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Big Deals
Communities hope rewards of planned $50 million-plus projects justify risks
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Business New Haven
9/20/1999
By: Susan Froetschel
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As a region, greater New Haven has experienced more real economic development - with more vitality and vision - in the past year than it had in all the earlier years of the 1990s combined.
Central Connecticut, with its skilled population and accessibility, is poised to seize a firm place on the map as a reasonable alternative for new businesses besides the traditional Northeast powerhouses of New York and Boston, according to Peter Gioia, economist with the Connecticut Business & Industry Association (CBIA).
Business New Haven spoke with economic planners throughout the region to discuss major and potential projects, defined as those with price tags of $50 million or more. Economic development officials long for such large, visible projects, so that politicians can go out and cut ribbons as tangible evidence of their community's worth and vitality.
"Less heralded, but just as important, are the little points of development, which are a lot harder to attract," notes Gioia. Consider that 80 percent of new jobs in the state are regularly created by existing companies, according to CBIA, while the doubling or tripling in size of hundreds of five-person companies has much smaller net effect.
When CBIA surveyed more than 400 companies throughout the state earlier this year, 60 percent responded that they had plans to expand, and 92 percent of those firms intended to expand within Connecticut.
The $50 million-plus projects listed here may represent only a fraction of the dreams in our communities, but they do provide momentum and infrastructure that guide and motivate smaller companies.
"One project by itself, absent a strategic plan or direction, isn't that important. But if there are multiple interrelated projects, that does bode well and increases a region's chance for success," says Jeff Blodgett, vice president of information services with the Connecticut Economic Resource Center Inc. (CERC).
New Haven has 11 projects underway that total $83 million: The largest are a medical conference facility for 80 Temple Street; a biotech facility for 300 George Street; the FBI building and upgrade of Veterans Memorial Coliseum.
Other proposed projects include almost $1 billion for an innovative housing initiative, the mall at Long Wharf, mixed-use housing at West Rock, a housing-retail development at Lamberton Square, renovation to the Chapel Square Mall and parking projects. Public projects, including expansion of the Pearl Harbor Memorial (Q) Bridge, construction of high-speed rail, the Church Street South bridge and mixed-income housing, represent $1 billion more.
New Haven and the rest of Connecticut were sluggish getting out of the gate with the recovery, reports Blodgett, but now the state has recovered more than 90 percent of the jobs lost in the 1989-1992 downturn. He expresses optimism about the state's future - and its cities': "Right now, we're in economic heaven, and most cities and towns are making the most of it," he proclaims.
Because most planning and development in Connecticut is largely done on a home-rule basis rather than by counties or regions, competition among municipalities can hinder development. "Sometimes communities mistakenly think that if Community A gets a project, then Community B fails," says Gioia. "But if both communities are in the same region, then there may be benefits to both. Community B may attract other companies as a result or receive ancillary benefits."
The recession, however, prompted cooperation. "There is a new sophistication, an understanding that 'regional' does not mean all communities are the same," says Robert W. Santy, president of the New Haven-based Regional Growth Partnership. "Bethany is not the same as New Haven and, if we're smart, we'll preserve both."
Bridgeport, West Haven and communities in the Naugatuck Valley all have extensive projects on town borders that require cooperation with neighboring towns (see accompanying chart).
"We can't have 169 fiefdoms out there trying to go it alone," says Blodgett. "Connecticut is too small, and there are a lot of efficiencies to be realized through regional cooperation."
One of the most exciting projects is the University of New Haven's Institute for Forensic Science on Orange Avenue in West Haven, anticipated to open in larger quarters within two years.
The center will be primarily academic in nature, with a research center, consulting services for insurance companies and law-enforcement agencies, as well as a combined 20,000-square-foot learning center and museum for the public.
"This would put West Haven into more [newspaper] datelines than anything else we could do," says Richard Slawsky, executive director of the West Haven Economic Development Corp.
