Gov. Dannel P. Malloy is unapologetic about his approach to the state budget or his controversial economic development program, which critics are calling “corporate welfare.”
The state Bond Commission approved funding Wednesday for several large companies that have agreed to stay in the state and create more than 200 jobs in exchange for varying amounts of state funding.
Sustainable Building Systems, cooperative effort by Australia-based Weeks Group and Arizona-based Diverse Services Group, will manufacture steel building material and establish its United States headquarters at a 300,000 square foot facility in North Haven. It received the $19.1 million low-interest, 10 year loan the state promised Wednesday.
“If the company created at least 208 new full-time jobs within 24 months of loan closing and maintains those positions for one full year, $10 million of the principal may be forgiven,” according to the language on the Bond Commission agenda.
But that was just one of seven companies which received a total of about $58.7 million from the Bond Commission Wednesday.
Norfolk’s Infinity Hall, which is expected to build a 500 seat theater and a 100 seat music hall and bistro in the Front Street entertainment district at Adriaen’s Landing in downtown Hartford, received $1.3 million Wednesday. Under the terms of the agreement $1 million of the loan will be forgiven if its able to retain 53 jobs and create 34 jobs within three years.
The addition of the music hall and a movie boosts a long-stalled project started by former Gov. John G. Rowland. The state lost a lawsuit in July filed by one of the Front Street developers who didn’t appreciate the ultimatum they were given by the administration which had just been taken over at the time by former Gov. M. Jodi Rell.
“As someone who drove urban development in a city I’m not sure the project was as well thought out as it needed to have been,” Malloy said Wednesday. “But having said that with a movie theater nearing completion and a live entertainment venue added to the location there’s a very sizable private investment.”
He said it’s the combination of those venues which will help spawn more development.
“I have been personally involved in trying to attract other businesses there and those discussions continue,” Malloy said. He declined to offer any specifics on which companies he’s trying to convince to locate to the empty retail and residential space, which sits across from the Connecticut Convention Center.
Sen. Gary LeBeau, D-East Hartford, who is not a member of the Bond Commission but chairs a subcommittee that gives him a seat at the table, asked Malloy to explain the reasoning behind giving a home health care company money to move from East Hartford to Hartford. He said some of his constituents have had trouble understanding the decision to give money to a company that moves a few miles across the Connecticut River.
Malloy explained that CareCentrix is a rapidly growing company that was seriously considering offers to relocate to Kansas and Florida.
The company will receive $24 million in grants which will be paid over five years if the company meets annual job retention and creation goals until it reaches 503 jobs. It currently has 213 jobs.
CareCentrix had outgrown its East Hartford offices and said their decision to stay in Connecticut was due to the state’s grant.
“I just want to be frank, without the governor’s program we wouldn’t be here today. We wouldn’t be able to retain these jobs and we certainly wouldn’t be able to grow these jobs,” CareCentrix CEO Eric Reimer said back in June when the announcement was made.
Malloy assured LeBeau that they’re in discussions with the owner of the building that CareCentrix is vacating in East Hartford and are looking to find another tenant.
A similar scenario is in play for Alexion Pharmaceuticals, which received money Wednesday to move from Cheshire to New Haven. Alexion will receive $26 million to relocate its 368 jobs and create 300 new jobs. The loan will be fully forgiven if the job creation goal is achieved within five years. It will also receive $25 million in urban and industrial sites reinvestment tax credit over 10 years.
The developer who owns the building the company is moving to in New Haven also owns the building the company is fleeing in Cheshire giving him an incentive to find a new tenant.
News of the Alexion move this summer prompted outcry from Republican legislative leaders, but it received the approval Wednesday of the two Republicans on the state Bond Commission. Neither Rep. Sean Williams, R-Watertown, or Sen. Andrew Roraback, R-Goshen, voiced any objection before the unanimous vote. But it’s not only conservative legislators on the right that have a problem with giving tax breaks to large companies. The Working Families Party was concerned enough to commission this report a year ago, which pointed out the state has been bad at clawing back the generous packages it’s handed out.
Malloy is often quick to put to rest any criticism of his economic development strategy or his approach to the state budget.
Malloy said he took office “after a string of Republican governor’s who made some pretty horrendous decisions and metaphorically drove the car into the ditch.” The metaphor is one often used by President Barack Obama when he talks about the Republican administration of former President George W. Bush.
When Malloy took over the state of Connecticut in January 2011 he was handed a $3.6 billion budget deficit.
“I didn’t make that deficit,” Malloy reminded reporters at a post-Bond Commission press conference Wednesday.
According to Malloy, the previous administration spent all the money in the “cookie jar,” and they borrowed over $1 billion without making any budget reforms. He said he’s doing what he can to straighten it out, which includes borrowing for capital improvements.
“Straightening this thing out is tough work, hard work, and change is hard,” Malloy said.
Funding for Charter Communications, the latest company to qualify for $6.5 million under Malloy’s ‘First Five’ program, is still in negotiations with the state over the terms of their loan so the item was removed from Wednesday’s agenda.