Mayor-elect ready to grapple with New Haven's fiscal problems

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Justin Elicker will become New Haven's 51st mayor on Jan. 1, taking over a divided Connecticut city with myriad fiscal challenges.

“I see a city in one way doing very well with a lot of investment, especially downtown. However, I also see significant challenges similar to many other municipalities around the nation," Elicker said in an interview.

Ivy League Yale University's presence adjacent to a vibrant downtown contrasts with the struggles of poorer neighborhoods in the 130,000-population city.

Elicker, 44, executive director of the New Haven Land Trust and a former city alder, defeated three-term incumbent and former longtime state senator Toni Harp in the Democratic mayoral primary, then again in the general election when Harp ran on the Working Families Party ticket.

“I can’t underestimate our financial challenges," Elicker said. "The city of New Haven absolutely needs to have a budget that’s well-managed.”

S&P Global Ratings and Fitch Ratings last year downgraded New Haven's general obligation bonds to BBB-plus and BBB, respectively. Moody’s Investors Service, however, revised its outlook in July for the city's GOs over the past five months to stable from negative while affirming its Baa1 rating, three notches above junk. Fitch also revised to stable from negative ahead of a recent $49 million GO refunding.

"Our pensions are only 40% funded," Elicker said. "We have $1.5 billion of debt because we borrowed a lot of money. We owe a lot in health-care payments. Our credit rating has been downgraded."

While acknowledging the stabilizing effect of Yale and Yale-New Haven Hospital, Moody's said the city's" very narrow" financial position will challenge its ability to balance its budget. "While fixed costs are manageable, pensions face depletion risk due to low funded ratios and failure of annual contributions to meet treadwater indicators," Moody's said.

Elicker's transition team of 25 members and 11 subcommittees have been working on policy issues that include affordable housing and lead-paint exposure. He is also holding community meetings, including one that drew 200 people.

He hired Scott Jackson, a high-ranking operative under governors Ned Lamont and Dannel Malloy, as chief administrative officer. Jackson is a former mayor of neighboring Hamden and aide to U.S. Sen. Joseph Lieberman. In addition, Elicker appointed ethics expert Patricia King corporation counsel.

Elicker, who has joint graduate degrees from Yale's School of Management and School of Forestry and Environmental Studies, has also spoken frequently with Lamont about his own city and Connecticut's other municipalities.

"That relationship is important. And New Haven’s vitality is very important to the region and the state. New Haven in my opinion is the cultural capital of the state," he said by phone as he returned by train from a training session for mayors-elect at the John F. Kennedy School of Government in Cambridge, Massachusetts.

He has also met with some of Connecticut's other mayors — Luke Bronin in Hartford, Neil O’Leary in Waterbury and Joe Ganim in Bridgeport — and with Joe DeLong, the chief executive of the Connecticut Conference of Municipalities.

In addition, Elicker has huddled with state transportation Commissioner Joseph Giuletti about the need to reduce travel time between New Haven and New York City. Elicker also favors adding a bus depot as part of the parking garage project at Union Station, the larger of two New Haven train stations.

Elicker said Yale could contribute more to the city and the state could arm it with better revenue tools such as tax-collection mechanisms. He favors highway tolling — long a political controversy in the state — saying Connecticut could flag needed revenue from out-of-state drivers.

"I drove down to [Washington] D.C. to visit my wife’s family recently and I paid tolls in several states," he said. "The riders of Connecticut should not be subsidizing the riders in other states.”

Applying for state oversight under the nascent Municipal Accountability Review Board is "on the table," said Elicker, whose administration must weigh any benefits with a loss of municipal control. His team is examining fiscal 2020 and 2021 budgets, the latter it must present to the Board of Alders, the city's legislative body, by March 1.

Hartford and West Haven are under MARB's umbrella. Should New Haven's finances worsen, MARB could mandate the city enter its workout program, as it did with West Haven. Hartford applied when it was on the cusp of bankruptcy, and later crafted an agreement for the state to assume $540 million of Hartford's general obligation debt.

Harp opposed joining MARB.

"You go into the MARB when you can't do anything else,” she told The Bond Buyer in an August 2018 interview at City Hall. “We feel confident with our five-year plan, the refunding and our administration's initiative.”

The city that month issued two series of general obligation bonds, including a $160 million deficit borrowing that extended debt maturities.

“This refunding was a classic scoop and toss, basically,” Alan Schankel, managing director at Janney Capital Markets, said at the time.

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Budgets State and local finance Toni Harp City of New Haven, CT State of Connecticut Connecticut