In fact, it might make sense, although it is not all that clear. The
Greater New Haven area has a population just over half a million; slightly smaller, but not by much, to metro areas like Burdeaux, and bigger than places like Montepellier or Alicante. Mid-sized cities can host successful light rail / trolley systems, specially if they are well planned and designed. Far from being a fancy project, a good network can be a great addition to the strenght and attractiveness of a metro area.For starters, the city becomes much more walkable, as residents are less likely to need a car. This allows building with less focus on having massive amounts of parking space, as well as allowing denser zoning and more pedestrian-friendly streets. In addition, easier transportation tends to raise property values where it is installed, specially when the infrastructure is fixed and stable. Buses and bus stops are easy to move, making routes more confusing and planning around them less likely; a fixed tram line, in contrast, offers a solid path that will remain there.
Of course, all these benefits need a certain kind of city. First, it has to be somewhat dense; trams have a lot of capacity compared to buses, after all. Second, the distribution of the city needs to have at least a few "dense" destinations that generate traffic; areas with lots of activity that will benefit from being connected. Third, it is an investment that requires a strong commitment; as happens with rail, if the network is not extensive enough or the frequencies are too low, the system will be pretty useless.
New Haven has the density and the layout (potentially) to host an effective tram system. I am not sure if it has the money to make it work from day one; it will definetely need a lot of Federal or State (one can dream) help.
A different question would be if a tram should be the first in the list of city priorities, of course; if a transportation project that will only bring substantial development in the medium term should go before improving schools (one of the factors keeping many people out in the suburbs). To solve this we need to talk about property taxes and smart growth; and about that we will talk tomorrow.