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Economic development oversight lacking in CT

BY Greg Bordonaro

7/23/2018
Greg Bordonaro Editor
Developers beware.

If you or your projects have a track record of legal entanglements be transparent about them before you pitch an ambitious development in Connecticut.

If not, your motives may seem nefarious if your checkered history is publicly aired, which it most likely will be by the media or someone else.

The latest snafu arose from the $200 million multi-sport complex proposed in Windsor Locks that aims to feature two roughly 6,000-seat stadiums, turf fields, retail space and hotels. The project, which seemed ambitious, was unveiled with much fanfare during a July 9 press conference.

But a week later Windsor Locks First Selectman J. Christopher Kervick suspended negotiations with the developer — Long Island's Andrew Borgia — after HBJ News Editor Matt Pilon raised questions about a lawsuit Borgia faces in connection with a similar-type project in New York.

In the lawsuit, four investors in a proposed sports complex in the Long Island town of Islip allege that Borgia and his companies defrauded them out of $462,000. Kervick said he was unaware of the lawsuit when asked about it by HBJ. Three hours later he suspended further negotiations, although the project could be revived pending a more thorough vetting and explanation of the lawsuit, which Borgia's lawyer called "utterly frivolous."

Borgia, who also field for Ch. 11 bankruptcy in 2006, said he still thinks his Windsor Locks project is salvageable.

Regardless, his legal history should have been fully understood before the town publicly touted the project. The episode highlights a major problem within Connecticut's economic development circles, mainly that local and state officials don't always do a good job vetting companies and developers, particularly those looking for tax breaks or government incentives.

Another high-profile example is when Hartford city officials granted development rights — and more than $1 million in taxpayer funds — to the former would-be developers of Dillon Stadium, both of whom are currently serving jail time on federal fraud convictions. One of those developers, James Duckett, had a history of embezzlement and lawsuits that the city council was unaware of when they hired him.

Meantime, HBJ highlighted issues with the state Department of Economic and Community Development's vetting process last year, when it revealed the agency had granted funding to a New York startup — CliniFlow Technologies — whose founder was being accused by numerous investors in the Empire State of operating a Ponzi scheme.

DECD said it was unaware of CliniFlow's legal problems before granting the company $400,000 and pledging another $3.6 million. Following the story, agency officials said they would improve how they vet out-of-state companies.

These examples demonstrate how state and local officials lack the ability or resources — in some cases — to thoroughly vet companies or developers seeking government assistance. It's particularly concerning in a day and age when corporate greenmail is as free flowing as ever.

This begs for government officials to collaborate and develop a basic set of guidelines to screen developers and development projects — maybe even borrow the playbooks of organizations that have a successful track record like the Capital Region Development Authority. Steps like legal searches in state and federal courts should be part of the routine as well as requiring certain financial disclosures.

To be clear, we don't need additional layers of bureaucratic red tape to block economic development. In fact, we need to promote and make it easier for honest and reputable developers to do business in this state.

A simple background check checklist shared among state and local economic development officials — in addition to proper training — should suffice.

I'm also not saying involvement in a legal action should eliminate a developer from a project. Development can be a litigious bloodsport, but transparency should be the rule of thumb.