December 11, 2017

Hartford is at a crossroads

Greg Bordonaro Editor

Two major events happened last week that will have potentially significant ramifications for the city of Hartford and its future.

First, Hartford health insurer Aetna announced it was going to be acquired for $69 billion by pharmacy retail giant CVS, in a move many have proclaimed will reshape the healthcare landscape. What's unknown is how the deal will impact Aetna's large presence in Hartford where it employs thousands of workers.

In a separate announcement, Stanley Black & Decker said it will open a 23,000-square-foot advanced manufacturing center downtown, giving the global tools maker its first presence in the Capital City.

Both developments signal that Hartford, despite its financial struggles and economic decline in more recent years, can still be at the center of major business decisions and activity by national and global companies. In fact, Aetna CEO Mark Bertolini said during a CNBC interview that the first conversations about his company's mega-deal occurred in 2015 at a downtown Hartford restaurant — Peppercorn's — between him and CVS Health President and CEO Larry J. Merlo.

That's a nice plug for Hartford (especially coming from an executive who's been critical of the state), which has a storied history of innovation and as a center of corporate activity.

But the city is also at a major crossroads in terms of being able to preserve that deep-rooted past.

On the one hand, there are many positive vibes in Hartford, with the addition of more than 1,000 new housing units, the opening of Dunkin' Donuts Park and UConn's move to the old Hartford Times building. Stanley's decision to invest in downtown is another major step forward for the city as it aims to attract top technology and other companies and talent.

More importantly, Stanley's investment was not subsidized by government assistance; its risking its own capital, albeit a very tiny amount for a company that had $11.4 billion in revenue in 2016, to be in Hartford.

There are also many landlords, from inside and outside the state, who are bullish about Hartford and its future. Corporate engagement is also on the rise, with insurers investing in a new InsurTech accelerator downtown.

Those are all good signs.

But let's be honest, online retail giant Amazon, which is looking for a home for its second headquarters, likely won't be walking through that door next. (Hartford and East Hartford teamed up in a bid to lure Amazon's HQ2, which supposedly will bring 50,000 high-paying jobs to the winning location.)

While the city of Hartford has made significant strides in recent years, it still has a long way to go before it rebuilds its reputation as a commercial epicenter. Because for every positive development in the city, investors and companies also see red flags like a still unresolved fiscal crisis (that nearly led to a bankruptcy filing) and a commercial property tax rate (74.29 mills) that chokes off private investment. (Let's not forget about the city's high poverty rate as well.)

Remember, it was just months ago that Aetna said it was moving its corporate headquarters to New York City to be closer to a larger pool of technology talent. Bertolini also took a swipe at the state's fiscal issues.

(With Aetna's CVS deal now in play, however, Hartford has a chance to showcase itself to a new management team, which currently calls Woonsocket, R.I., home. It would be nice to convince CVS officials that Hartford ought to remain Aetna's headquarters.)

While I've always considered Connecticut's play for Amazon to be a pipe dream, the economic-development exercise of trying to woo the company and meet its needs is actually a healthy one. It's reminding city and state leaders of the cold hard facts of what many companies are looking for in a potential home. Amazon, for example, is taking into consideration various factors like tech labor force, fiscal health, cost of living, college population, culture fit, and state tax rank.

By those measures alone, you can see why Hartford and Connecticut, which has its own fiscal issues, might not be on Amazon's radar.

Regardless, the opportunity for Hartford to flourish is there. As Millennials fully enter the workforce and Baby Boomers retire, companies want to be in cities attractive to younger workers. It's no longer just a trend, but a fact. Hartford has a highly educated workforce, great cultural assets and strong base of corporate, midsize and small employers.

If we can once and for all put the city and state on sustainable fiscal paths with competitive tax rates, while still making needed investments in transportation and education, both will flourish.

But we are not there yet.

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