Chicago made history, electing former federal prosecutor Lori Lightfoot its first black, female mayor as the city struggles with gun violence on its streets and looming fiscal woes.

Lightfoot, who also will be the first openly gay leader of the nation’s third-most-populous city, soundly defeated Cook County Board President Toni Preckwinkle, 74 to 26 percent with nearly all precincts reporting, according to city election board returns. Lightfoot had never held elective office and will replace Rahm Emanuel, who chose not to run for a third term.

The historic outcome of Tuesday’s vote was assured after the two black women beat 12 rivals in the campaign’s Feb. 26 first round, Chicago’s most crowded mayoral ballot ever. It included Bill Daley, the son and brother of two past Chicago mayors and, like Emanuel, a chief of staff to former President Barack Obama.

“Together we can and will finally put the interests of our people, all of our people, ahead of the interests of a powerful few,’’ Lightfoot told a cheering crowd gathered at a downtown hotel. “We can and we will break this city’s endless cycle of corruption.’’

Lightfoot, 56, who Emanuel named to a police-reform task force, campaigned as an independent reformer while Preckwinkle, 72, touted her years of experience in elective office, calling the mayoral post not an entry-level job. At a time when Democratic politics is leaning left, Preckwinkle’s establishment resume didn’t sell.

In a victory speech that evoked Martin Luther King Jr. and Chicago’s first black mayor — the late Harold Washington — Lightfoot said her victory was a “mandate for change.” She pledged to embrace diversity, welcome immigrants, ensure the city doesn’t shrink, and combat its infamous political corruption.

Referring to President Donald Trump’s immigration policies, Lightfoot decried a “climate of hate and fear” that she said is frightening immigrants from around the globe.

In conceding defeat, Preckwinkle noted the historic nature of the night. “Not long ago, two African-American women vying for this position would have been unthinkable,’’ she told supporters.

Democratic Town

Chicago’s election, while nonpartisan, was fought between Democrats in a place that the party has dominated for decades. Preckwinkle remains the head of the Cook County Democratic organization.

In defeating Preckwinkle, Lightfoot inherits control of a city beset by $28 billion in pension debt, a shrinking population, and a murder rate far surpassing that of New York and Los Angeles. While Emanuel reassured investors in the city’s junk-rated bonds by boosting taxes, his successor will contend with the pension shortfall and projected budget deficits that put the city’s fiscal stability at risk.

“It’s going to take quite a few months to get her arms around the fiscal situation, which is the thing that matters most for investors,” said Triet Nguyen, managing partner at Axios Advisors, a bond research firm, in Lake Forest, Illinois. “On one hand you have optimism but there is a lot of uncertainty that comes with that.”

Related: Junk Bonds, Pension Crisis: Why Wall Street Is Watching Chicago

Lightfoot’s campaign drew attention for her leadership of an Emanuel-appointed task force that issued a scathing review of the department in the wake of the shooting of an unarmed teenager, Laquan McDonald, by a Chicago policeman.

Challenging Emanuel

Lightfoot challenged Emanuel before he dropped his bid for a third term, announcing her candidacy in May 2018. She presented herself as the candidate who would combat Chicago’s notorious reputation for corruption. Indeed, a scandal involving allegations of attempted extortion erupted in the middle of the campaign’s first round.

Once a favored candidate, Preckwinkle was hurt by her connection to Alderman Ed Burke, who was hit with a federal corruption charge in January. Prosecutors alleged he pressured executives of a fast-food restaurant chain to become clients of his tax-specialty law firm in exchange for a remodeling permit in his ward. Burke has pleaded not guilty.

The federal complaint alleges he pressured company executives to donate $10,000 to an unnamed politician, later identified as Preckwinkle. He’d also held a fundraiser for her in his home during her campaign for county office.

Preckwinkle, a former Chicago alderman who has led the county government since 2010, also was backed by some of the largest labor groups, including the Chicago teachers union.

Neither she nor Lightfoot offered many specifics on how to handle the city’s financial problems, but Lightfoot won the endorsement of the local chamber of commerce as well as the Chicago Tribune and Chicago Sun-Times.

Financial Hurdles

Under Emanuel, the city ended its so-called scoop and toss, the process of borrowing to pay off maturing debt, and also unwound its debt portfolio of interest-rate swaps. All three major rating companies now have a stable outlook on the city’s debt. Moody’s rates the bonds one step below investment grade, while S&P Global Ratings and Fitch Ratings consider Chicago at least one level above junk.

Financial hurdles remain. The city’s retirement funds are only 27 percent funded. Emanuel put the pensions on a path to solvency by boosting the city’s contribution and raising property taxes and other fees. After he leaves office, though, the city’s required annual pension payment doubles to more than $2 billion.

The next mayor, who will be inaugurated in May, won’t have time to waste once she takes office, said Dora Lee, director of research at Belle Haven Investments, which manages $8.9 billion of municipals including Chicago bonds. The city budget is typically presented in October.

“Chicago’s financial situation does not afford any candidate a lot of runway,’’ Lee said. “It’s going to be a very short honeymoon.’’