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Out of the Red

On January 1 of this year, Toni Harp stood in the auditorium of Career High, a school her late husband Wendell Harp built, to recite the mayoral oath of office. Looking out at the audience of 700 plus attendees, Harp was probably focused on maintaining a friendly demeanor for the cameras and mentally rehearsing the steps of the ceremony, which would mark the first transfer of power in New Haven in 20 years. While the ceremony unfolded without a hitch, the same cannot be said for Mayor Harp’s first year in office, in which she has sought to rectify the longstanding problems of New Haven’s past. As we approach the one-year mark in Toni Harp’s term as mayor, we should look back at the progress she has made so far on some of her more prominent campaign promises, which included improving New Haven’s financial situation and strengthening its social fabric.

In October 2014, Mayor Harp announced that the city had finished its fiscal year with an operating budget surplus of $4.7 million. For a city that has been plagued by more than $500 million in outstanding debt and that has witnessed its credit rating cut to an A- a few months before Harp took office, this feat is commendable. But how was this surplus produced? Laurence Grotheer, Director of Communications for the Office of the Mayor, explained, “The mayor was able to win some additional state aid in what’s called the PILOT (Payments in Lieu of Taxes) program.” This program reimburses cities for tax-free properties. In New Haven, 45 percent of property is tax-exempt—and much of it owned by Yale University. Grotheer commented that the surplus was also a result of Harp’s decision to restructure debt and raise property taxes.

While the PILOT funding and debt restructuring do not have any direct negative effects, the increase in property taxes has significantly impacted local businesses. New Haven’s property taxes are higher than those of other Connecticut cities. Hartford, which is comparable to New Haven in terms of population and demographics, has a mill rate (the property tax rate measured in per thousand dollar values called mills) of 27.68. In comparison, for the 2014-2015 fiscal year, New Haven’s mill rate is 42.36. Mayor Harp increased the mill rate by 3.61 percent, up from 41.88 mills last year.

A former member of the Yale College Democrats Board, who asked to speak anonymously, detailed the adverse effects of this increase, stating that some businesses have been forced to move in light of these new levies. “Panorama Education, a really popular and really successful startup at Yale, moved to Boston,” he said. That the founders of this startup viewed Boston as a more attractive place to work is not surprising. In addition to its burgeoning tech scene, Boston has a mill rate of only 31.18 mills for commercial, industrial, and personal property—a stark difference from New Haven’s. For New Haven, a city whose reputation still recalls high crime rates and a stagnant economy, this property tax increase serves as another reason for businesses and startups to choose another location.

HarpSaloveyYNAccording to the anonymous source in the Yale College Democrats, the consequences for small businesses in New Haven have been equally dire. Elm City Market, for example, is struggling, and high property taxes have only exacerbated the situation. In 2010, developer Bruce Becker reached out to Whole Foods and Trader Joe’s to invite them to lease the ground floor of his building. Both refused to move to New Haven however, and many people point to the property’s unusually high projected taxes—about $1.4 million for the building—as the likely reason for this decision. Elm City Market won the space, but it has faced financial headwinds, resulting in the store being sold in auction last month.

Harp nonetheless defends the mill rate increase as a necessary response to the constantly changing financial affairs of the city. In an interview with The Politic, Mayor Harp explained, “New Haven’s mill rate differs from other cities and towns just as the total value of state assistance varies. The value of each grand list [the list of taxable and exempt property] is different, [and] each municipality has a different subset of tax exempt property.” Yale University in particular makes New Haven’s situation unique: the university, spread throughout much of the city, is tax exempt, and therefore greatly diminishes New Haven’s tax base. With this context, Harp said, “New Haven’s mill rate compares favorably with Connecticut’s other large cities.”

