Yale Threat Pays Off

City officials scrambled this week to prevent another Yale-union spat from blowing an unexpected $5.6 million hole in the just-ended fiscal year budget.

In the end, Yale leveraged a threat to win assurances it can proceed with a plan to build a new biology lab.

The drama began more than a week ago when the university contacted the Harp administration with some unwelcome news: It planned to delay forwarding the first installment of its annual voluntary financial contribution to the city.

The university, after years of negotiation over a series of local issues, agreed a decade ago to give New Haven $8.3 million a year in voluntary contributions in lieu of taxes. It trumpets that contribution — in the face, for instance, of calls for it to pay more in taxes — as an example of its good neighborliness.

The deal called for Yale to pay all the money each year in October at the latest. But under an arrangement with the previous DeStefano administration, Yale has annually paid the first $5.6 million in August, according to city Budget Director Joe Clerkin. (It pays the other $2.7 million, in lieu of paying for fire service, in October.) That early payment helped the DeStefano administration balance its books one year. Clerkin said the $5.6 million has never been double-counted in any one fiscal year, but rather that it’s expected each August to balance the books on the fiscal year recently ended.

But the week of this Aug. 12, amid repeated fights with its UNITE HERE union Locals 34 & 35 and their employees who serve on the Board of Alders, Yale notified the city that it will not pay that $5.6 million until October this year, according to Mayor Toni Harp.

That set off a near-panic, because the city closes its books at the end of August on the fiscal year that ends June 30. Each year it counts on that $5.6 million as the last major revenue to come in, Clerkin said. The budget is otherwise balanced. But without that payment the city would end the year with more than a $5 million deficit.

That would endanger the city’s bond rating, which one rating agency already downgraded this year. It might then cost the city more to borrow money, and it might then have to raise taxes next year, Mayor Harp warned in an interview this week on her ​“Mayor Monday” program on WNHH radio.

Toni Harp declined to speculate on Yale’s motives. She said the important point was the potential impact on city finances. She noted that one rating agency, Moody’s, recently downgraded the city’s bond rating. A sudden multimillion-dollar deficit could further endanger the city’s bond rating, raising the cost of borrowing and potentially leading to a future tax increase, Harp warned.

“Look, I think this is going to be worked out,” Harp said. ​“I would think it would hurt everyone in the city if we have to raise taxes next year.”

Officials said late Wednesday that it appeared the $5.6 million payment was indeed on the way, to arrive as early as the end of the day.

A meeting on Tuesday — with Yale officials, Board of Alders leaders, and city officials — sealed the deal. Participants discussed how to move forward city approval of a Yale plan to build a new biology laboratory on Whitney Avenue, which UNITE HERE-backed alders had delayed. They reached agreement on that, in the process paving the way for the release of the $5.6 million check, according to someone familiar with the discussion; the laboratory project is now expected to be passed by the Board of Alders at its next meeting, earlier than previously planned.

“Adam Should Call”

Asked why Yale had threatened to change its schedule for making the payments this year, university officials declined to answer specific questions, but instead issued a general statement. Contrary to Harp’s version of events, the statement failed to address the change in schedule and instead noted that its previous payment was made for the current year. The statement read: ​“The University has already made its voluntary payment of more than $8 million this year, but if the City needs Yale to prepay additional funds from next year to close a deficit, we will do our best to assist by the end of August deadline that their auditors have set.”

(Yale subsequently released a follow-up statement: ​“We are hopeful that we will come to a positive resolution of our overall parking plan at the hearing on Sept 6, which will then pave the way for our projects to move forward. We are looking forward to working in partnership with the City to further improve parking and transportation in New Haven.)

This latest move by Yale on the voluntary contribution was interpreted in political circles as Yale’s response to feeling unfairly targeted by the UNITE HERE-backed city alders. (Yale also has reportedly so far failed to offer the city’s police chief a job to enable the Harp administration to deal with a political problem, the way Yale did to help out a former mayor who was looking to enable an embattled chief to exit his job gracefully.)

That interpretation was boosted by the fact, confirmed by several people familiar with the situation, that Yale initially offered to pay the money in August under one condition: that Westville Alder Adam Marchand, a UNITE HERE paid employee and a leader of the anti-Yale Board of Alders actions, call them to make the request.

“Adam should call,” a Yale representative told city officials.

