October 15, 2012

Malloy embraces challenge of Hartford

HBJ File Photo
HBJ File Photo
Gov. Dannel P. Malloy has taken a significant interest in trying to help spur economic development in Hartford, but he said he is not interested in playing the role of de facto mayor.

For the first time in years, major development projects are beginning to move forward in downtown Hartford, but it's not a recovering economy driving the activity.

State government is once again taking a leading role in attempting to lead Hartford through another renaissance, making tens of millions of dollars in investments so far — and likely much more — to drive housing, business, and other economic development.

The action is being led by Gov. Dannel P. Malloy who has taken a significant interest in trying to turn around the city, whose economic fortunes took a major hit following the 2008 financial crisis. Even before the Great Recession, Hartford's attempt to morph itself into a 24/7 city where people come to work, play, and live was stalling.

As a former Stamford mayor, Malloy has a track record of helping revitalize a city and he said he sees hope for Hartford. But he believes a recovery won't happen on its own; it requires a public-private partnership.

At the same time, Malloy said he is not interested in running the city.

"I'm not trying to be mayor of Hartford," Malloy said in a recent interview with the Hartford Business Journal. "I'm different from other governors. I already had a 14-year stint as mayor. On the other hand, I am trying to play a role in helping Hartford."

Privately, many economic development officials say Malloy, and any governor for that matter, needs to act as the de facto mayor of Hartford, both from a planning and investment perspective.

And in many ways Malloy's administration is playing a powerful role in city development, particularly downtown. His most important move so far was creating the Capital Region Development Authority, a quasi-public agency that is charged with better coordinating economic development for the region.

CRDA is moving the management of major regional assets — Rentschler Field, the Convention Center, and Adriaen's Landing — under one umbrella and will be coordinating marketing and venue development.

Its mission is to also attract new investment in housing and business. The CRDA has a diverse board made up city, state and private industry officials, but leading the group is executive director Michael Freimuth, who was Malloy's former top economic development lieutenant in Stamford.

Malloy said he does not want to have a top down driven economic plan for the Capital City. Instead he wants all major players to have a seat at the table so they can craft an agreeable strategy.

In the meantime, Malloy has already been active in funding downtown development projects. His administration has provided:

At least $60 million, and likely much more, for CRDA to invest in 2,000 new housing units downtown.

Up to $24 million in grants for healthcare management provider CareCentrix to move from East Hartford to downtown Hartford, where the company plans to add 500 jobs over the next five years.

$10 million for a 30,000-square-foot expansion of Hartford Hospital's Center for Education, Simulation, and Innovation.

$1.5 million to Infinity Hall to build a 13,000-square-foot music house in the Front Street Entertainment District.

$1 million for Back9Network, a startup golf lifestyle channel, to build out a new production studio in downtown Hartford's Constitution Plaza.

And there are other, potentially much more significant, projects in the pipeline. That includes the relocation and consolidation of state agencies to downtown Hartford, which has been in the works for more than a year as the state tries to negotiate the purchase of several major downtown Hartford properties.

Malloy, and other state officials have remained tight lipped on the plans, but the governor did indicate his administration is pursuing a different real estate strategy for the state. He said it was a wrong minded for previous administrations to consolidate state agencies outside the city, particularly when it forced the state to lease a lot of office space in the suburbs instead of owning it.

"I think that was a wrong-minded policy," Malloy said. "We are looking at less expensive ways to conduct business, and I think Hartford has a certain attractiveness for that."

Realty sources say the state has had negotiations with the owners of the vacant Connecticut River Plaza tower as well as 55 Farmington Ave., which is owned by the Hartford Financial Services Group.

It's not clear when a deal may be finalized, or which agencies will be relocated to downtown, but any movement of state workers near the central business district should significantly boost foot traffic during the daytime.

Meanwhile, realty sources have told HBJ that the University of Connecticut has plans to increase its presence downtown. Sources say UConn has shown interest in buying or leasing the Travelers Resource Center at 200 Constitution Plaza, although it's not clear which programs would be housed in an expanded UConn campus.

