Hartford Business Journal

16 Hartford Business Journal • June 13, 2016 www.HartfordBusiness.com Despite the buzz, experts admit there are challenges. Here are the top ones: 1. Defining "impact investing" is a challenge. It includes a wide swath of subjects, from gender equality and renew- able energy to affordable housing and environmental policies. So they don't all appeal to the same people. 2. How it benefits investors is some- times hard to measure. Fixing abstract problems like gender inequality through private investment don't have easy yard- sticks for success. 3. Impact investing is often confused or conflated with philanthropy — many investors don't want to blend the two, either for moral reasons or tax purposes (you can write off philanthropic dona- tions when you file your taxes). Still, companies are becoming more transparent, experts say. Last year, over 7,000 companies issued corporate responsibility reports, which are audited by a third party. That's up from only 27 such reports in 1992, says VanderBrug. And some people are trying to tack- le the challenges facing impact inves- tors. Christina Alfonso is the CEO of Madeira Global, a firm based in New York that specializes in data analytics that pertain to ESG — environmental, social and governance. Her firm focuses on scoring private equity companies on a framework that has a scale of 0 to 100. Madeira ranks firms on a range of factors, such as environmental policies, governance and social impact. "It allows us to benchmark companies across industries, geographies and growth stages," says Alfonso. One often-cited socially responsible company is Starbucks. It seeks to buy coffee grown in an ethical manner. It also helps employees pay for college, among other initiatives. n Four Delicious Courses Tableside Chef Dinners Thursday nights at 7 pm With Chef Rob Maffucci As featured on Food Network $75 Per Person + tax and gratuity Vito's by the Park 26 Trumbull St., Hartford, CT 06103 860-244-2200 from page 1 Young Millionaires ▶ ▶ 51 percent of Baby Boomer investors believe impact investing is key to where they park their cash, up from 46 percent. The use of property tax breaks or incen- tives to encourage economic development is not new to Hartford or other Connecticut cities and towns, but a legal challenge ques- tioning the fairness of such incentives is rare. According to the suit, the issue is that the Radisson — currently owned by Florida hospi- tality owner/operator Inner Circle — is assessed on city property-tax rolls at $6.545 million, for which its latest tax bill was $486,228.06. However, the suit contends that three neigh- boring large downtown hotels — the Hilton Hartford on Trumbull Street; Hartford Mar- riott Downtown on Columbus Boulevard; and the Residence Inn By Marriott Hartford Down- town on Main Street — "have been granted tax exemptions by the [city] and are not required to pay any taxes" despite each being valued at millions of dollars on city tax rolls. "The disparate tax treatment imposed by the [city] upon the [Radisson] in comparison to the … three competitors,'' the suit states, "is intentional but irrational and deprives the [Radisson Hotel and its owners] of equal protec- tion of the laws in violation of the Fourteenth Amendment to the United States Constitution.'' According to the Radisson owner's New Haven attorney, John R. Williams, his client has been unable to determine how the city and its rivals crafted the tax exemptions, but it hopes to find out during discovery. "Everything is ad hoc,'' he said. "There isn't a set plan. Everybody is out cutting their own deal.'' The city assessor's office verified that none of the Ramada's three downtown Hart- ford rivals has paid property taxes on their land since at least 2012. The reason, according to Jamie Bratt, the city's director of planning and economic devel- opment, is that the Residence Inn and Hilton Hartford rest on city land for which they pay the city rent. As such, they are not subject to real estate taxes for the land. But all three hotels are responsible for personal-property levies on the value of furniture, fixtures and equipment in their buildings, Bratt said. According to city records, the most recent personal-property tax bill for the Residence Inn was $66,441; Marriott Hartford, $156,060; and Hartford Hilton, $118,990. The Marriott Hartford, as part of the Adri- aen's Landing development that includes Front Street and the Connecticut Convention Center, does not pay real estate property tax under a 15-year abatement that the hotel's owner negotiated with the city, Bratt said. The Radisson is one of three downtown hotels that have tax-abatement applications pending with the city, Bratt said. She declined to identify the other two, citing privacy con- cerns for the property owners. Asked whether the Radisson suit could undermine city efforts to negotiate future property-tax abatements, or even force the city to revisit previous tax-aversion pacts, city hall spokesman Brett Broesder said the city does not comment on pending litigation. Other legal issues 50 Morgan Hospitality Group LLC was formed in Aug. 2013, according to the Secre- tary of the State's office, shortly before Inner Circle became majority owner of the Radis- son, after pumping in $11.5 million for property renovations. Inner Circle bought its stake from Magilink Group, a South Korean company that purchased the hotel out of foreclosure in 2010. In Jan. 2014, the owners swapped the hotel's Ramada brand flag for one from Radisson. Inner Circle also reportedly is under- way with converting some of the property's upper rooms into apartments, many of which have sweeping views of parts of downtown, including the new Dunkin' Donuts Park. The hotel's owner, which did not respond to a request for comment, has had other legal disputes with the city. Last October, the Radisson's owner won in state court its appeal of the city's 2012 and 2013 assessment of the value of the hotel's personal property — consisting of furni- ture, fixtures and equipment that included data-processing equipment; telecommuni- cations gear; hotel uniforms/linens, among other items, court records show. According to court papers, 50 Morgan hired an appraiser who set the hotel's personal-prop- erty fair value in continued use at $330,780 as of Oct. 1, 2012 and $454,000 as of Oct. 1, 2013. The city assessor, however, asserted the hotel's personal property was worth way more: $893,890 in assessed value on its per- sonal property in 2012. Ultimately, a trial referee sided with the hotel owner, declaring that both the hired appraiser's Oct. 1, 2012 and Oct. 1, 2013 per- sonal-property valuations of $330,780 and $454,000, respectively, were reasonably cal- culated based on the hotel's use of the items rather than for their purchase or sale. Hotel owner's plight Landlord Paul Khakshouri says he has been an investor in downtown Hartford real estate the past 16 years. One of his holdings is the former Bond Hotel, now Homewood Suites, at 338 Asylum St. Khakshouri says Homewood also is among the three hotels with a pending tax- abatement application at city hall. He said he needs property-tax relief because over- all occupancy among Hartford's downtown hotels has been stuck at an average 58 per- cent for the last four years. Moreover, he is petrified at the prospect that a looming revaluation of all city resi- dential and commercial real estate likely will show values have increased, triggering higher property-tax bills. If his tax bill climbs, he said, along with the prospect that Aetna's pending merger with Humana further shrinks executive-trav- elers' use of his lodging services, the result- ing drag on Homewood's profitability would place it "in dire straits.'' Similar concerns prompted him, he said, to sell the former 96-room Holiday Inn Express hotel, now a Red Roof Inn, doors away from Homewood Suites. The problem, he said, is an existing loophole that allows hotels atop city- or state-owned real estate to qualify for favorable tax treatment. He said that if the city denies his latest request for tax relief, he would strongly consid- er following in the Radisson's footsteps — and urge other aggrieved hotel owners to join — in pursuing a class-action lawsuit against the city. "It's unfair play,'' Khakshouri said. n Other hotel owners alarmed The Hilton Hartford is exempt from city property taxes. H B J P H O T O | G R E G O R Y S E A Y

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