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Friday, March 21, 2008

Transfer station may bail out city budget

By Elizabeth Benton
Register Staff
NEW HAVEN — The city is poised to sell or lease its transfer station to plug a $10 million budget shortfall and Mayor John DeStefano Jr.’s budget proposal for fiscal year 2008-09 hints at similar plans for the New Haven Parking Authority.
This comes about two years after two major New York bond rating agencies downgraded the city’s bond outlook from “stable” to “negative,” citing, among other indicators, an over-reliance on nonrecurring revenue.
“We’re going to have to wean ourselves off it,” city acting budget director Frank A. Altieri acknowledged at that time.
This month, the city maintained an A3 credit rating from Moody’s, and an A- from Standard & Poor’s and Fitch Ratings, placing the city in the upper-medium tier of investment-grade bonds, however the city’s “continued reliance on nonrecurring revenues to balance financial operations,” was noted by Fitch.
“New Haven’s financial flexibility remains limited, evidenced by thin reserve levels, the use of nonrecurring revenues to support operations, and a reliance on state aid as its largest revenue source,” the Fitch report says.
Neither Moody’s nor Standard & Poor’s addressed the issue in their reports, however Moody’s analyst Alexandra Lerma said Thursday use of one-time revenues to offset a budget is “not a conservative way of budgeting.”
City Budget Director Lawrence Rusconi defended such sales as part of an “expansive view designed to promote financial and economic health in our community … such sales reduce the tax burden.”
The city has a two-pronged asset management strategy that includes sale of city-owned tax-exempt properties, and sale of underperforming city assets, such as the transfer station, to generate non-tax revenue and make them more efficient, Rusconi said.
“The goals of this strategy are designed to enhance and diversify the tax base and/or to look for creative solutions to underperforming assets,” he said.
The Board of Aldermen voted in 2005 to form a regional Water Pollution Control Authority, selling $34 million in assets from the city’s local authority.
The city used $7 million from the deal to balance the 2004-05 budget, and has used $27 million to pay down debt service through 2009.
Now, aldermen are poised to make a similar decision, either selling or leasing the transfer station to an independent solid waste management authority. The deal is expected to generate $6 million to help close a $10 million budget gap.
“Running a transfer station is hard, and we’d like to create an authority that would have citizen input, but also allow us to run it better…as well as have any future capital improvements not from the general fund,” said Deputy Chief of Staff Paul Nunez.
And as the city eyes its budget for fiscal year 2008-09, there are already plans for what might go next.
In budget presentations, DeStefano has floated the idea of leasing the New Haven Parking Authority, although how much such a deal might garner has yet to be fully analyzed.
“We have no firm plans, we’re just looking at how this would be an option for New Haven,” said city spokeswoman Jessica Mayorga. “It’s not something we’re saying we’re going to do.”
Mayorga said the city is in the “information gathering” stage, and is looking at how other cities have financed their parking authorities, including public/private partnerships, and sales and leases.
The parking authority operates over 9,000 parking spaces around the city, including the Air Rights, Crown Street, Chapel Square, Temple Street, Temple/George, Granite Square and Union Station garages.
Elizabeth Benton can be reached at 789-5714 or ebenton@nhregister.com.

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