Another national newsmaker, Yale University, this fall will begin construction of a $160 million medical research complex. The 440,000-square-foot building, on Congress Street between Howard and Cedar streets, is expected to be completed in 2002. The complex, focusing on disease-oriented research, will house laboratory space, offices, classrooms and a Magnetic Resonance Center. Yale annually spends about $200 million on capital improvements, largely renovations, for its campus.
Southern Connecticut State University has an ambitious $132 million five-year campus construction plan underway, approved by the state legislature, with renovation of the facility and operations building, Engleman Hall, Jennings Hall and Buley Library, as well as construction of a multi-story parking garage and a student center. Campus administrators also hope to secure legislative approval for an additional $230 million in construction funds as part of a ten-year plan.
Another potential project on the horizon is a regional biotech facility to be developed on 30 acres off Route 34 in West Haven near the New Haven border. The Regional Growth Partnership (RGP) formed a nonprofit subsidiary earlier this month to spearhead such economic development projects, and a bioscience park is a priority. The former Sursum Corda site was originally intended for a medical hotel for heart patients in need of monitoring, but that plan fell through.
Regional cooperation is much less evident in the retail sector, where duplication is rampant and competition is fierce, as evidenced by the onslaught of advertising and opposition hurled at a proposed New Haven mall by Westfield America, which owns malls in Milford, Trumbull and Meriden.
In all, Westfield America has spent more than $800,000 fighting the New Haven Galleria at Long Wharf, rallying support among existing retailers and filing a series of lawsuits against the city of New Haven and the developers of the proposed mall.
"[Westfield America's] experiencing a taste of the medicine they dumped on downtowns years ago," notes Jeffrey Finkel, director of the Council for Urban Economic Development in Washington, D.C.
Over-reliance on retail tends to make many community planners cringe, because retail development does not produce high-wage positions and does not require immense skills on the part of the workforce. Also, competition is so intense that new storefronts can leave dilapidated structures in the next community or down the street.
Economists report that Connecticut has slightly more retail than the U.S. average, but that's hardly surprising given the state's higher-than-average income profile.
"Retail is a funny business," comments Gioia. "It is a business that's not stagnant; it tends to follow fashion, which requires ongoing reinvestment." Some areas, both individual stores or complexes, think they can retain their customer base without updating and reinvestment. "That is a doomed strategy," says Gioia. "Customers vote with their feet."
Location is critical to the success of new retail facilities, according to national and state economic development specialists. For example, a new mall would struggle in Stamford, where the unemployment rate is less than two percent. A new mall would be better suited to an area with a higher unemployment rate, as well as sizable source of entry-level workers, such as students or minority populations, who want a start on a career ladder. That description fits New Haven.
In today's market, retailers must also offer entertainment value, according to Gioia, particularly with the increasing competition and ease offered by online shopping. Customers want a strong mix of shopping with art, restaurants, music, education and more.
Particularly intriguing about the $500 million Galleria at Long Wharf, according to Gioia, is the plan for a retail training "academy" by developers, New England Development Corp. of Newton, Mass., and Fusco Corp. of New Haven. Such a center could provide consulting, education and business services, and also attract more customers to the site. But for now it remains in the talking stage.
Bridgeport continues to move forward on a variety of fronts with the Harbour Place/Steel Point Project, up to $1 billion. That project is still in the pre-development stage, and about $20 million in urban act funds is being used to demolish buildings, relocate occupants and prepare the site to meet environmental and other regulations before the site is transferred to the developer.
Developer Alex Conroy has secured a commitment from CBL & Associates Properties Inc. of Chattanooga, Tenn., and continues to seek financing for the million-square-foot-plus complex. Originally planned as a factory outlet mall, with waterfront restaurants and shops, as well as museums, theaters and other entertainment facilities and marina services, the developers are in discussions about specific site use.
"We don't anticipate a major reconfiguration," says city planning director Michael Nidoh. The developers must submit a financial package to the city for approval by the end of August.
On a smaller scale is a $35 million-plus retail/commercial complex at the Saw Mill Road exit off I-95 in West Haven. The town bought properties in the area and demolished some of the sites, relocating residents by improving their housing or helping them to become first-time home buyers.
