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Ten Years After
Top business stories from BNH's first (almost) decade
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Business New Haven
7/8/2002
By: Michael C. Bingham
BNH
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Let's get one thing straight: Business New Haven is not ten years old. It's nine years old. That mean's we're embarking on our tenth year of publication. Okay?
As Dooley Wilson observed in Casablanca, that's a lot of water under the bridge. And New Haven looks like a vastly different business community today compared to 1993.
Just think of it: In 1993, His Excellency, John DeStefano Jr., was elected mayor. "Tax-delinquent developer/architect” Wendell Harp was gorging himself on city contracts. The Coliseum was losing money, while Chapel Square Mall was losing shoppers. And in all of downtown, there was not a single place to park.
What a difference nine years makes!
Actually, though, a few items of note indeed have taken place as the Roaring '90s collapsed into the 21st century. What follows is a somewhat-less-than-scientific sampling of the top business stories from BNH's first Almost Decade. We've enjoyed sharing highlights of the passing parade with our readers, just as we know they've enjoyed not just our coverage, but also the propaganda that passes for opinion on our editorial page.
What a long, strange trip it's been.
Will the Last Banker To Leave New Haven Please Turn Off the Lights
“They're Baaaaack…” crowed the inaugural edition of this publication on September 3, 1993. The story, penned by BNH Editor Michael C. Bingham, reported that area commercial bankers had crawled out from beneath the rocks they had been hiding under since the real-estate crash of 1989-90 and were, for the first time in years, actually…lending…money to businesses large and small.
“The number of commercial loans being written has increased, and the volume of dollars flowing into those loans is rising,” the article reported.
The page-one photograph showed a half-dozen white male bankers posed stiffly beneath the archway over the main gate of New Haven's historic Grove Street Cemetery, bearing the biblical legend, “The Dead Shall Be Raised.” (We never really found out whether the irony of the message was lost on the photo subjects.)
Even the advertisements in BNH's Vol. I, No. 1 reinforced the message. “$20 Million for the Asking,” crowed Lafayette American. “Up to 90 Percent Financing Available,” touted tiny Founders Bank.
With the benefit of a decade's hindsight, was the article's premise true, or mostly wishful thinking? After all, bankers always want potential customers to think they are lending money, even if they mainly want to lend it to folks who don't need it.
As it turned out, the issue wasn't with the individual bankers themselves (although New Haven Savings Bank President and CEO Charles L. Terrell, one of the photo subjects, passed away in 2000) - it was with the banks. The industry's 1990s feeding frenzy decimated the number of companies banking in New Haven to a handful - and the number based here to fewer than you can count on the fingers of one hand.
That meant sayonara to, among others, Union Trust, Lafayette American Bank & Trust Co., Centerbank, the Bank of New Haven, Founders Bank, Bank of Boston, Shawmut Bank and a host of peer institutions.
(We'll not take the blame for the June 26 demise of the Connecticut Bank of Commerce - known in 1993 as the Amity Bank & Trust Co. See story, page 8.)
What's left is a handful of banking behemoths, many of which have no human presence loftier than relationship manager (read: sales rep) in the state of Connecticut - the Fleets, the First Unions, the Chases. This unremitting landscape is broken only by the occasional sniper such as the Pennsylvania-based Sovereign Bank or undaunted optimists like onetime Bank of New Haven head Joe Ciaburri, who last year founded the New Haven-based Bank of Southern Connecticut, a boutique commercial bank.
Otherwise, you want a Connecticut bank? Down Bridgeport way People's is still doing business, but locally New Haven Savings under new CEO Peyton Patterson is just about the only game in town.
The engine for much of this revolution was less weakness or foolishness on the part of the late, lamented institutions than it was the bigger-is-better mania that fueled the NYSE and NASDAQ runups for the balance of the 20th century.
