The Hartford’s Deep Embrace

The Hartford’s recent $46.5 million repurchase of its Simsbury life insurance campus brings full circle a fruitful relationship cultivated with the Farmington Valley town some 29 years earlier.

Back then, ITT-Hartford Group Inc. sought a site remote from its urban base of operations for a secure, backup data-processing center. As a bonus, the insurer, then heavily into property-casualty coverage, wanted a companion office building to give a separate identity to its fledgling Hartford Life Insurance unit.

Simsbury, in turn, was eager to broaden its tax base beyond the thousand or so households anchoring a rural community of what locals once referred to as “paved cow paths.’’ Its trump card was its deed to 173 wide-open acres on the town’s southern end, near its border with Avon, that could accommodate The Hartford.

The Hartford ultimately paid the town $1.3 million for the land and sank an estimated $100 million more to erect and outfit its then state-of-the-art suburban campus — a financially fortuitous transaction that continues to sow dividends for Simsbury taxpayers nearly three decades later.

“This would have been a very different town had we not sold that land to The Hartford,’’ said First Selectman Mary Glassman.

Today, the company familiar for its antlered-stag logo is not only Simsbury’s single largest employer — with some 1,900 workers and more due this spring — but also is its leading taxpayer, generating one-year real and personal property levies totaling $2.4 million as of Feb.1. There is the extra benefit to local merchants of the insurers’ employees who live, shop, dine and purchase other goods and services in Simsbury, officials say.

In all, the insurer and the previous owner of Hartford Life’s four-story, 611,000-square-foot building on 40 of the 173 acres at 200 Hopmeadow St. have returned tens of millions in taxes — plus untold donations of cash and services — to this town of 23,600 over the years.

Those tax dollars and contributions have funded educations for thousands of local schoolchildren, as well as the town library, town hall and other upgrades to public facilities and roads — many of which still stand, town officials say. Plus, the insurer has hosted scores of cultural events, such as the Hartford Symphony, on its grounds.

In the same span, Hartford Life has grown from a small, specialty insurer to the nation’s fourth-largest issuer of life insurance, managing almost $300 billion in assets held in annuities, life and disability insurance, mutual funds and retirement plans worldwide.

Hartford Life spokesman David Potter says the campus repurchase “solidified our commitment to the Greater Hartford area and gave us a solid foundation to continue growing.’’

The repurchase may also set the stage for even more growth for the town, just as the decision to build there did three decades ago, past and present town leaders say.

“The Hartford was the backbone of our being able to move forward with the other infrastructure projects we needed for the town,’’ said Margaret “Peggy’’ Shanks, a substitute teacher who was Simsbury’s first selectman when the insurer came calling in 1981.

Shanks recalls the phone call from a real estate broker with a “client’’ interested in buying the 173 acres that Simsbury officials envisioned as a business park.

When she showed up for a meeting with the broker and his mystery client, the selectman who accompanied her recognized the “stag’’ neckties on the other men in the room.

“He said, ‘I just about jumped up and down,’’’ Shanks said.

The Hartford wanted more from the town than the business park — part of which was once a hog farm.

The insurer insisted the town review and approve all its planning, building and zoning applications and issue permits on a “very aggressive’’ 12-month timetable, so construction could begin immediately, recalls Hartford real estate lawyer John Mallin, whom The Hartford hired to liaison with the town.

The first step, however, was convincing residents — many initially skeptics — to approve the land sale. On June 24, 1981, an overflow audience of 3,000 or so gathered at town meeting — the largest ever recorded in New England, according to former town moderator and author Evan Woollacott — and unanimously voted to sell the acreage to The Hartford.

Kevin North, then a real estate vice president at The Hartford who also attended the meeting as a Simsbury resident, recalls the town was not the insurer’s first suburban choice. Among the locations considered, North said, was a Farmington tract, near the junction of Route 4 and South Road, in the shadow of the University of Connecticut Health Center.

Glassman, who moved to town 20 years ago from New Britain, said Simsbury deserves credit for recognizing all those years ago the benefits of a diversified economic and tax base.

“Fortunately, we had strong leaders like Peggy Shanks who were able to make the case for what was best for the town,’’ said Glassman, who is running for governor.

North, who sits on the Simsbury finance board, pointed to the difficulty his and other Connecticut communities have these days setting budgets amid shrinking tax bases caused by the Great Recession.

“Things would be much more difficult for the town without The Hartford, no question about it,’’ said North, a real estate investor whose holdings including downtown Hartford’s Gold Building, among other commercial properties nationally.

This spring, The Hartford plans to move most of the 600 jobs relocated from its closing Southington office to its Simsbury campus. With the move, 1,900 workers will be in the life-insurance operations, and 800 in property-casualty, the company says.

In November 1984, with construction bankrolled by a $74 million mortgage from the old Connecticut Bank & Trust Co., The Hartford seized on a novel financing arrangement in which it sold the unfinished data-office center and the acreage beneath and then agreed to lease them from the new owner for 25 years. The Hartford moved into its completed campus in 1986.

The benefit of a sale-leaseback is that it puts cash in the seller’s hand right away, while the buyer collects a guaranteed stream of rent plus tax benefits from owning and maintaining the real estate.

But once the lease is up, U.S. tax laws are very precise about what happens to the property, said Mallin, partner in McCarter & English’s Hartford office, where he leads the combined real estate/construction/environmental practice for all seven regional offices. One requirement is that the tenant has the right to buy the property back at fair-market price.

Other companies have benefitted from sale-leasebacks. Aetna used it to develop its sprawling Middletown campus, and General Reinsurance did the same with its Stamford headquarters. However, Aetna and Gen Re opted to walk away rather than repurchase, essentially leaving those large, one-tenant properties mostly empty.

Fortunately for Simsbury, officials say, The Hartford chose to stay at 200 Hopmeadow St.

“I like it better occupied,’’ said North, “rather than unoccupied.’’