The city expects Berkshire Development of Springfield, Mass., to submit site plans later this month. The financing is in order, but an occupant has not yet been identified.
"Our economic development projects offer great promise to get a handle on the tax rate and get higher and better use of these selected areas," says Doug Cutler, executive assistant to West Haven Mayor Richard H. Borer. His city has the highest tax rate in the state, with a grand list heavily dependent on residential property.
Dreams of retail riches can vanish fast with competition or opposition. In June, on the other side of New Haven, developer Ron Lyman approached and asked the Guilford Economic Development Commission to filter public reaction on a $50 million retail project, near exit 57 off I-95, that could include a large home improvement store, a wholesale distributor or major supermarket.
Guilford residents turned out in force to an Economic Development Commission hearing to oppose any project that threatened to change the pastoral character of the town. Since then, the developer has not submitted a formal application, which would require a zoning change from office/industry use to retail zoning.
"Guilford's policy, as expressed in our town plan, is to discourage large-scale regionally oriented retail development," says George Kral, Guilford town planner. Kral says he expects the town to hold out for an office or research development project rather than fill available space with retail.
However, research and office park developments are much harder to come by than retail. "Everyone wants those things," says Kral, noting the buildings are typically of better quality, offering higher assessments and higher-paying jobs. "This is an important debate in Guilford and a step in determining what kind of community we want."
Planning officials like Kral recognize how retail design can influence an image of a community: pleasant, inviting clusters or hodgepodge sprawl lining two sides of a busy highway. Strip highway development can help with a community's tax base growth, but can damage a town's aesthetic appeal and create a drive-through-fast mentality.
"I go out of my way to avoid Route 1 at the shoreline on the weekends," says Blodgett. "There's a trade-off to sprawl, and many people ask, 'Is that the kind of life we want?' Some communities are more aggressive than others at public policy and planning that prevents that kind of growth."
Route 80 through North Branford is another area of potential sprawl. Several large tracts of property are up for sale, providing that town with the opportunity to plan for development that offers the greatest value - economic and otherwise.
Urban centers have not been left in the dust as far as economic development goes, thanks to the state's Initiative for a Competitive Inner City, more government funding for brownfields testing and development, and programs that smooth the lending process for brownfields sites.
The state's initiative for cities is off to a good start. "It has got people thinking about clusters within the cities," says Blodgett. "There is more awareness, more teamwork to find new strategies."
The Naugatuck Valley Regional Planning Corp. was one of the first regions to apply for the Environmental Protection Agency's pilot program for brownfields, and has generated active cleanup efforts since. The pilot program provides grants for assessment as well as an organized trail for review and sign-offs from the state DEP and federal EPA, which ultimately results in a covenant that prevents legal action.
Some property owners resist the brownfields clean-up, according to Richard Eigen of the Valley Regional Planning Agency. Many don't want their property publicized as having environmental problems; they would rather sell and vacate the area first. The first project through the program is Haines Corp.'s purchase of a former dump site in Seymour and plans for a 40,000-square-foot light industrial building there.
Also, Stop & Shop is planning a $30 million retail complex in Seymour at Route 8, near exit 22, on the former site of Seymour Specialty Wire, which went bankrupt in 1992. The 64-acre project recently received subdivision approval from Seymour's Planning & Zoning Board, but must still undertake an enormous cleanup of environmental problems. Once the site is cleaned, town planners anticipate development of surrounding 200 acres for an eventual industrial park.
A $75,000 federal Economic Development Administration grant will assist planning for the multi-million-dollar redevelopment of Meriden's core, including downtown, the site of the former city hospital and the International Silver factory.
"We think there is real opportunity to redevelop the core area for economic purposes and provide employment in the inner city," says Randy Kamerbeek, director of economic development for Meriden. "We recognize that economic development in the inner cities can often be more easily accessible than once thought because of the infrastructure and employee base in place."