As to where that leaves the rest of us, well…Wanna commercial loan or line of credit? You can probably get one - if you really don't need it. (And never forget Subway International co-founder Fred DeLuca's rule No. 1 of business success: Take out a loan especially if you don't need it.)
Which, come to think of it, is pretty much the way things stood in 1993.
Hello, Goodbye
The sordid saga of Williams Specialty Steel was one of the strangest business stories of the 1990s - or perhaps any era in New Haven's history.
Unwilling or unable to accept the economic reality of manufacturers fleeing places like New Haven, or Connecticut - or, indeed, the United States - the city and state cut a sweetheart deal for a Buffalo, N.Y. steel fabricator with a checkered history of unfulfilled promises.
In his 1997 grip-and-grim press conference photo op with the governor and mayor, phantom steel magnate Harry Williams looked like a man who was hiding an incriminating secret - which, indeed, he was.
The city had agreed to buy and then convey to Williams a 25-acre industrial site in the Cedar Hill neighborhood near the North Haven line, forgive taxes for ten years, in return for which Williams would put up a $200 million specialty stainless-steel plant employing at least 350 workers in high-paying (average annual wage: $40,000) jobs. To the True Believers it was the renaissance of manufacturing in New Haven - despite that steel fabricating in New England had been mostly dead for at least a quarter-century. In anticipation of six-figure power bills, United Illuminating was ecstatic, even pledging $5 million in financing to make the deal happen.
It never did. According to Anthony Anastasio Jr., co-owner of the proposed site, his side made a deal with Williams and then made some concessions about payments over the course of construction. “Over about a year we held a number of discussions and everything seemed very positive, but they never once brought a lawyer to the table,” Anastasio said at the time. It seemed odd that “They never seemed ready to actually put anything in writing.”
Then, after about 18 months, the numbers under discussion changed, Anastasio said. “We're reasonable people, but we're not in the habit of giving land away,” Anastasio says. “There was no way we could agree to what they wanted.”
That's true in part because, in the meantime, Williams Steel had other fish to fry. In December 1998, as Connecticut fiddled, Williams Steel won approval from the Niagara (N.Y.) County Industrial Development Agency to sell $72 million in tax-exempt bonds to private investor to build a 500,000-ton-per-year, state-of-the-art, semi-finished stainless steel slab casting facility on a 29.5-acre site.
According to the Buffalo News, “A $1 million cash contribution from the county [was] discussed as part of the financing.” Not even New Haven could match a deal-sweetener like that.
Festival Overtures
Want a feel-good story of 1990s New Haven? How about the International Festival of Arts & Ideas, which grew from modest beginnings (if immodest pretensions) in 1996 - five days, 375 artists, 60,000 attendees - to a two-week-plus cornucopia of culture and conversation that has burnished New Haven's reputation in places like Scotland and Kiev - even if thousands in Wallingford and Stratford have never even heard of the event.
Much of the credit for the event's ascension must be laid at the feet of estimable Englishman Paul Collard, who helmed the extravaganza from 1997 to 2001. But it was the indomitable will of three women - Anne Tyler Calabresi, Jean Handley and Roslyn Meyer - who made the event a reality when skeptics laughed at the notion that New Haven could became a stage for the entire world.
This year, from June 13-30, under the able stewardship of Scot Mary Miller, the IFAI attracted something like 145,000 spectators, spent $3.6 million and staged ten U.S. premieres. By all accounts, the events seventh year may indeed have been its best.
A June 19 concert performance of La Boheme by the Metropolitan Opera drew some 20,000 music-lovers to the New Haven Green, who along with the magic of Puccini's music were blessed with the appearance of a magnificent rainbow following a brief summer shower. The New Haven Register ran a photograph of the rainbow in a July 1 photo tribute to the festival. The Register printed the color photo - in black-and-white.
The Case of the Disappearing Phone Company
For a community whose biggest economic-development challenge has been dwindling corporate leadership and resources, no defection of the 1990s wielded greater impact than SNET's 1998 sellout to giant Texas Baby Bell SBC Corp.
