DECD Commissioner David Lehman airs his early plans to jumpstart CT’s economy

David Lehman, Connecticut’s newest economic-development commissioner, sees himself as a life-long learner.

Two books on the credenza in his upper-floor downtown Hartford office overlooking the Connecticut River — “Industries of the Future,” by Alex Ross; and “The New Urban Crisis,” by Richard Florida — speak volumes about the crossroads in the Greenwich resident’s life and career.

They also hint at where the former Wall Street banker will look for solutions to Connecticut’s decade-long, sluggish economy as well as new opportunities for innovation and job creation.

Like his predecessor Catherine Smith, a former insurance executive turned Department of Economic and Community Development (DECD) commissioner, Lehman is a newcomer to the world of economic development and will be forced to learn while he’s on the job. He knows he faces a daunting task.

“It’s clear from the last 10 years of economic growth and outmigration and the fact that we haven’t regained all the jobs that we lost during the recession, there are real challenges we need to address,” he said. “But I think the state has a lot of the structure and bones in place to regain its greatness.”

After facing a tough nomination process, in which his background as a Goldman Sachs partner during the 2008 financial crisis came under scrutiny, Lehman says his top priority is revitalizing Connecticut’s cities, especially Hartford, while also rejiggering how the state uses incentives to spur private-sector jobs and investment.

He’s also helping to redefine, observers say, a new, deeper relationship between his agency and its economic- and market-research affiliate, the Connecticut Economic Resource Center (CERC). Gov. Ned Lamont bared plans earlier this year for a reconstituted CERC board helmed by former Webster Bank CEO James Smith and ex-Pepsico CEO Indra Nooyi. CERC, Lehman says, will focus on new and better ways to market the state’s inherent economic assets like its skilled, well-educated workforce, thriving advanced-manufacturing sector, and proximity to Boston and New York.

Smith says he’s interacted often with Lehman during his first months on the job, describing him as “a strong, highly motivated, skilled leader who is going to make good things happen in economic and community development in Connecticut.”

Also holding the title as Lamont’s senior economic adviser, Lehman is “the speartip’’ for the governor’s business recruitment and retention ambitions, Smith said. He also will have policy influence with the state’s other business-facing agencies, such as transportation, labor, and energy and environmental protection.

“That will make it possible for him to collaborate with all of the other agencies that have a say on business policy,” said Smith, who added that the Lamont administration's other pillars for economic growth include fiscal stability and investments in transportation and workforce development.

Also, Lehman is forming, Smith said, a business-advisory panel made up of statewide corporate leaders and business owners who will provide DECD with valuable intelligence on marketplace trends.

In a wide-ranging interview with HBJ, Lehman, 41, also talked about the need for state government to consider public-private partnerships; ease its regulatory burden on business; leverage investment in and development of federally sanctioned Opportunity Zones; and continue to promote entrepreneurship and innovation.

Since he assumed office, Lehman says he has spent time canvassing state lawmakers, local mayors and economic-development specialists, business owners and professional organizations, corporate managers, and members of his DECD staff, to get a better sense of the issues important to them.

Push for cities

A married father of two, the New Jersey native spends several nights a week in an East Hartford hotel. He says he got to know and appreciate Connecticut — and its “beautifully landscaped geography” — through his wife, a Westport native, on weekend visits upstate from their Manhattan residence.

Ironically, Lehman, who says he and his family moved to suburban Westport to escape life in New York City, now extols the virtues of urban living, citing Hartford’s “live, work, play’’ ambitions.

Indeed, a cornerstone of his plan to revitalize Connecticut’s economy is to focus on building up its cities.

He says Connecticut’s lack of a metropolis the size of Boston, New York or San Francisco is a hindrance. However, for the urban areas it has, the state must make them appealing not only to investors but young Millennials and retired Baby Boomers.

U.S. cities, Lehman says, underwent a period in the 1970s and ‘80s in which they were vilified as incubators of crime and poverty. That gave a state like Connecticut, known for its suburban lifestyle, an advantage in attracting people and companies like General Electric, which moved from New York to Fairfield in the early 1970s.

Today, however, that narrative has been upended as cities are considered safer destinations and magnets to a new generation of young workers for whom living and working in an urban setting is an amenity.

“Personally, I think there’s been a macroshift in terms of the forces that put people into Connecticut, or into the suburbs,” he said. “The trend toward cities is very, very real and we need to address it.”

One of the challenges Lehman faces in his efforts to boost cities is limited state funding. Hartford’s downtown has undergone significant changes over the last decade thanks to tens of millions of dollars invested by the Capital Region Development Authority — a quasi-public agency created under the Malloy administration — into converting old or vacant office buildings into more than 1,000 new apartments.

That’s helped boost downtown’s residential population and also enticed some suburban employers to move to the center city to be closer to a growing talent pool.

Millions more dollars have been invested in various innovation hubs downtown that have helped attract new startups to Hartford.

However, Lamont’s debt diet, in which he has pledged to limit the state’s borrowing, has slowed existing fund allocations to CRDA and left uncertain how much money the agency, and other state-backed efforts or programs, will have to work with in the future.

The reality is, progress made in revitalizing Hartford’s downtown would not have happened without state support, and Connecticut’s limited financial flexibility could make it harder to stimulate growth in the capital and other cities going forward.

Lehman, who sits on CRDA’s board, said he’s a big fan of the work the quasi-public agency has done in Hartford, but that it’s imperative for cities to leverage as much private dollars as possible. That’s one reason he’s bullish about promoting the federal Opportunity Zone program, which was created as part of the 2017 federal tax reform law to spur realty- and business-development in the U.S.’ neediest communities.

It allows taxpayers who invest in qualified Opportunity Zones to be eligible for capital gains tax incentives. Besides investors, anticipated beneficiaries are the 72 low-income neighborhoods in 27 municipalities across Connecticut that have been tagged as OZs. That includes zones in Hartford, West Hartford, East Hartford, Bristol, Middletown, Meriden and Manchester.

Lehman said he’s watching closely a bill in the state legislature that would further leverage OZ investments, but mostly he wants DECD to be a convener of deals, maybe even creating a centralized website or marketplace for municipalities and developers to identify shovel-ready projects.

“We should be a ‘go-to’ source for Opportunity Zones … to make sure those investments get through the pipeline as quickly as possible,” he said.

He also said DECD needs to work more closely with local planning and zoning boards to understand their growth strategies and how the state could help.

‘Earn as you go’

Maybe one of the biggest shifts under the Lamont administration’s economic-development strategy is how the state plans to use incentives to stimulate job growth and development.

The Malloy administration transformed the state’s jobs strategy, aggressively ramping up corporate incentives — to the tune of more than $650 million in loans and grants and hundreds of millions more in tax credits — to entice private-sector companies to retain and add jobs in a state desperate for growth.

Some of that aid was in the form of grant money or forgivable loans that companies benefited from up front, before they created jobs or made certain investments.

That required the state to borrow money in order to provide those incentives, which were panned as corporate welfare by some.

Lehman said he wants the state to move to more of an “earn-as-you-go” system, meaning employers won’t reap state incentives until they’ve created a certain number of jobs or made a certain level of investment.

That prevents the state from having to borrow money to incentivize job growth, or from having to clawback funds from companies that failed to live up to their deals.

“The company and the private sector are going to come up with the money they need to create those jobs and they will earn that incentive over time,” Lehman said.

He said most states structure their incentives that way, and he’s working to change Connecticut policy.

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Lehman talks CT's regulatory environment, public-private partnerships