he was “prepared to have discussions with any stakeholder who wants to be part of a collaborative, constructive discussion,” but didn’t take a position on Assured’s request.

Debt payments in Hartford, which faces a $65 million deficit, are set to rise by tens of millions of dollars in the coming years. By 2021, the city’s annual debt service is expected to top $60 million — about 20 percent of its non-education expenditures, said Bronin, who has called the figure “unmanageable.”

Assured Guaranty’s plan would keep Hartford’s annual payments around $40 million for the next 15 years.

The company has warned that bankruptcy would be a black eye to the city and state. If Hartford were to default or otherwise fail to make its debt payments, Assured would be responsible for making those missed payments.

Hartford leaders are preparing to confront cash flow issues in November and December, with shortfalls of $7 million and $39.2 million, respectively.

The city, which borrowed millions last spring to help pay bills, owes $3.8 million this month and $26.9 million in October.

Bronin sent a letter to Gov. Dannel P. Malloy and legislators this month threatening to pursue bankruptcy if Hartford didn’t get its needed state aid by early November. He has asked for at least $40 million more from the state this year.

Democrats had set aside $40 million to $45 million in their spending plan, but a Republican budget was approved by lawmakers instead.

The Republicans’ proposal only included about $7 million in additional assistance for Hartford. Malloy has promised to veto that plan.

It is unclear when another budget agreement might be reached. The fiscal year began July 1.

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