A former staffer for the Harp administration, who insisted on speak on background, further explained that most of the factors that drove the mill rate increase were fixed variables and contractually obligatory expenditures. The one decision over which the city did have control was the balancing of the rainy day fund (money set aside for natural disasters or other miscellaneous emergency expenses) and addressing a couple of shortfalls in the accounts to get the city out of debt and back in the black. The source went on to emphasize that the Harp administration was tasked with rectifying the mistakes of its predecessors: “The city had basically been using tricks and gimmicks to balance its budget for the last six years. They would literally sell off a school or sell streets to Yale as way of patching holes.” Because the previous budget was not sustainable under the last administration, the Harp administration had to seek alternative measures, like raising the mill rate, to improve city finances.

Although this higher mill rate was seemingly inevitable, Grotheer points out that Harp is also taking steps to offset its potential negative consequences. According to Grotheer, the city is attempting to entice startups to stay by providing new resources for them to use. Harp is working with the mayors of West Hartford and Stamford on an early-stage proposal to create a 1-gigabyte per second open access fiber network. Mayor Harp explained the progress so far on this idea to The Politic: “New Haven was joined by Stamford and West Hartford in September [2014] and issued a joint Request for Qualifications (“RFQ”) seeking information and dialogue with parties interested in building the next generation broadband network with capacity of one gigabit.” This network would provide speeds close to a hundred times faster than the average home Internet speed. Grotheer emphasized that this upgrade would benefit tech firms and research companies that required enhanced connectivity. In a West Hartford Patch article, Consumer Counsel Elin Swanson Katz explained the vital role faster internet speeds could play in a city like New Haven: “We heard from businesses, universities, high-tech start-ups, mayors and first selectmen…about how greater Internet speeds at lower costs are essential to their functioning.” At the same time, Alexion, a major pharmaceutical company, very recently moved to New Haven, a further indication that Harp’s policies have not completely decreased the Elm City’s image in the eyes of businesses.

Although the reaction to Harp’s economic policies has been mixed, community members have applauded Harp for her strong social agenda, particularly her effort to reopen the Q House, a local community center that closed in 2003. During her campaign, Harp made reopening the Q House a priority. Yale College Democrats President Becca Ellison ’15 commended Mayor Harp’s work so far, saying that Harp is “fighting to secure funding and support for reopening the Q House as a community center.” Although Harp emphasized that the new Q House is still in its design phase, the blueprints contain a fitness room, outdoor recreational facilities, a community kitchen, a library, a health clinic, and a senior center. In the past, the community center provided a beneficial social environment for Dixwell’s youth while also tying the community together with a common recreational area. Harp elaborated on the importance of the center, concluding, “This is a symbol of the Dixwell community.”

The Dixwell community is not the only group with which Harp has engaged. During her first year, Harp has made strides to improve the city’s relationship with Yale. Because Yale plays such a large role in the New Haven community, it is important that Mayor Harp has taken steps to be more involved with students. Ellison commended Harp’s increased presence on campus. “She came to a meeting with the Dems at the beginning of the semester to welcome new freshmen to campus and talked to us about what she’s been doing for New Haven.” The anonymous former Yale Dems member applauded the improvements Harp made in interacting with Yale. According to the source, during the mayoral election, “Harp almost never engaged with students. She showed up on campus exactly once before the primary election.” Over the past year, her interactions have increased significantly, the source continued. “She comes to meetings on campus for different groups, and she returns our calls, which is always helpful.”

City Controller Daryl Jones further emphasized the effort that Harp is making to partner with the university. Jones explained Harp’s willingness to use outside resources to find solutions for problems. “The mayor always asks the question, ‘What are other people doing that we can then use in the city?’” Following this philosophy, Jones went on to describe Harp’s intent “to build a really good relationship with Yale.” Already, the city has profited from this partnership. The Yale IT department has shared valuable information with Jones, who has used the new knowledge to improve the city’s computer systems. After learning how Yale handles maintenance contracts, Jones initiated renegotiations of all city maintenance contracts.

While Harp is certainly guiding the city in the right direction in these aspects, the question remains: how should New Haven relieve its financial pressures while strengthening its social progress? The way Harp has chosen to rein in the city’s excessive debt may attract criticism now, but the full consequences of this policy remain to be seen. Harp has three more years to fulfill her vision of a revitalized New Haven. Who knows what three more years can bring?