City financial adviser outlines debt capacity, warns capital plan could push debt past Moody’s threshold by 2029

Bill Lindsey, the city’s financial adviser for debt issuance, told the Board of Estimate and Taxation on May 5 that Norwalk’s current issued general‑obligation debt was approximately $459 million and that roughly $114 million remained authorized but unissued.

Lindsey reviewed Moody’s and Standard & Poor’s scorecard methodologies, emphasizing that ratings weigh multiple factors — economy, financial performance, institutional framework, pensions and OPEB — and that direct debt is only one input. He said Moody’s uses a scorecard where economy, financial performance and leverage all carry significant weight; Moody’s had produced a scorecard‑indicated AA2 for the city in August 2024 and applied below‑the‑line adjustments reflecting Connecticut’s property‑tax revenue stability to reach the city’s headline rating.

Using a conservative model that amortized outstanding authorized but unissued debt and assumed full near‑term bonding for the 5‑year capital plan, Lindsey said the city would begin to exceed a $650 million informal leverage threshold in fiscal 2029. He noted that prior practice — that the city typically does not issue all authorized bonds in the first year they are approved — and recent debt issuance have pushed the projected breach further into the future compared with projections a year earlier.

Lindsey said several factors could change the projection: issuing all authorized debt sooner, significant new borrowing, weaker fund balance or slower revenue growth could put pressure on credit metrics; conversely, improved reserves, continued conservative budgeting, or favorable economic changes could raise capacity. He repeatedly stressed that debt is only one component of rating analyses and that pension/OPEB funding and liquidity are material positives for Norwalk.

No formal vote followed the presentation; Lindsey stayed on the line for the subsequent capital resolution discussion and vote.