Yale Vice-President for New Haven Affairs Lauren Zucker was asked Wednesday — at a Yale downtown groundbreaking at which no city officials appeared or participated — why Yale asked for Marchand to make that call.

“I’m not going to say anything,” she said with a smile. ​“Sorry.”

Asked the same question at the event, Yale Vice-President Bruce Alexander responded: ​“No comment. I don’t want to talk about that. This will work out. We have always had a good partnership with the city.”

It was unclear whether Marchand ever made that call to Yale. He refused repeated requests to answer that question.

Town-Gown Chill

The latest drama follows months of tussling between Yale and its UNITE HERE locals that has spilled over into costly disputes with city government, where UNITE HERE-backed elected officials control a majority on the Board of Alders.

It began in the spring when the state legislature considered UNITE HERE-spawned proposals to update the application of a special tax break Yale gets on its profit-making properties and to reexamine its tax status altogether. A vitriolic war erupted between the two sides, with Yale’s president and a vice-president holding an unprecedented press conference to attack Mayor Harp personally for backing the first of the proposals. (The bills never passed.)

Then Yale officials bristled at delays upon delays in approval of its plans to build the new biology lab, a 280,000 square-foot replacement for the existing Gibbs lab on Whitney Avenue.

As a member of the City Plan Commission and then in his seat on the Board of Alders, Adam Marchand led the charge to require that Yale first win approval of an unrelated citywide parking plan — and then to drag out the process of approving that plan for more than half a year through hours-long hearings and dilatory scheduling. The plan still hasn’t been approved, though it’s getting closer. However, if it’s not approved by Oct. 1, Yale will have to start the process all over, because new state rules will take effect for new building projects.

At stake is $4.4 million in building fees connected with the project. (It now appears the alders will speed up approval at their next meeting, on Sept. 6, based on Tuesday’s agreement.) The city (including the Board of Alders) counted on that revenue for the new fiscal year budget. Failure to receive it could blow a $4.4 million hole in the budget. (Click here and here for background on that dispute, with Marchand’s explanations. This story features an explanation by Marchand about why he has historically voted as a City Plan commissioner on matters that will eventually come before him as a city alder, but felt he couldn’t vote on this matter.)

So Yale’s request this past week that ​“Adam should call” to fix this new $5.6 million payment problem had an unmistakable and understandable ring in City Hall.

The Art Of Ducking

Marchand himself was impossible to pin down on the matter — about whether he even made the phone call.

He wasn’t at his UNITE HERE office on College Street when the Independent showed up seeking comment. Another UNITE HERE employee, Board of Alders President Tyisha Walker, happened to be there. She claimed with a straight face, repeatedly, that she had no knowledge of the $5.6 million Yale payment dispute.

Nor could Marchand be reached by phone. He failed to return a half-dozen phone calls left with his cell number throughout the day Wednesday.

He did, however, promptly respond by text to say he couldn’t talk by phone, but could later — then to say he no longer could. In those text messages, he ignored a request to answer questions about the phone call.

Here’s how the text conversation went (prompted in places by unanswered phone calls):

Marchand: Hey! I’m at work in meetings all day. What’s up? Can I call you later? 10:44 AM

Independent: Urgent on deadline. Can we set a time to chat briefly? Maybe 1 pm? 10:51 AM

Marchand: That will be hard, given how jammed up I am. What’s the topic? I ask because I may not have any knowledge to help you … 11:23 AM

Independent: Yale required that you personally call them to ask them to give the city the annual first $5 million payment in August as usual rather than October this time. City’s worrie[d] about the bond rating dropping if money doesn’t come in by end of August. Did you make the call? And how did you feel about that being a condition? 11:32 AM

Marchand: Sorry, seeing your text just now. I’ve been in a meeting in a basement, bad reception. Sure, I can call, 1:30? Need to finish up meeting12:50 PM

Independent: Sure! Or my I [g]o by your place? I’m two blocks away 12:51 PM

Marchand: In the filed, will call! 1:02 PM

Marchand: Meeting running late 1:39 PM

Marchand: Hey Paul! Totally slammed today at work, cannot get out of the area I’m in. Regarding your question, I have no doubt that the Mayor, the Board and Yale will be able to work in partnership to resolve many issues, including parking. Adam 2:28 PM

Independent: Any chance you can answer the question? Wanna know if you made the call. And how you felt about Yale demanding that you make it 2:29 PM

Independent: I feel like you’re ducking me. 2:30 PM

As of 10:50, Marchand had not responded further.