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Fernandez Response to S&P Downgrade (2)

Fernandez Response to S&P Downgrade (2)

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Published by: fernandezformayor on Aug 19, 2013
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Henry Fernandez’s Response to the Lowering of New Haven’s Bond Rating
 A Better Vision for Lower Taxes and More JobsAnd the Experience to Get the Job Done
BackgroundThis past week, Standard & Poors (S&
P) lowered the City of New Haven’s bond rating to BBB+,
 just twosteps
before New Haven’s bonds tumble below investment grade. The impact of this is significant. The
city will immediately pay more for bond sales. This means the city instantly has less ability to raise fundsto fix sidewalks and streets, create bike lanes, clean up parks, or buy police cars and garbage trucks. Itmeans our taxes will go up.Equally important, it sends a strong signal to the business and investment community that New Haven isnot a place to do business. That we lack a strategy to build the city going forward. That we have novision for growth.We cannot become Detroit, where mismanagement and the failure to tackle tough problems head onhas led to massive tax increases, a collapse of city services, people leaving the city in droves andultimately bankruptcy.New Haven is at a crossroads. We can either move forward and build a new strong city that creates jobs, lowers taxes and becomes a beacon for other cities across America. Or we can fall off a cliff wheretaxes continue to go up, investment leaves the city, and we do not have the resources to provide goodschools, community policing and basic city services.ExperienceWhen Henry Fernandez was Economic Development Admi
nistrator, the City’s S&P bond rating went up
from BBB+ to A (from 2000 to 2005). During this period the City had a clear vision that was based inredefining our economic future as a growing city committed to aggressive business development. Justsome ex
amples of Henry’s efforts include his leadership to
Bring Ikea to Long Wharf 
Elevate New Haven’s image as a center for biotechnology
Rescue the Shubert Theater from financial collapse
Bring Pfizer to the medical complex
Make the 9
Square a hub for creative, fun and tax paying businesses and for the arts so oncevacant storefronts became occupied
Work with merchants to clean up and rebuild the Grand Avenue corridor
Put the arts front and center to ensure that New Haven was seen as a place of excellence andcreativity, both of which help recruit business
Build over 300 new homeownership units across the cityVisionNew Haven needs to have a clear vision for
our economic future. Henry’s vision has
two simplecomponents:1.
Grow the business sector.2.
Stabilize and then lower taxes.
Grow the business sector
 New Haven has become a city with two large sectors: the non-profit sector which pays no taxes and theresidential sector which pays far too much in taxes. We are lacking a large third sector
a businesssector which will pay property taxes to take the burden off of homeowners, renters and smallbusinesses.We need to address this immediately and see the next five years as the moment in New Haven to createa major new business sector.New Haven has a unique opportunity. Changes in the health care laws and economics in the UnitedStates (including the Affordable Care Act or Obamacare) mean that there are going to be a smallernumber of large and growing medical complexes. Yale New Haven hospital is one of those. We have
already seen YNHH absorb other local hospitals including Bridgeport Hospital and Saint Raphael’s
Hospital.For profit businesses will need to locate near Yale New Haven Hospital. These businesses will include,but not be limited to:
Doctors offices (which will also be merging)
Clinical testing facilities
Pharmaceutical companies
Companies specializing in Electronic Medical Records
Biotechnology firms
Hotel rooms for patients and guestsThe question is not whether these companies will grow. The question is whether these companies willgrow in New Haven or in our immediate suburbs. We need to act now to be sure that New Havencaptures this growth and the resulting new revenues and jobs.
 New Haven has significant vacant and underutilized land between downtown and the hospital, betweendowntown and the train station and between downtown and Wooster Square. This land is a uniquedevelopment opportunity. We should use it to create new office towers that pay taxes and are filledwith the new businesses.
But building new buildings and capitalizing on the hospital’s growth is not enough. We must create a
serious new approach to growing business to create jobs and lower taxes. This includes the following:
Support all of the entrepreneurial new companies coming out of all of the six colleges anduniversities in and just outside New Haven. We need to work with all of our college partners tohelp them keep these new entrepreneurial companies in New Haven. We have seen this withHigher One
and it works.
Put the arts front and center to make New Haven into a destination. New Haven needs tocapitalize on the arts for the tourism revenue that they generate and for the quality of life whichwill make people want to live here and companies want to grow here.
Recognize that Union Station is a transportation hub for New England and use it as just that.Develop around the station, with a combination of tax paying new office buildings, residencesand retail. Create a business corridor starting at Union Station and leading to downtown. Andbuild the second parking garage at the station immediately.
Significantly improve the New Haven Public Schools. This will have three impacts: (1) ensurethat New Haven children are being prepared for the jobs that are going to grow here; (2)encourage businesses to open in New Haven because they believe they can hire locally; and (3)keep companies from moving elsewhere because they are concerned that they cannot getemployees to come to New Haven because the schools are not good enough.
Work neighborhood by neighborhood to rebuild commercial corridors.
Cut crime. The perception and reality of crime in New Haven stops businesses of all sizes fromgrowing in the city.
Create the impression and reality that New Haven is a pro-business and pro-growth city.
Stabilize and then Lower Taxes
New Haven residents simply pay too much in taxes and those taxes have been going up. Henry’s vision
of economic growth is the only structural way to lower taxes. But we need to do the followingimmediately to begin to provide relief:
Do not use one time gimmicks to balance the budget. Selling streets to Yale may fill a budgethole but that hole just reappears next year.
Build a coalition with other impacted towns and cities to ensure that PILOT is fully funded by theState of Connecticut. If the State legislature met its statutory obligation to the City of NewHaven then taxes would not go up.
Repair the City’s credit
rating. This requires balancing the budget without using one timerevenue sources, increasing reserves, and articulating a clear vision for economic growth. Abetter credit rating means that borrowing costs less and provides the opportunity for the city torefinance more expensive debt.

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