Hartford Business Journal

14 Hartford Business Journal • June 15, 2015 www.HartfordBusiness.com Centerplan asks $15M in DoNo aid The promoter of Hartford's Downtown North mixed-use development is petitioning the state for $15 million toward financing its first phase of housing for that corner of the center city. Middletown's Centerplan Development LLC on June 5 formally submitted its DoNo funding petition to the housing committee of the Capital Region Development Author- ity. CRDA has the ability to use loans and/or grants to finance worthy projects. According to Centerplan development exec- utive Yves-Georges Joseph II, the requested sum is $5 million less than originally envisioned because the DoNo development will now occur in phases, rather than all at once. Now planned, Joseph said, is to erect the first 172 one- and two-bedroom apartment units in DoNo. Another 156 units would come later, he said. A portion of the total units would be earmarked as "affordable.'' In all, the development tab for the first phase rings in at around $60 million vs. the original $105 million to erect housing, plus space for office and retail, including a super- market, and parking. Joseph said discussions are just underway between Centerplan and the housing commit- tee on a public-financing framework. There is no timetable for concluding those talks, although Centerplan is contractually obligated to start DoNo construction by Nov. 1, he said. Meantime, Joseph said Centerplan is working with senior-debt providers and other financiers to secure its private-equity slice of the funding pie. — Gregory Seay CORRECTIONS & AMPLIFICATIONS Peter N. Stevens is principal/president of JCJ Architecture. A June 8 article incorrectly identified him as an architect. REPORTER'S NOTEBOOK Sketch of Centerplan's DoNo development. R E N D E R I N G | C O N T R I B U T E D CT's jobs picture uneven from page 1 state closer to recovering the last one quarter of the 119,000 jobs lost during the Great Reces- sion. Its 6.3 percent April unemployment rate is the lowest since hitting 6.1 percent in Sep- tember 2008. Housing sales, which tend to be viewed as leading indicators of consumers' appetites for spending and taking on debt, are rising and prices are firming. All of that, along with rising household wealth, a rallying stock market, limited infla- tion and an uptick in wages, points to an improving economic picture for the state, econ- omists said. But that progress could be short- circuited by the General Assembly's $2 billion- plus tax hike that will hit most businesses and the wealthiest individual taxpayers hardest. The two-year, $40.3 billion budget, passed last week by the state House and Senate, not only threatens to undermine the state's fragile economic recovery, clouding its second-half out- look, but may prove a setback in Connecticut's efforts to attract and retain employers, some economists said. "What it does is it makes us less com- petitive and works against economic vitality,'' said Pete Gioia, economist for the state's largest pro-enterprise lobby, the Connecticut Busi- ness & Industry Asso- ciation. "The lack of fiscal discipline is going to lead to more businesses and resi- dents leaving, which will, over time, cre- ate even more fiscal pressures.'' Connecticut's top economic-develop- ment promoter, Cath- erine Smith, counters that nothing in the 2016-17 biennial budget is final until the governor, who is calling for a special budget session, signs it. Meantime, Smith, who runs the state Department of Economic and Community Development, says there are signs aplenty that Connecticut's economy, while not surging, is steadily improving. The Census Bureau last week, however, reported Con - necticut's gross domestic product grew less than 1 percent in 2014, slower than the nation as a whole. "We still think the fundamentals of the state are in good shape,'' Smith said. "I think in the second half we'll see steady growth in job creation. Obviously, that's what we want.'' There is some evidence of growth: Ama- zon on June 5 confirmed plans to hire more than 500 full-timers for its Windsor fulfill- ment facility. In addition, Doosan Fuel Cell America, which had 30 workers in South Windsor last July after buying ClearEdge Power's fuel cell operation out of bankrupt- cy, is now past 200 workers and projected to hit 300 by yearend. But some observers harbor concerns about Connecticut's job-creation trajectory, particularly in light of the recent tax hikes approved by legislators. For example, the state's declining finan- cial support to hospitals, in the form of higher taxes and cuts to Medicaid reimbursements, will translate to more than 4,000 lost jobs, $300 million in lost personal income, and a $145 million decline in state revenue by 2017, according to an analysis by two UConn researchers. Hartford Healthcare last week warned of pending layoffs