Christine Stuart photo

Gov. Dannel P. Malloy and United Technologies Chairman and CEO Louis Chenevert want state lawmakers to approve a deal that allows the company to use up to $400 million in unused tax credits to reduce their tax liability and expand their facilities.

At an hour-long event Wednesday afternoon, Malloy and Chenevert, told employees and suppliers gathered at the Pratt & Whitney Hangar Museum in East Hartford that Connecticut doesn’t want to lose its critical mass of aerospace and engineering jobs. That’s why they said this deal is so vital to the state.

“Your kids will have an opportunity to work for this company because of what we announce here today,” Chenevert said.

The deal Malloy is asking the legislature to approve would ensure Pratt & Whitney stays in Connecticut for a minimum of 15 years. It also keeps Sikorsky’s corporate headquarters in Stratford for a minimum of five years. In addition it creates a customer training center at UTC Aerospace Systems in Windsor Locks and new labs at the United Technologies Research Center.

The company is expected to invest up to $500 million in capital improvements over the next five years and the tax offsets from the state of Connecticut will be extended over 14 years. The total income tax credits for the various entities cannot exceed $400 million.

The centerpiece of the new agreement will be a 425,000-square-foot global headquarters and world-class engineering building for Pratt & Whitney in East Hartford. UTC will also build a new 12,000-square-foot global customer training center at its Aerospace Systems business in Windsor Locks, and capital improvements at Sikorsky. Construction on the projects would begin this year and continue through 2018.

It’s unknown exactly how many unused or stranded tax credits the company has because the state considers that proprietary information and officials were not able to say.

Malloy called the proposal “dynamic,” but Republican legislative leaders remained skeptical.

“I didn’t hear anything about job growth,” House Minority Leader Lawrence Cafero said. “If they don’t grow one job they get to use 90 percent of those credits.”


According to the spreadsheet provided by the company Pratt & Whitney, UTC Aerospace Systems, and United Technologies Research Center currently employ 14,100 workers and 4,900 engineers. That’s the amount they need to retain in order to use 90 percent of the tax credits. In order to qualify for the full credit, it needs to employ 5,000 engineers and 14,400 workers.

Cafero said the deal also applies specifically to Pratt & Whitney, Sikorsky, UTC Aerospace Systems, and United Technologies Research Center and doesn’t apply to UTC, which is the parent company.

Sen. Minority Leader John McKinney said he has a lot of questions he needs answered before he’s comfortable with the legislation, which at this point doesn’t exist.

The financing deal is unusual for the state. Department of Economic Development Commissioner Catherine Smith said over the first five years of the deal the company earns the right to use the $400 million in tax credits.

According to a chart, the Pratt & Whitney, UTC Aerospace Space Systems, and United Technologies Research Center is expected to use $80 million in the first year of the program, $100 million in the second and third year, $75 million in the fourth year and $20 million in the fifth year. There are another $50 million in credits available to Sikorsky, but it will be a race to see who uses them first because the deal won’t exceed $400 million.

McKinney pointed out that Sikorsky just laid off 600 employees.

Asked about the layoffs, Malloy blamed the federal government.

“The federal government has not done its job with respect to maintaining the orderly flow of orders for what’s made at Sikorsky in Connecticut,” Malloy said. “Hopefully, that’s in the process of turning itself around.”

He said the layoffs were “caused by federal government action, and not state action.”

Asked to comment on rumors that UTC is thinking about selling Sikorsky, Chenevert said he doesn’t “speculate on rumors.”

“Sikorsky is the best helicopter company on the planet,” Chenevert said.

Fred Carstensen, who heads up the Connecticut Center for Economic Analysis, praised the deal Wednesday.

“By converting retrospective tax credits into a prospective development credit, the state rewards companies (presumably UTC will not be the only company permitted to make this conversion) for renewing and often expanding their commitment to continuing to do business in Connecticut,” Carstensen said. “Because large companies such as UTC play such a powerful role in the health of the state’s economy, and because they have the option, over time, of moving some, much, or all of the operations elsewhere, designing a strategy that keeps a company here, even if the objective is to maintain steady employment, is vitally important.”

Even though job growth doesn’t seem to be the main objective of the deal, Smith said she thinks that “there’d be no chance of having this be a job-growing endeavor unless we did this deal.”

“By doing the deal, we’re solidifying and reaffirming their commitment to the state,” she said.