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Political incubator

Once looked upon as a dismal municipal outpost, Chelsea is now considered an incubator of talent, the seeds of which can be traced to the appointment of Jim Carlin as receiver nearly two decades ago.

By Steven Rosenberg
Globe Staff / December 13, 2009

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Back in 1991, the cavernous and drafty Chelsea City Hall represented all that could go wrong with a democracy. Within those walls, mayors crafted deals with organized crime, signed off on union contracts that allowed employees unlimited sick leave, and presided over a city that had no official accounting system.

These days, prospective employees come to the building hoping they’ll land a job in a city that has served as a training ground for municipal, state, and federal leaders over the last 18 years. Once looked upon as a grim outpost for a municipal worker, the weathered building is now considered an incubator of talent and is known unofficially as the “Chelsea School of Government.’’

Over the two decades, private developers and the state have poured hundreds of millions into the city, building a state computer center, a new courthouse, seven new schools, and a 180-room hotel, and lining the waterfront with parking facilities for nearby Logan Airport. Like other cities, Chelsea has not been immune to the economic downturn. Last week it was forced to cut almost 20 jobs to plug a $6.5 million shortfall. Still, today, the city is on solid fiscal ground and has earned an A+ bond rating from Moody’s.

Chelsea’s recovery - and the people it attracted - offer lessons to Lawrence, which now faces a serious shortfall and possible state interven tion. For Chelsea, the road to fiscal solvency began when the community reached a dark nadir in its 270-year history in 1991. That summer, after decades of mismanagement and corruption, Chelsea failed to meet its payroll, and the Legislature voted to take control. Governor William Weld appointed Jim Carlin, a no-nonsense manager, as receiver, charged with filling Chelsea’s $10 million deficit and balancing its budget.

Carlin, who had a successful track record in the private sector and as state transportation secretary and chairman of the MBTA, was confident he could fill the budget gap in a matter of months. But changing the culture of corruption within City Hall was more difficult.

“There are situations where democracy doesn’t work,’’ said Carlin, who later turned down an overture by then-New York Mayor Rudolph Giuliani to join his administration. “There was no accountability in any department that I found. It was an urban Wild West.’’

Carlin kept just three of the city’s 17 department heads, including Assessor Guy Santagate, and looked for outside professionals to help implement basic government principles, such as overseeing spending and revenue, and bookkeeping.

Within weeks, Carlin brought in a team of seasoned municipal workers, led by former Boston Housing Authority receiver Harry Spence as deputy receiver. Carlin also recruited former Somerville and Everett personnel specialist Stephen McGoldrick, along with W. Scott Gould, a Navy veteran who became the city’s assistant receiver and director of operations.

They scoured City Hall for records, interviewed employees, found shoe boxes of uncashed checks in closets, and discovered $2 million in unpaid vendors’ bills scattered throughout employee desks. Meanwhile, as the receivership put a clamp on overtime, forced businesses and residents to pay more than $2 million in back water bills, and secured a $5 million reparations payment from Massport for the Tobin Bridge, residents started to believe in the city again. State workers cleaned the streets; storm drains that had been clogged for years were reopened; during December, Carlin persuaded an insurance company to pay to have Christmas lights strung through the downtown.

Gould, now deputy secretary of the US Department of Veterans Affairs, called his experience in Chelsea invaluable. “I learned the importance of leadership, the importance of people and systems and strategy, and, finally, you have to be good at the entire spectrum of those things to make government really work,’’ said Gould.

McGoldrick said he still uses basic management principles he honed during his five-year stint in Chelsea, such as hiring qualified people, not micromanaging their work, and paying them a salary that an institution can afford. Also in Chelsea, McGoldrick represented the city during heated rounds of union negotiations. Instead of viewing union representatives as the opposition, he saw the employees as partners.

“I learned that the best way to get things done right is to have a productive and cordial relationship with labor. It doesn’t do anybody good to be fighting all of the time,’’ said McGoldrick, now a deputy director at UMass Boston.

Eleven months after the city went into receivership, Carlin departed, leaving Chelsea with a balanced budget and a $7 million surplus. He tapped his deputy, Spence, as his successor, and the Harvard-trained lawyer served as receiver until the summer of 1995. Several months before Spence left office, the city voted to amend its charter - a move that would protect its government from a return to the old days of corruption. The new charter abolished the mayor’s position and Board of Aldermen, and created a city manager’s position overseen by a new City Council.

“We didn’t just balance the books for a little while; we worked hard to identify what the causes of their financial problems had been,’’ said Spence, who most recently served as commissioner of the state Department of Social Services.

Santagate, a Chelsea native and banker who had run unsuccessfully as a reform candidate for mayor in 1969, was appointed Chelsea’s first city manager by the City Council in 1995. While Carlin and Spence had carte blanche to run the city, Santagate had the duty of not just balancing the city’s budget but reintroducing democracy and keeping corruption out of City Hall.

While he brought in his own set of principles, such as five-year financial forecasts and long-term capital equipment purchase projections, he also promised his staff and city residents that his administration would be honest, fair, and focused on fiscal solvency and growth.

“I set eight to 12 goals for the year, met one-on-one with the staff, and let people grow on the job,’’ said Santagate, who hired Jay Ash, Andrew Maylor, and Kim Driscoll. Ash is now Chelsea city manager, Maylor is Swampscott town administrator, and Driscoll is the mayor of Salem.

During his five years as city manager, Santagate oversaw the city’s $112 million school building project, a $14 million street and sewer repair plan, and helped persuade 19 developers to pump $46 million into Chelsea. In 1998, the community won an All-America City award from the National Civic League.

David Panagore, who worked for Carlin, Spence, and Santagate, said the common ideal in each administration was a sense of honesty and dedication to the city.

“Every one of them knew their business, did not cut corners, was considerate to people, and cared about community first,’’ said Panagore, who is now chief operating officer for the city of Hartford.

Ash, a Chelsea native who succeeded Santagate in 2000, says he hasn’t tinkered with much of the philosophy instilled by Santagate, Spence, and Carlin. Besides hiring capable employees and letting them grow on the job by taking on increased responsibilities, he says Chelsea’s success can be measured by fundamental municipal principles, such as focusing on the bottom line, economic development, public safety, neighborhood enhancement, community development, and honest government.

“One of the common threads is the adherence of the fundamentals and the belief that we do things for the right reasons and not the politically convenient reasons,’’ said Ash.

Ash said his senior staff meetings have helped department heads share strategies about best managerial practices and have prepared supervisors to move on to bigger municipal or federal positions.

“If you’re an aspiring public official who wants to be more than just a treasurer or an auditor, those senior staff meetings are like classrooms, where you’re learning a lot about what other departments are doing, and it prepares you to take on the challenges of being a manager elsewhere,’’ said Ash.

Maylor, who worked for Santagate and Ash as city auditor, chief financial officer, and deputy city manager, said he learned that “organizational excellence’’ can be accomplished only by taking risks and challenging the status quo.

“I learned that effective organizations encourage employees to challenge the status quo, and all ideas should be approached from the assumption of ‘yes’ rather than ‘no,’ ’’ he said. “I have tried to bring that philosophy to Swampscott, and with the support of the selectmen, staff, and residents, have made significant progress in replicating the Chelsea model.’’

Steven Rosenberg can be reached at srosenberg@globe.com.