Armed with an upward outlook revision from Moody's Investors Service, New Haven, Conn., plans to sell $90.2 million of general obligation bonds Wednesday.
The Series B refunding component, $54.1 million, will enable the city to balance its budget in fiscal 2015 through 2019 and negate the need for cash-flow borrowings, and cover projected outyear gaps in 2020 through 2024. New Haven will refund certain maturities in bonds from 2005 through 2008 for an overall estimated savings of $936,000, or 1.6% of refunded par.
The move, combined with conservative budgeting practices, prompted Moody's to revise its outlook to stable from negative, only a year after the three major bond rating agencies downgraded the city. Moody's rates New Haven A3.
"We've worked very hard," Mayor Toni Harp said in an interview. "They see that we paid attention to their comments. We think we're moving in the right direction fiscally."
The Series A new-money bonds will fund public improvement, school and urban renewal projects. New Haven has $412 million of debt outstanding, according to Moody's.
Harp hopes the city can obtain a bond-rating upgrade as soon as next year. Moody's said a return to structural balance, improvement in general and internal-service funds, and strengthening its tax base and demographic profiles "to levels more consistent with higher rating categories" could push up the rating.
New Haven expects to replenish its stabilization, or rainy-day fund, with $5 million through the refunding. The $508.3 million budget for fiscal 2015, which the Board of Alders in May passed after fractionally reducing Harp's request, added $1 million, bringing the rainy-day account, depleted two years ago, to about $10 million.
Fitch Ratings and Standard & Poor's affirmed their respective ratings of A-minus with a negative outlook, and BBB-plus with stable outlook.
The good news didn't stop at the city line.
Also on Aug. 6, Moody's revised its outlook for Bridgeport, Conn., 20 miles west on, to stable while affirming its A2 rating.
"I think what it says is that the rating agencies, who take a hard look, realize that these two cities have turned the corner," said Harp, a former state senator who took office in January after 20-year incumbent John DeStefano did not seek re-election.
New Haven, Connecticut's second-largest city and home to Yale University and Yale-New Haven Hospital, expects to realize the majority of its restructuring savings in fiscal 2015 and 2016 -- $14.5 million and $5 million, respectively.
New Haven officials showed off the city to Moody's representatives during a site visit after passing a $508.3 million fiscal 2015 budget.
Major developments under way include the Downtown Crossing/Route 34 project, which when complete is expected to link downtown with the medical district, train station and outlying neighborhoods such as the Hill. Officials say it will also more logically integrate the New Haven portion of state Route 34, which critics have long called a "road to nowhere," with interstates 91 and 95.
The first phase of the development, a medical and lab office structure at 100 College St., near Yale Medical School, will house Alexion Pharmaceuticals Inc., which is returning to its New Haven roots after about 15 years in Cheshire, 17 miles north. Phase two consists of the Orange Street crossing and the construction of a mixed-use development of the site of the former New Haven Coliseum, which the city imploded in 2007.
New Haven calls itself the biotech capital of Connecticut. It says 39 of the state's 52 biotechs are located there.
"That's where our future is, in biotech," said Harp, adding that Internet technology is also a growing part of the Elm City's economy.
"We've also had a burst of housing starts," She said.
Harp, a San Francisco native who earned a master's degree from Yale in environmental design, previously served 20 years in the Senate and 10 as chairwoman of its appropriations committee.
"In a way, it's not business as usual. It's far more collaborative," she said. "We have a rainy-day budget reserve, and we also have a budget that held education and schools responsible. It was a budget that I would support."
Raymond James is managing the negotiated deal.
The city's financial advisor, senior management consultant William Fazioli of Public Financial Management Inc., said Harp's experience at the state capitol helps locally. "She has intricate knowledge of state politics and the budgeting process," said Fazioli, who also advises Bridgeport out of PFM's Providence, R.I., office.
City Comptroller Daryl Jones, one of Harp's hires, has nurtured banking relationships and streamlined procurement processes, among other measures. "He's taking a broad vision," Fazioli said of Jones, who served nearly six years in New York State Comptroller Thomas DiNapoli's office.
According to Fazioli, a former East Providence city manager, attention to fundamentals such as revenues that exceed expenditures, will pay off. "The city went through a period where that wasn't happening," he said.