No commercial franchise in New Haven was freighted with more historical glory than the Southern New England Telecommunications Corp., which traced its history to 1878 and counted among its many innovations the nation's first functional switchboard. In addition, SNET had been a key contributor to many if not most of the city's philanthropic needs, providing financial (and, in many cases, human) capital where the need was most keen.
To this day, the logic of the sale defies credulity. SNET occupied a highly profitable geographic niche, and had been a successful entrant into the long-distance business, giving competitors like AT&T fits.
Asked whether the sale was prompted by SNET senior managers' fears of a hostile takeover by a competitor such as Bell-Atlantic (now Verizon), one national telecom expert told BNH, “They could also fantasize that a rocket was going to come down from Mars and shoot up their main telephone office. It's fantasy.”
The stock swap that gave SNET to the San Antonio-based SBC - one of the seven “Baby Bells” created by the 1984 breakup of AT&T - was valued at $4.4 billion - a price many analysts still regard as a steal.
What does it mean to New Haveners? Well, we still get a dial tone when we pick up the phone. Former SNET CEO Dan Miglio's still making the rounds as the New Haven equivalent of a dignitary in roles including the board chairmanship of the International Festival of Arts & Ideas (see above). And SNET still gives dough to worthwhile causes.
But somehow, the place just doesn't feel the same. The magnificent Art Deco building at 227 Church that once housed SNET brass is being converted to high-end condos, while the (formerly blue) monstrosity at 300 George - after being flipped by developer Bob Matthews for a cool 27 mil - now houses would-be biotechnology companies.
Cowboy boots with business suits just don't cut it in Olde New England.
All That Jazz
Even as New Haven city officials determined that “arts and entertainment” were a viable economic-development niche, the twin flagships of the Elm City's downtown “theater district” were languishing and in need of new leadership, direction - and above all, dollars.
When it reopened in 1984, the refurbished 70-year-old Shubert Theater was the pride and joy of a revitalized downtown, promising to redeem its historic legacy as the “Birthplace of the Nation's Greatest Hits.”
The Shubert's programming mix of Broadway road shows salted with occasional opera, dance and pop concerts offered sport-jacketed suburbanites one of a dwindling number of reasons to brave a visit to Sin City. Meanwhile, under the management of onetime Scandinavian furniture maven Brian Alden - whose investment in New Haven likewise included successful New Haven Jazz Festival and Taste of New Haven events - Joel Schiavone's Palace carved a serviceable niche as a concert venue for sub-arena-level music acts.
Good - but not good enough. When Schiavone's real-estate empire crumbled in the early '90s, the mercurial magnate sought a deal to unload the Palace, which eventually landed in the hands of developer David (Thanksdad) Nyberg who, in partnership with Philadelphian Ron Caplan, also rehabbed the former Strouse-Adler foundation-garment plant and purchased Chapel Square Mall and the 900 Chapel Street office tower.
Meanwhile, by the spring of 2001 the Shubert's management, presided over by an Old Guard elite board, calculated it could not present a 2001-02 season at better than a $1.5 million shortfall - after requiring some $3 million in public bailouts during the course of the 1990s - and had to go to the state and city, hat in hand, seeking sustenance.
In fleeting moment of free-market sanity, the city (which held title to the building) turned management of the aging pleasuredome over to a private concern, the Columbus (O.) Association for the Performing Arts (CAPA). The jury is still out about whether the Ohio organization is a viable long-term fit. While it brings national muscle to the job of booking touring shows, its judgment has already raised eyebrows, as when it booked a non-Equity production of The Music Man this March, inviting a union picket led by actor Keir Dullea. CAPA's promise to present edgier programming was redeemed in part by last year's booking of a Vagina Monologues road show (whose I-95 billboards were the cause of countless motor-vehicle mishaps). Whether John Fisher - who replaced Doug (We Hardly Knew Ye) Kridler as CAPA's top New Haven dog February 1 - and company can make a go of it over the long run without a new publicly financed facility remains to be seen.
