Hartford Business Journal

HARTFORDBUSINESS.COM | FEBRUARY 5, 2024 11 Connecticut in 2022 saw a net increase of nearly 57,000 residents from other states, driven by people coming from New York and Massa- chusetts, according to U.S. Census Bureau data. "So, if you can choose where to live, why not live in a place where the quality of life is high, where the quality of education is high, where the quality of health care is high," O'Keefe said. Those factors drove O'Keefe and his wife, Sarah, to move from New York City to New Canaan in 2011. His wife was pregnant at the time, and they wanted a quieter setting in which to raise their children, he said. "I think that's what's starting to happen," O'Keefe added. "We are seeing people with greater flexibility start to choose Connecticut because they can." The future of remote work still remains a question that many employers struggle with. Why flex- ibility still exists, more employers are requiring workers to come to the office at least a few days a week, embracing a hybrid model. Goldman Sachs recently estimated that between 20% to 25% of U.S. workers work remotely at least part of the time, with the majority of people (16%) in hybrid roles. Recent data that shows fully remote workers are losing out on promotions at a higher rate, and are also more likely to be laid off, further complicates the picture. Regardless, to support population gains, Connecticut must continue to invest in housing and other ameni- ties, especially near mass transit in small cities, O'Keefe said. Lamont recently announced plans to boost transit-oriented development in the state, by providing funding to a statewide economic development agency — called the Municipal Rede- velopment Authority — that would provide gap financing and other support to new apartment develop- ments near bus or train lines. "If you look at constraints on an economy, housing looms large," O'Keefe said. "Our economy cannot and will not grow at its potential if we cannot house the people to do it." O'Keefe also touted Connecticut's recent economic performance, noting a recent revision to 2022 gross state product data by the U.S. Bureau of Economic Analysis placed Connecticut at the top of the nation's GDP growth curve. According to that revised data, Connecticut's 2.9% GDP growth in 2022 was the seventh-fastest in the nation, ahead of neighboring Massa- chusetts (2.1% growth) and New York (2.3%). It follows a "lost decade" between 2008 and 2018, when Connecticut was one of three states whose econ- omies contracted, O'Keefe said. GDP growth rates for 2023 will be released later this year. In the third quarter of 2023, Connecticut posted 4.7% GDP growth, 27th among all states. Lamont admin. plans to consolidate innovation investor CTNext into state agency; $450K approved for employee severance By Michael Puffer mpuffer@hartfordbusiness.com T he General Assembly created the quasi-public economic development agency CTNext in 2016 with the aim of investing in and boosting innovative startups capable of growing jobs and building economic vitality. Now, the Lamont administra- tion wants the much larger state Department of Economic and Community Development to absorb CTNext, a move that would come with a workforce reduction. A request to fold the functions of CTNext into the DECD will go before state lawmakers in the coming session, said Daniel O'Keefe, who is the acting commissioner of the DECD while awaiting confirmation by lawmakers. CTNext is currently a subsidiary of Connecticut Innovations, another quasi-public agency that serves as the state's venture capital investor. CTNext was created as part of a larger effort to create "Innovation Places" around the state, particu- larly in cities. Its mission was to accelerate startup growth by providing access to talent, space, industry expertise, services, skill development and capital to foster innovation and create jobs in Connecticut. CTNext has traditionally received its funding through state bonding. The consolidation will shrink the organization and shift its budget into DECD's operations. In 2021, the state legislature authorized $64.2 million in general obligation bonds over five years to fund CTNext's operations. However, funding for CTNext has not found its way onto state Bond Commission agendas for three years, O'Keefe said. That's a necessary step to turn that legisla- tive authorization into actual cash. "I think the work matters, and I think the DECD is the right place for the work to continue," O'Keefe said. "CTNext was set up legislatively to be a subsidiary of Connecticut Innovations. The goal would be to work with the legislature to fold it into DECD and have it form the nucleus of what will be the Office of Innovation out of our agency." Barring that, O'Keefe said, he's not certain how CTNext's opera- tions will be funded. O'Keefe joined the Lamont administration last July, originally in a newly created chief innovation officer role within DECD. He was named acting commis- sioner following the recent depar- ture of former DECD Commissioner Alexandra Daum, who has taken a community development post at Yale University. O'Keefe said a newly created Office of Innovation will continue the work of supporting startups, and function much like the Office of Manufacturing, which was created by the Lamont administration in 2019, and is currently led by former manufacturing executive Paul Lavoie. Severance pay CTNext's board of direc- tors on Jan. 23 approved setting aside $450,000 for staff severance packages. O'Keefe said he imagines four or five of CTNext's 11 full-time staff members will join DECD after the consolidation. Some staffers would not make the transition because their roles would be fulfilled by existing DECD employees, he said. It's not clear how much money the state will save with the consolidation. O'Keefe said CTNext was originally envisioned to foster the creation of physical spaces for collaboration and innovation. After the COVID-19 pandemic, however, the mission crept heavily toward supporting networks and programs. The Lamont administration believes that work is important, O'Keefe said, but it doesn't want to borrow money to fund those efforts. Attempts to reach a CTNext representative were unsuccessful. The organization's executive director is Onyeka Obiocha, who was named to the role in 2022. Obiocha is paid $196,905 in salary and wages, according to the State Comptroller's Open Payroll database. CTNext's board of directors, on Jan. 23, also voted in a new chairman, David Steuber, previ- ously chief of staff to former Hart- ford Mayor Luke Bronin. Steuber spent more than a year as a senior program manager at Connecticut Innovations, before joining the Bronin administration in 2021. Part of Steuber's task is to help with the transition. 'Sustained path' It wasn't immediately clear how much state funding CTNext has received since its 2016 inception. Its programs included pitch events that awarded winning startups prize money. For example, Monroe-based wearable medical device maker Elidah won $20,000 at CTNext's first mentor network pitch event. CTNext also reportedly awarded $54,000 to five startups during a 2022 Entrepreneur Innovation Awards event. CTNext also supported the creation of a new venture fund with the intention of financing early-stage startups led by women and minorities. O'Keefe stressed the aim is to continue CTNext's contribu- tions through a "sustainable" funding mechanism. "I look at this as an initiative we incubated outside of government," O'Keefe said. "And now what we are looking to do is take the parts that worked, and worked well, and bring them into government and set them up on a sustained path." CTNext Executive Director Onyeka Obiocha (center) with Dan O'Keefe (right), acting commissioner of the Department of Economic and Community Development. Continued on page 12

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