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LCI Fallout: Now What?
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Business New Haven
7/13/1998
By: Michael C. Bingham
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For now, scandal's glare eclipses signs of economic progress in city
It's not the people who are to blame. It's the procedures.
After the firing of three top aides did little to stanch the bleeding from the ever-widening City Hall loan scandal, embattled New Haven Mayor John DeStefano Jr. returned from the long Independence Day weekend to face the news media's red glare July 6. But this latest episode brought no bombs bursting in air, or even any real bubbles.
Instead, in attempting to pin blame for the crisis beyond that which could be borne by his three jettisoned associates, the mayor blamed faulty procedures and misunderstandings in the administration of the Livable City Initiative (LCI) loan programs. He promised change.
DeStefano acknowledged July 6 what had become apparent well before: that the LCI loan programs “lacked clearly defined policies and procedures”; that there had been “inadequate oversight” of the loan process; and that the city was guilty of “poor follow through” in tracking the “quality of work” done with public funds.
The mayor promise to address the sins above by:
• clarifying the loan application and approval process by enforcing existing income restrictions and outsourcing to an “independent party” loan processing;
• requiring city employees and their household members by so identifying themselves on loan applications, and requiring both LCI board and city Board of Aldermen sign-off on all loan programs;
• establishing better reporting and compliance mechanisms to insure that work publicly funded through LCI is in fact performed, and performed competently.
In addition, DeStefano said, filling the vacant LCI director's position “is my first priority right now.” He said a nationwide search had begun for the post formerly occupied by Frank Alvarado, who resigned under fire.
The mayor recapitulated the original goal of the LCI program - to stabilize neighborhoods through the creation of better, more affordable housing while at the same time alleviating the blight that mars many inner city neighborhoods.
“If we didn't try to intervene in these neighborhoods there would be a real negative cost,” said DeStefano. “The real mistake would be not to try to make these loan programs work.”
Few might have predicted that it would come to this in a city accustomed to winking at the excesses of single-party rule. Rocked by allegations that the federally funded LCI loan coffers were being selectively tapped to reward political cronies at the expense of deserving applications, DeStefano responded June 19 by temporarily shutting down the programs completely. That same day, agents of the federal Department of Housing & Urban Development descended upon LCI offices to confiscate computers and paper records as part of a burgeoning probe of reported improprieties in the administration of the loan programs.
These included a sweetheart $58,750 “loan” to a top aide, Andrea Jackson-Brooks, whose $72,100 City Hall salary grossly violated the spirit, if not the letter, of the loan-program guidelines. When reports of the loan became public, DeStefano abruptly fired Jackson-Brooks, along with Alvarado, the then-LCI director caught trying to give a $5,000 loan - to himself. City Corporation Counsel Patricia Cofrancesco was shown the door the same day for having signed off on the two transactions. (Cofrancesco shortly thereafter filed a wrongful-termination suit against the city, claiming she was asked to examine only whether the terms of the loan violated the ethics code of the city charter.)
The firings did little to quell the gathering storm clouds. Soon after it was revealed that $2.3 million in federal funds that flowed through City Hall into the Community Housing Corp. could not be accounted for, a federal investigation was under way, now in the hands of the FBI and the U.S. Attorney's office.
What long-term economic fallout from the imbroglio can be expected? At first blush, no major economic-development initiatives appeared endangered. The week after the scandal began dominating page 1 of the New Haven Register, Gov. John G. Rowland came to town to unveil a $100 million plan to revitalize Science Park and its immediate Newhallville neighborhood.
Earlier the governor had affirmed the state's $60 million commitment to fund infrastructure improvements necessary to build what seems destined to become the defining achievement - or failure - of the DeStefano administration: the million-plus-square-foot Marketplace at Long Wharf.
But for the time being, at least, many remaining question marks - development of the former R.H. Macy & Co. building, a new home for WTNH-TV, the hoped-for Williams Specialty Steel plant, a new FBI headquarters downtown - seemed to fade in the rear-view mirror until DeStefano & Co. can find a way to right the ship they set sail in so confidently just months ago.
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