If the previous management is to be believed, the Shubert, at 1,500 seats, is simply too small to go toe-to-toe with larger competitors such as Wallingford's 3,600-seat Oakdale Musical Theater - or even to accommodate larger Broadway touring shows.
The Bard's wisdom notwithstanding, not all the world is in fact a stage.
Isn't That Special?
While it doesn't exactly nurture the soul to say bad things about an event that provides hope, opportunity and even fleeting glory to the mentally retarded, it is fair to observe that selling the 1995 Special Olympics World Games to New Haven was a snake-oil job for the record books.
So sweeping were the economic benefits promised by organizers and boosters of the Special Olympics that one would have thought they were - well, the real Olympics.
Corporate sponsors ponied up $1 million apiece to attach their names to the event. A photogenic Kennedy - Tim Shriver - was found to head the local organizing committee. A sitting U.S. President came to the Yale Bowl for the opening ceremonies. And you can still occasionally see the T-shirts.
What was lost in the hoopla was the reality that the Special Olympics are not in truth a spectator event, but one that is - as even Shriver acknowledged before the fact - “constituent-driven.” While the athletes and their families provided a welcome shot in the arm to local eateries and hostelries over the ten days of the event, the thousands of hoped-for spectators mostly took a pass.
It didn't help matters that the local organizers didn't exactly do out of their way to patronize local vendors, and it stuck in the craw of some observers that the old hometown was snubbed in naming the “Connecticut” Special Olympics. After all, nobody 12 months hence was traveling to attend the “Georgia” Summer Games.
But hey - we did it. We were nice as pie, the place got shined up real good, and nobody died. What more could you ask for?
At Least, We'll Always Have the Flag Man
On Long Wharf did Johnny D. a stately retail-dome decree.
The proposed retail mega-mall at Long Wharf was the hardest of hard sells. Mayor John DeStefano Jr. staked his legacy on it. As big ideas go, it was a doozy - four department-store anchors (Bloomingdales, Macy's, Lord & Taylor, Nordstrom), $500 million to build, 1.5 million feet of space for your shopping pleasure - oy, such a mall.
Oh, yes - and $60 million in taxpayer subsidies to the private developers - the Massachusetts-based New England Development in “partnership” with loyal local mayoral financiers the Fusco Corp. - of the “Galleria at Long Wharf.”
The mall was to be the centerpiece of an extensive harbor development that included waterfront eateries, a marina, the former Yale boathouse (now there's a tourist attraction) and, naturally, billions and jillions of rich, well-fed, happy visitors.
Not everyone bought into the vision. Actually, very few bought into the vision. Downtown merchants (excepting the few who were bought off or cowed into submission, such as Seychelles proprietor Chip Croft) were petrified, Westfield America (owners of the nearby Connecticut Post and Meriden Square malls) marshaled its legal SWAT team, the Greenies fretted about the sand plovers, and lawmakers such as Milford State Rep. Jim Amann led the charge against what City Hall had identified as its top state-budget gimme.
History, too, was not on the mayor's side, as a growing body of evidence nationwide suggested that the model of successful self-contained retail destinations had peaked in the 1970s and was not likely to return to viability any time soon.
None of that helped the project, which for three years divided the business community. But what really set the house of cards a-tumbling was when, in late 2000, Nordstrom got cold feet. That December DeStefano reluctantly pulled the plug on his pet project.
But hey - give the guy credit: He went down with both guns blazing.
So, moving forward, what is to become of New Haven's retail profile? Is it one-of-kind boutiques and precious shops, a la Chapel Street, upscale chain stores, such as Yale successfully courted for Broadway, or Scandinavian furniture in the old Pirelli building?
Come to think of it: Where have you gone, Brian Alden?
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