and cuts to services. M e a n w h i l e , several major Con- necticut employers — General Electric, Aetna and Travelers, among them — are now being aggres- sively courted by other states after publicly voicing their displeasure with the budget, which includes tax credit caps, a uni- tary tax, continuation of a 20 percent corpo- rate tax surcharge, and a tax on web and data processing services. Smith, however, says she will be doing some courting of her own of domestic and foreign aerospace-manufacturing employers while attending this week's Paris Air Show with the governor and a dozen Connecticut aerospace firms eager to widen their export opportunities. She said Connecticut, too, is being contacted by a growing number of South American firms eager to operate here or do business with homegrown companies. National, regional, local impacts Economist Donald Klepper-Smith in New Haven said the 93,200 jobs recovered in Con- necticut through April is still only 78 percent of the total lost from the recession's start in December 2007 to its official end in June 2009 vs. the national economy's reclamation of the more than 8.7 million jobs lost in the same period. At its current job-creation rate of about 1,500 jobs a month, Connecticut won't recov- er the final 27,000 jobs lost to recession until mid-2016. That's longer than the state's reces- sion recovery in the mid-1990s. "What you have is a good-news, bad-news picture,'' said Klepper-Smith, of DataCore Partners. "The good news is we're growing. The bad news is we're underperforming the previous [post-recession] expansion.'' For the second half, Klepper-Smith proj- ects health care, business and professional services, education and leisure and hospital- ity to be the strongest growth sectors. Manu- facturing and construction are likely to post job losses, he said. Patrick Flaherty, senior economist at the state Department of Labor (DOL), said that Con- necticut has added 9,000 jobs since December, a period covering one of New England's coldest, snowiest winters on record. Hiring for construc- tion, durable-goods manufacturing and finance- insurance have paced this state's employment growth in that period, Flaherty said. Connecticut's pool of workers is also the largest it has ever been at 1.9 million, reflect- ing that the eligible and able-bodied are either working or looking to, he said. That's a posi- tive sign for the economy. "It's probably too early to say we've turned the corner,'' he said, "but, so far, 2015 is look- ing pretty good. If we keep at this pace, we will have recovered 27,300 jobs this year. That pace is faster than we've seen this recov- ery and better than we've seen the past year.'' Flaherty's fellow DOL economist Andy Condon says there is nothing in the budget that would appear to materially alter, in the second half of this year, the employment trends the state has experienced thus far. There are, however, some disconcerting economic signs burbling up in the local, region- al and national economies, experts said. Some Connecticut job sectors, such as gov- ernment employment continue to shrink, led by the U.S. Postal Service, which is relying on retirements and departures to trim its staffing. Economist Eric Rosengren, who is CEO of the Federal Reserve Bank of Boston, told a Capital Workforce Partners audience at The Hartford Club on June 1 that the anemic 0.7 percent first-quarter rise in the nation's gross domestic product (GDP) was a "big miss'' for public-private economic forecasters. Their 3 percent to 4 percent forecast that stood in February for this year's GDP by late May had been lowered to a projected range of zero to 2 percent, Rosengren said. The big- gest implication of an uneven forecast for GDP growth is that the Federal Reserve's open-mar- ket committee, on which Rosengren sits, says 2016 is now the most likely timetable for the Fed to even begin tightening interest rates. Rosengren said he worries what fresh crop of financial headaches are rooting in the current low-interest environment. In particu- lar, he said, the limitations of U.S. monetary policy to effectively regulate the economy are now on full display. In addition, slowing economies in Europe and China — two key markets for Connecticut-made products and services — are among his other concerns. "… My sense is that we wouldn't have a very aggressive response if a negative [eco- nomic] shock occurs,'' he said. n New England/U.S. GDP Growth 2014 State GDP Growth Rate New Hampshire 2.30% Massachusetts 2.30% Rhode Island 1.20% Vermont 0.60% Connecticut 0.60% Maine 0.20% New England 1.60% U.S. 2.20% S O U R C E : B U R E A U O F E C O N O M I C A N A L Y S I S ▶ ▶ ' The good news is we're growing. The bad news is we're underperforming the previous (post-recession) expansion.' Economist Donald Klepper-Smith, of DataCore Partners

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