Kamerbeek envisions a downtown that focuses on specialty retailing, arts, entertainment and history, and a surrounding manufacturing area that will follow the state's push for a biotech industry cluster at the site of the former city hospital. The city has hired AMS Advisory Services of Bridgeport as a consultant for the planning phase.
In the Water Street/Kimberly Avenue/West River crossing area that borders West Haven and New Haven - an area replete with scrap metal facilities, landfills, underground fuel tanks and an assortment of dilapidated buildings - environmental assessment has begun with the help of funds from the Regional Growth Partnership.
"This area contains the most intense environmental problems in New Haven," says Richard Slawsky, executive director of the West Haven Economic Development Corp. "We hope to identify the impediments to development and then explore the opportunities."
Redevelopment of the area is estimated at $50 million-plus and TPA Design Group of New Haven has been hired as a consulting firm for planning a mix of commercial, industrial office space and recreation use. A report and plan is expected by November.
In Derby, aldermen just declared 40 acres of downtown a redevelopment zone and are in the process of seeking a private developer. The town has secured $250,000 for planning funds, environmental assessments and up-front costs of design and expects the project to cost up to $80 million.
"We want to develop critical environmental information for the developer so they know what they're in for," explains Rick Dunne, director of community and economic development in Derby, explaining that the town assists the developer with negotiations on remediation actions "to provide confidence and predictability in the process."
Gioia does not think that enough urban communities in Connecticut are pushing for brownfields redevelopment. "Of course, we don't want to put day-care centers on these sites," he says. "But there is no good reason why there can't be another manufacturing plant constructed on a brownfields site. There is lip service, but there is not enough effort among urban leaders to make brownfields development a critical part of their agenda."
New Haven and surrounding communities have dozens of structures ideal for manufacturing - with ceilings 24 to 40 feet high, close to highways - that are abandoned as they wait for environmental cleanup. For example, the city of New Haven has contracted with Marin Environmental Inc. of Haddam to evaluate the former Hamilton Clock factory so that the two-acre site can be redeveloped.
More assistance with cleanup is available than ever before, such as insurance policies from the Connecticut Development Authority, but proposals for brownfields are not exactly pouring into banks. "We're not seeing them," says Jerry Kusinski, senior vice president in charge of commercial lending at Liberty Bank, based in Middletown. "And we're always interested in a viable project."
In-State Relocation
The potential of enhanced rail service has some economic planners suggesting that the New York metropolitan area will spread beyond Fairfield County.
"Most of the business coming to the Valley is coming from Stamford companies that are doing expansions," notes Eigen of the Valley Regional Planning Agency, which represents four towns for planning, nine towns for brownfields and six for economic development. Some might question the value of economic development plans that recruit businesses from one Connecticut community to another. However, Eigen warns, "If we don't recruit, they could very well go out of state."
The Valley represents an affordable alternative to Fairfield County for many families, who can still commute to Stamford or New York.
"Shelton was certainly the frontier for this relocation in the early 1990s," says John A. O'Toole, former first selectman of Seymour. "The Route 8 corridor continues to grow."
To attract attention, Seymour has an aggressive tax-incentive package for businesses 20,000 square feet or more which choose to relocate: The state reduces property taxes by 80 percent for five years and Seymour reduces the remaining tax bill by 60 percent for the next seven years.
Still, Connecticut's proximity to New York is not a major highlight for the RGP's Santy. "I'm not sure that's our most important connection," he says. "I think there are different connections we should focus on rather than becoming the new edge city for New York. We should understand what connections are important."
For example, he suggests that greater New Haven does not need two small airports in Bridgeport and New Haven; instead, area towns could rally behind a larger regional airport. Santy envisions the region gradually cooperating more closely to establish such annual priorities.
Even without New York's help, New Haven and surrounding towns are growing, with more farmland and open tracts being developed for residential use.
North Branford is preparing for a $50 million-plus adult community, with more than 300 separate units, off Route 17. The site has been rezoned and next must undergo reviews from the Inland Wetlands Agency and Planning & Zoning Board for the site plan, as well as by the state's Department of Environment Protection for sanitation services.
