Common Council members weren't told of city's withdrawn credit rating

ITHACA, N.Y. —  The majority of Common Council members confirmed that they learned about the withdrawal of the city’s credit rating through The Ithaca Voice’s reporting last week.

The rating agency Moody’s announced it withdrew the city’s credit rating on March 14 due to a “lack of sufficient information” provided by the City of Ithaca. 

The Ithaca Voice published an article on April 3 detailing the development, leaving city staff with nearly three weeks for city staff to inform the council about the status of the city’s credit rating. 

However, eight of the city’s 11 council members said that they learned the rating was withdrawn as a result of The Ithaca Voice’s reporting. Two members of council did not respond to a request for comment. 

“It is important for the public to be fully informed as soon as possible regarding important issues such as a change regarding the City’s credit rating,” said Paul Wolf, president of New York Coalition for Open Government, a nonprofit open-government advocacy group.

“Last year we learned from reporting by [The] Ithaca Voice that city meeting minutes were years behind and now we have learned that financial audits are years behind,” Wolf said. “In both instances the public is being kept in the dark, which is not how city government should operate.”

According to the city’s charter, the city manager must “keep the Common Council fully advised as to the financial condition and future needs of the City, and to submit to the Council within two months after the close of each fiscal year a complete report on the finances and administrative activities of the City.” 

The City of Ithaca transitioned to a city manager form of government at the start of 2024, which gave a full-time administrator position the authority to run the city operations under the oversight of city council.

City Manager Deb Mohlenhoff did not respond to multiple requests for comment regarding the council not being informed of the city’s credit rating. 

In previously reported statements, Mohlenhoff said Moody’s choice to withdraw the city’s credit rating was due to a backlog of financial reporting, and not fiscal stress. Mohlenhoff said Moody’s tightened its reporting requirements, which were relaxed during the COVID-19 pandemic. She said the city is still trying to catch up on reporting that it fell behind on as a result of the pandemic’s staffing impacts on the city.

The City of Ithaca’s finances haven’t been audited since fiscal year 2020. That audit was submitted to the city by the accounting firm Insero & Co in January 2023. 

The lapse in communication is one that multiple members of Common Council said they hope leads to a change in relationship between the city’s staff and administration. 

Several council members attributed the communication lapse to how new the council is and the new city manager structure. Of the council’s 11 members, which includes the mayor, seven entered office with the start of 2024. 

“I think we’re still working out all the relationships and the communications channels. That’s pretty clear. I do think that this is information that needed to be shared,” Alderperson Margaret Fabrizio said.

Alderperson Tiffany Kumar confirmed she learned Moody’s withdrew the city’s credit rating through The Ithaca Voice. Kumar said Tuesday she has already seen more communication from city staff on the status of the city’s credit rating. 

“We’re all on the same page of more communication being better which has already kind of started to happen since. We’ve been getting a lot more updates in the last few days already,” Kumar said.

Some members of council expressed that while they were not informed of the issue, are confident that city staff will restore the city of Ithaca’s credit rating. 

“To my memory, the Council was not briefed by staff on the developments with our credit rating,” Alderperson Pierre Saint-Perez said in a statement. “I look forward to our late paperwork being filed, and have full confidence staff are working hard on it as we speak. Hopefully, this will be behind us soon.”

Alderpersons Kayla Matos, Kris Haines-Sharp, Ducson Nguyen, David Shapiro, and Clyde Lederman confirmed that they learned the city’s credit rating was withdrawn as a result of The Ithaca Voice’s reporting. 

Alderpersons Phoebe Brown and Patrick Kuehl did not respond to requests for comment. 

Acting City Controller Scott Andrew said in a previous interview that his office is working to complete an audit for fiscal year 2021, which he said he believes will be enough information for Moody’s to issue the city a new credit rating. In a report to Common Council on April 3, Andrew wrote that the city’s 2021 audit should be completed by the end of April 2024.

The city’s credit rating signals what the city’s financial condition is to investors that may purchase bonds from the city. A credit rating strongly determines what interest rates are when the city issues bonds. 

The city raised over $38 million through bond anticipation notes in February, and was able to sell them without a credit rating. 

Moody’s last affirmed a credit rating of Aa3 for the City of Ithaca in November 2022. According to Moody’s rating scale, Aa3 indicates a “high quality and very low credit risk” for long-term loans and have a superior ability” to repay short-term debt

Mayor Robert Cantelmo said he knew the city’s credit rating was withdrawn before The Ithaca Voice reached out to him on March 29.

“The City is working diligently to bring its records into compliance, as reported previously by the administration,” Cantelmo said in a statement. “The City Manager and I are closely monitoring the situation and working with staff to ensure the City meets all its necessary obligations.”

In a separate comment, Cantelmo said, “The administration is very proactive in apprising us of things as it’s brought to their attention.”