Hartford Mayor Pedro Segarra has lobbied for years for UConn to move its School of Social Work to downtown from neighboring West Hartford. Sources say the likely move is for UConn to bring that West Hartford campus to downtown Hartford.

And of course a major decision on the fate of the XL Center is pending. The arena is owned by the city of Hartford but leased to the Connecticut Development Authority. That lease is set to expire next year and most experts and officials agree the XL Center is in need of a makeover, but deciding what type of renovation and how much to spend remains a big question.

CRDA will ultimately make the decision.

"With the number of nights booked at XL Center right now it's hard to justify a significant investment," Malloy said. "But I can't imagine the city without the XL Center.

"We have to get our facilities running at a higher level of activity," Malloy added. "I've never hidden the fact that a lot of money was spent on the convention center with not as big a return. That was a top down decision that hasn't worked out great."

Oz Griebel, CEO of the MetroHartford Alliance, said he is happy with the increased role Malloy is playing in the city. Besides investments in real estate development and individual businesses, Griebel said the New Britain-to-Hartford busway, known as CTfastrak, and renewed interest in the Hartford-Springfield rail line will also pay dividends for the city in the long run.

Continuing to improve public safety and education and finding a solution to the city's property tax problem, will also have to be dealt with, he added.

Hartford is the only city or town in Connecticut that taxes residential and commercial properties at different market value rates, which has put a significantly higher tax burden on commercial property owners in the city who face a mill rate of over 70. That is more than double the mill rate in most other Connecticut cities and towns. The mill rate is the tax levied per $1,000 of assessed value on a property.

State lawmakers have tried to remedy the situation in recent years, but the issue still lingers. Malloy said the property tax problem is a local issue that needs to be sorted out by city leaders.

"As a Capital City, what goes on in Hartford also defines the state," Griebel said. "If Hartford is viewed as an economic hub with quality education, entertainment and housing, it sends a strong signal about the entire state of Connecticut."

Griebel noted that Malloy's focus on Hartford comes more than a decade after former Gov. John Rowland also made a big bet on the city by investing hundreds of millions of dollars in the six pillars project, which led to the construction of the Convention Center, Science Center, Front Street, and several downtown housing projects.

One of the things that made the public-private partnership work, Griebel said, was that there was a strong relationship between Rowland, former Hartford Mayor Mike Peters, and former House Speaker Thomas Ritter.

"I see the same thing happening now," Griebel said. "I think CRDA represents a great way of linking the city, state and private sector together. There is no guarantee anything is going to be successful, but I believe the right structure is in place."

Jeffrey Cohen, an associate professor of economics at the University of Hartford's Barney School of Business, said he is not surprised the state is taking an added interest in Hartford, since it is the Capital City and where state government conducts its business.

At the same time, not all investments made by the state will have equal impact, and officials must be careful where they invest taxpayer resources, he said.

"When you are talking about investing in a stadium or sports arena, it typically has less economic benefits than transportation and housing," Cohen said.

Of course, as the state takes on an increased role in the city's affairs, there are opportunities for power clashes. But that's not an issue today.

One of the ways Malloy has tried to avoid clashes is by making the CRDA board inclusive with members that include Hartford and East Hartford mayors Pedro Segarra and Marcia Leclerc; members of his administration including Catherine Smith and Ben Barnes; and private sector representatives including Suzanne Hopgood and Andy Bessette, Travelers executive vice president and chief administrative officer, to name a few.

Segarra said he welcomes the state as a partner, but he also stressed the need for the city government to maintain flexibility over development priorities.

At the same time, the cash strapped city government doesn't have the economic muscle the state does.

The city also has fresh eyes on its economic development strategy, with the recent departure of David Panagore. Thomas Deller, who led economic development in Providence, took on the same role in Hartford during the summer.

"I'm a willing partner," Segarra said, "as long as we have flexibility to consider other projects."

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