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A new state panel tasked with revitalizing Connecticut’s poor urban centers is recommending $76.5 million in financing for more than two dozen economic development projects in 12 communities.
The initial report from the Community Investment Fund advisory board, which includes brownfield remediation along the Connecticut River in Middletown and an expansion of Waterbury’s downtown district, now must be reviewed by Gov. Ned Lamont’s budget office.
But the report — which stems from a complicated political compromise on taxes and borrowing — already boasts an impressive list of backers, including Lamont’s top economic development officials and key legislative leaders from both parties.
“I think it has exceeded all of our expectations,” said House Speaker Matt Ritter, D-Hartford, whose home community would also benefit greatly from the first report. “For the doubters who said this could never work … you could not have been proven more wrong.”
Ritter was referring to complex negotiations that surrounded the state budget in May and June of the 2021 legislative session.
Progressive Democrats wanted to impose hundreds of millions of dollars in new taxes on Connecticut’s wealthiest households and large digital media companies and then dedicate all of those revenues to poor urban centers.
Lamont, other moderate Democrats and most Republican lawmakers opposed those increases. The principal argument against the plan was that boosting state taxes solely on the wealthy would prompt them to flee the state.
Lamont also advocated for a “debt diet” since he took office in 2019. Connecticut has roughly $27 billion in bonded debt and ranks as one of the most indebted states per capita in the nation.
But a significant portion of the Democratic majority in the House and Senate counter that Connecticut is home to some of the most extreme income and wealth inequality in the nation. The top margin income tax rates here are lower than those in neighboring New York and New Jersey, and progressives say Connecticut’s heavy reliance on a regressive property tax system to fund local education and municipal government excessively burdens many low- and middle-income families.
Ritter brokered a compromise that abandoned the tax hikes on wealthy households and digital media companies but authorized $175 million in annual bonding, starting in the 2022-23 fiscal year and running through 2026-27, for poor communities.
Equally important, it also created a mechanism to fast-track this financing.
Legislative authorization alone isn’t sufficient for the state to borrow funds. It also needs approval from the State Bond Commission, a 10-member panel heavily controlled by the governor. The chief executive serves as chair, has two commissioners serving on the bond commission and has sole authority to set the panel’s agenda.
But under the compromise approved by the 2021 legislature and Lamont, the governor must identify relatively quickly any objections to projects endorsed by the Community Investment Fund board. Otherwise they must be placed on the bond commission’s agenda for action within 60 days.
Ritter said the board, which adopted its first report last week, would submit its plan to Lamont by mid-October, in time for action at the bond commission meeting set for Dec. 9.
The spokesman for Lamont’s budget office, Chris Collibee, said the administration expects to finalize which projects will be placed on the bond commission agenda in the next few weeks.
But the Ritter also said he doesn’t expect much pushback.
The investment board not only includes legislators from both parties, representatives from the treasurer and comptroller’s offices, but also key officials from the governor’s budget and economic development staff.
Every key player in the decision-making process was involved in reviewing the applications for funding, Ritter said, adding that cities and towns submitted roughly 140 applications that passed initial screening. Any objections or concerns were addressed early in the process.
“That’s such a sea change in the approach to bonding,” he said.
House Minority Leader Vincent J. Candelora, R-North Branford, agreed.
“It’s sort of the pattern of the way we should be doing all of our bond allocations,” he said. “It de-politicizes the process.”
Alexandra Baum, Lamont’s deputy economic development commissioner and a member of the Community Investment Fund board, noted that all projects were endorsed unanimously by the panel.
“The Department [of Economic and Community Development] looks forward to working with each community as they utilize this funding to unlock transformative development opportunities,” said Baum, who specializes in local economic development projects and urban revitalization zones.
The legislature’s Black and Puerto Rican Caucus has strongly supported higher income tax rates on Connecticut’s wealthiest households to help poor communities. But Rep. Gerardo Reyes, D-Waterbury, who chairs the BPRC, said so far the compromise is working.
“I think it’s going to play out well for us over the years,” he said, adding that cities and towns deserve much of the credit for developing thorough, detailed applications.
“The people who prepared the data really did their homework,” he said, “so we can actually compare and see where the dollars really are needed.”
The investment fund panel put a hefty share of the first wave of funds, about 40%, toward the state’s three largest cities.
The most, almost $19.5 million, was designated for New Haven and spread across five projects, including $10 million for housing, child care services and commercial development in New Haven’s Dixwell Plaza.
Hartford received $10.6 million for four projects, including $3.7 million to develop 155 new housing units in the Sheldon Charter Oak neighborhood.
And $2.5 million is earmarked for a total of two projects in Bridgeport, including 50 units of affordable housing on the site of the former Marina Village Apartments.
The largest grant, $12 million, is designated for Middletown brownfield remediation, the first step in developing 200 acres along the Connecticut riverfront.
Waterbury’s central business district expansion will be supported with $10 million.
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