"This is good alternative housing in a beautiful rural setting, and from the town's point of view, the project helps considerably with the tax base," notes Frank Connolly, North Branford's town manager. He points out that the project would have low public-service costs, with private roads and no education costs.
Bridgeport has more than $2 billion of investment going on, either on the ground or on the drawing boards, according to planning director Nidoh. "Everywhere you turn, investment is going on - People's Bank is expanding, the deep-water port is expanding, there's reinvestment in the downtown infrastructure," he says.
Economic development activity is so intense that Nidoh has had to increase the size of the economic development staff. "There is a definite resurgence in Bridgeport, a new attitude."
A major challenge for Bridgeport leaders is enticing neighboring Connecticut residents to visit the city for a similar attitude change. The city did not waited for economic development specialists to visit, but instead sponsored a "red carpet day" on September 2, inviting developers, real-estate agents, contractors and designers from all over the region to spend a day touring the city's opportunities and attractions.
Bridgeport has also been named an expansion site for an East Coast Hockey League club. The team plans to begin play by the fall of 2000 in a yet-to-be-built basketball/hockey arena, with a capacity for 10,000 fans. Design is complete and bids are going out. Sound fast? "We built Harbour Yards in nine months," Nidoh retorts, about the first of a three-phase sports complex, the stadium for the minor-league Bridgeport Bluefish.
Blodgett was never too impressed with sports' impact on economic viability until he started attending some local games, including the Bluefish. "It was a fun, low-cost night, great for the family," he says, adding that the identity between teams and a town becomes invaluable for developing community spirit and pride. This season the Bluefish attracted 5,000 fans on an off-night and more than 300,000 for the season.
Part of the arena project includes a 900-car parking garage that will complement a $50 million Intermodal Transportation Project which could make the Bridgeport the commuter center of the state. Architect firm Wallace & Floyd Associates of Cambridge, Mass., is finalizing the design for the state- and federally-funded project for trains, buses, high-speed ferries, cabs, commuter parking, and possibly high-speed rail. The facility would also include services essential for commuters, such as stores and possibly even a day-care facility.
Also in Bridgeport is the $400 million Lake Success Development Project, a proposed corporate industrial park to be developed by Sporting Goods Properties Inc., a subsidiary of DuPont, on 450 acres of the former Remington Woods ammunition testing property in the northeast corner of Bridgeport and Stratford.
The Stratford corner is actively being marketed for office development, and cleanup of lead is scheduled for the Bridgeport side, with 100,000 tons of contaminated soil to be moved out of state by rail. The environmental cleanup remains the major challenge, anticipated by developers to be completed by 2002. North America Realty Advisory Services of New York is preparing a redevelopment plan and marketing the site. The property will be made accessible by the Seaview Avenue Industrial Connector, itself a $100 million project.
Unfortunately, Philips International Realty Corp. of New York City backed out of its proposed $100 million shopping-entertainment-waterfront complex for the 50-acre site of the former Carpenter Technology steel plant. However, Bridgeport continues to move ahead on plans to develop the site.
Nidoh credits teamwork throughout Bridgeport in attracting so much development. He points out that an advertisement about the city during the nationally televised UConn. vs. Duke NCAA men's basketball championship game drew many calls.
"One of the great things about the economic development in Bridgeport is that the various projects are coordinated, integrated and not competing with one another," says Paul Timpanelli, president of Bridgeport Regional Business Council.
Bridgeport and most other communities are focusing on quality of life as much as economic development. As telecommunications and telecommuting emerge, geographic location diminishes in importance for business. "Companies can locate almost anywhere, and companies will locate where quality of life is best," says Santy.
The growth in Connecticut is steady and sustainable and not like the speculative growth of 1980s, according to Blodgett.
