After almost 16 years, New Castle, Pennsylvania, exits from Act 47
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New Castle, Pennsylvania, has exited from distressed status under the state’s Municipalities Financial Recovery Program, also known as Act 47, the Department of Community and Economic Development announced Monday.
A formal determination letter finding that termination of the city’s distressed status was appropriate under Section 255.1 of Act 47, was signed by DCED Secretary Rick Siger.
The state said its decision was based on the city’s use of the tools offered through the program to significantly improve its financial position and management infrastructure since entering Act 47.
Pennsylvania DCED
New Castle was designated as distressed on Jan. 5, 2007, under Act 47. The state said its determination was made because the town had run multi-year deficits and missed a payment to its pension fund.
Gordon Mann was appointed the Act 47 coordinator for the city in 2007.
Since then, the city has made significant strides to improve its management practices and fiscal situation, according to the state.
“The city has made timely debt service payments for years, paying off debt ahead of schedule when possible, and should be able to continue to do so after leaving Act 47. The city has no outstanding claims or judgments that would place the municipality in jeopardy of financial default,” the state said in a statement. “The Act 47 coordinator also projects that New Castle should generate sufficient revenues to support expenditures through 2024.”
Siger praised the city for staying the course.
“The city’s commitment to making the tough, but necessary, decisions to get on the path to financial prosperity is commendable,” Siger said.
Mann lauded elected officials, appointed leaders and city employees, saying they had to make a lot of difficult decisions over the past 16 years to put city government back on the path to financial stability.
“As a result, the city government is in better position to deliver the types of services that New Castle residents rely upon every day,” Mann said. “Hopefully, the current and future leaders will continue to apply the hard lessons learned during oversight and build on the last 16 years of progress.”
Gov. Josh Shapiro and his administration are “committed to helping our municipalities become stronger and healthier and we look forward to seeing New Castle prosper in the years to come,” Siger said.
The city of 21,000, near the Ohio border, most recently sold $4.78 million of taxable general obligation bonds in 2021, wrapped by Assured Guaranty without an underlying rating. In October,
New Castle was the 28th municipality to recover from distressed status under Act 47. Prior to New Castle, Aliquippa was the most recent municipality to recover,
Aliquippa was designated as distressed on Dec. 22, 1987, under Act 47. The state made its determination because the city was seeing an eroding tax base, which hurt its ability to provide public services.
The state said that Aliquippa has made significant strides to improve its management practices and fiscal situation.
“The borough has eliminated its structural operating deficit … Aliquippa’s debt is also reasonable and manageable within its current budget,” the state said in a statement. “The only debt currently held is in the form of short-term leases for vehicles and public works equipment. Additionally, the city has no outstanding claims or judgments that would place it in jeopardy of financial default,”
In February 2022, Scranton
But other cities still face difficulties.
As the city slid deeper into debt, then-Gov. Tom Wolf declared a fiscal emergency and placed the city under receivership in 2020.
In November, the bankruptcy court ruled for the most part in the bondholders favor in an adversary proceeding filed by the city challenging liens on revenues for bonds issued in 2017 as part of a financial recovery plan for the city.