In fact, as interest rates rise, the region can expect a lull in development, perhaps even some cancellations. "The hot time was the last 24 months," says Kusinski. Even before the jump in interest rates, up more than one percent in the last quarter, the speculative project was a relic from the 1980s. Today, lenders expect major pre-leasing activity in the commercial sector or substantial pre-sales in the residential market before committing to financing. "A developer can't get financing on a 100-percent speculative deal," says Liberty Bank's Kusinski. "It must be at least 50-percent committed."
Developers need viable and specific plans to compete for competitive investment dollars, with real estate competing against a strong stock market and other investments. "People are thinking more of the big picture, with more planning," says CBIA's Gioia. "That is a positive sign." says Gioia.
Location Project Next step(s)
Long Wharf, New Haven $500 million retail mall/entertainment complex Planning, environmental assessment, lawsuits
Congress Ave., New Haven $160 million medical research complex Construction bids
I-95 & Route 1, Guilford $50 million shopping complex Formal proposal, zoning change
Downtown Meriden Multi-million-dollar redevelopment Environmental cleanup, site plans
West River, Kimberly Avenue, West Haven $50 million plus redevelopment Environmental assessment
Downtown Derby downtown $60-$80 million redevelopment Planning, select developer, environmental cleanup
Bridgeport $1 billion Harbour Place Environmental cleanup, site preparation
Bridgeport Intermodal $50 million Intermodal Transportation Project Site design
Lake Success, Bridgeport $400 million industrial office park Environmental cleanup
North Branford $50 million-plus Adult community Approval for site plans by Inland Wetlands Agency, Planning & Zoning
Southern Conn. State University, New Haven $132 million renovation plan Bonding approved for 5-year plan, requires legislative approval for $230 million bonding and 10-year plan
Route 8 & 67, Seymour $30 million Shop & Stop complex/industrial park (cost unknown) Environmental cleanup, site preparation
\SIDEBAR HED\Courting New Businesses
So far this year, the Connecticut Economic Resource Center Inc. (CERC) has received about 8,000 inquiries from people hoping to do business in the state. Sorting through all the requests is like searching for pearls in oysters.
"We get hundreds of calls before we get dozens of leads," says David Driver, CERC's vice president of business development. Any call can be the big one. "Swiss Bank [now a major employer in Stamford] called our office first."
Of the 8,000 inquiries, about 3,300 were regarded as having "real" potential, with 2,900 of those from in-state and 400 from elsewhere. The vast majority are small businesses.
"Most are start-ups, with questions on how to obtain permits," says Driver. CERC provides answers and also sends information, with different packets designed for different types and sizes of business. "Everybody gets something," he notes.
CERC provides information and assistance until the companies are serious about actively searching for a location. "We nurture the calls to the point where we think they're valuable to be turned over to the state, local or other entities," says Driver.
Sometimes the nurturing process takes more than a year, and so far this year, CERC has made 178 referrals to other economic development specialists in the state. Any calls that promise the potential of 50 or more jobs - 22 inquiries in all - are automatically referred to the state recruiter. Calls promising 50 or fewer jobs are referred to local or regional offices. In all, two of the 178 calls were referred to the south-central region, one of six regions in the state.
Two referrals sounds pretty paltry, but Driver hastens to point out that a bulk of the referrals, or 127, were referred to United Illuminating of New Haven, which could provide details about power rates and availability in New Haven and Bridgeport. "UI is an active partner in following these leads," says Driver.
UI has an economic development staff of about ten, which rivals the city departments in Bridgeport and New Haven.
In fact, UI has a recruiting team that travels three days a week to visit companies in "problem locations" in New Jersey, Massachusetts and New York, hoping to convince the owners to relocate to Connecticut where the parking and quality of life is better. UI does more economic development work than most other power companies, because its service territory is largely urban.
"The challenges are more extensive than in greenfield sites," says Robert Mills, UI's director of market development. "Taking an old industrial location and casting it for modern use is more labor-intensive and requires more consensus building."
Economic-development calls to state offices from out-of-state businesses are a direct function of money spent on state advertising. With the state announcing a major new economic development campaign on July 1, the state and greater New Haven may reasonably expect many more referrals from CERC in the future.
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