Hartford Business Journal

24 Hartford Business Journal • June 13, 2016 www.HartfordBusiness.com EDITORIAL Blame shared in Hartford stadium debacle I t appears minor league baseball may not be played in Hartford this year after all. With Mayor Luke Bronin's decision to fire Centerplan Cos. and DoNo LLC as builder of the $63 million Dunkin' Donuts Park, the Hartford Yard Goats inaugural home season in the Capital City is in jeopardy; there's a high probability the Double-A baseball team will need to play the remainder of its home schedule elsewhere. The stadium debacle is another black eye for the city, which can't afford more bad publicity or financial constraints. As the finger-pointing ensues among the various stakeholders, it's clear there is lots of blame to go around; no stakeholder is completely faultless. The chief mistake was made early in the process, when the team, Segarra admin- istration and developer agreed to rush along a project that clearly needed more time to plan, develop and execute. We are now experiencing the consequences of a major project initially negotiated behind closed doors and out of the public light. When ground was broken on Dunkin' Donuts Park in Feb. 2015, there was a lot of skep- ticism, even doubt about a then $56 million stadium being erected in about a year's time. Even with an unusually mild winter the developer didn't come close to meeting its deadline. Some may place all the blame on Centerplan Cos.'s incompetence. We aren't willing to go there just yet. We will let the surety bond insurer's investigators and possibly the legal system sort out the facts and determine what went wrong. Hartford Mayor Luke Bronin, who inherited the stadium fiasco from his predecessor, and Yard Goats owner Josh Solomon have been harsh in their criticism of Centerplan, arguing they lost confidence in the Middletown developer's ability to provide a reliable timeline for the project. Centerplan has missed several deadlines they promised to meet. Centerplan has countered that more than 100 design changes ordered by the city since January are to blame for the delays. The reality is, this project was rushed from the start and when major projects are hurried along it paves a path for pitfalls. For example, the request for proposals to develop the stadium and broader downtown north mixed-use development was issued July 2, 2014 and had an Aug. 1 return deadline. There was an informational hearing on the project July 16, 2014, which means developers had only two to four weeks to create a blueprint for a complex project worth hundreds of millions of dollars, including tens of millions of dollars in taxpayer money. Only two legitimate bids were submitted for the development, including Centerplan's. We understand part of the rush to complete the stadium in a year's time was the fact that the team's lease in New Britain expired at the end of 2015, but that's still not an excuse to hurry the project. The team should have tried to extend its lease in the Hardware City for one more year, or make arrangements to play in another temporary home during the 2016 season. It's a similar playbook used by the National Football League's Minnesota Vikings, which played its home games the last two seasons at the University of Minnesota's campus, while its new $1 billion stadium was being erected. This would have stretched out the entire downtown north project timeline and maybe even encouraged more project bids. That's all irrelevant at this point, but we hope the city learns from its mistakes and re-thinks how it considers, approves and shepherds along major developments. We also still want the Yard Goats to be successful in the Capital City when they eventually do play baseball here. Rooting against the home team makes little sense — even for those who were opposed to the project from the start — because taxpayers will be the ultimate loser if the team fails to gain traction. n RULE OF LAW Could Hartford Foundation help solve city's budget crisis? By John Horak C onnecticut's image took another blow in March when State Sen. Martin Looney proposed taxing Yale's endowment. His suggestion was couched behind rhetoric about the "need to look at how much of the endow- ment is invested for the greater public good," and making sure rich schools "use their wealth to create job opportu- nities." The proposal died when people realized Looney had been reading from the playbook of Willie Sutton, who robbed banks "because that's where the money is." However, on a deeper level, Looney's proposal is evidence that the relationship between our government and nonprofit orga- nizations (whether they have an endowment or not) has taken on attributes of a tug-of-war over resources. The struggle is reflected in reductions in state funding of nonprofit service providers, and municipal attempts to impose property taxes on nonprofit real estate. Looney was more direct — he wanted to take some of Yale's money and use it to pay the state's bills. This issue is grounded in the fact that both nonprofit and governmental assets must be used to provide a "pub- lic benefit" of some type, so a pas de deux between the trustees of these organiza- tions and governmental officials is inevitable in times of scarcity. I believe that the endowments of our nonprof- it organizations would be gone by now if they had been under the control of government officials; and that Looney's remarks are not appropriate for Yale because its endowment is dedicated to its educational mission. However, his inquiry may be appropriate in the case of our grantmak- ing foundations with endowments legally dedi- cated to the general public welfare. As a matter of necessity (and political pressure) will grant- making foundations need to step up or alter their games to "relieve the burdens of government" — which the law expressly permits them to do? This could play out in different ways depending on the depth of government's problems and the resources of appropriate foundations. But let me use a large example to illustrate the point: the city of Hartford and the Hartford Foundation for Public Giving. The city is drawing open comparisons to Detroit and its bankruptcy. Hartford's turn- around will take years even if it avoids a bankruptcy filing. On the other hand, there is the Foundation with a total (restricted and unrestricted) endowment of $900 mil- lion dedicated to the "greater public good" (to use Looney's words) in the "city of Hart- ford and its vicinity." So, why and how could the Foundation step up to help the city (con- sistent in principle, for example, with the way the Kresge Foundation participated in the "Grand Bargain" that took Detroit out of bankruptcy)? The "why" question is easy to answer because the Foundation is a "community foundation," a form of entity that emerged in the country in the early 20th century when the industrial economy was creating wealth and people saw wisdom in pooling their charitable gifts in an entity man- aged by the community for its benefit. The Hartford Foundation was created in 1925. The endowment is not owned by the Foundation, but by the community for which it was created. The Foundation is directly answerable to the com- munity and the community is hurting. As far as the "how" question is concerned, the first thought is that cash is always king in these situations, and the Foundation could free up cash for a period of time to help navi- gate these waters. The Foundation could be asked to "share the austerity" by taking a hard look at its opera- tions in search of savings. In 2014, the Founda- tion started a public policy and lobbying initia- tive. Maybe this is necessary and maybe it is not — but the community does not lack for policy papers, demographic analysis or lobbyists. Another way to free up cash is to tweak the Foundation's spending policy upward (the per- centage of the endow- ment's average value that is expended) for special purposes. The Foundation is spending at a 5 per- cent rate, but it could be tweaked higher (even for a limited time or purposes) while still satisfy- ing legal prudency standards. Next, on a strate- gic level, the Founda- tion could "lessen the burdens of government" by doing what the government has done poorly — enhance private-sector economic growth. Community foundations can invest resources in enterprises (even privately owned) linked to eco- nomically stressed communities and residents. When you think about it, the Foundation's current endowment is the fruit of the commu- nity's once vibrant wealth-creating private sec- tor — such that investing to bring it back is as natural an undertaking as it is prudent. Finally, many private nonprofits depend on the Foundation for support, so if the Foundation were to shift focus to the city for a time, the Foundation could adopt a policy reserving a minimum percentage of its annual distributions to their grant appli - cations. The underlying point is that local governments have sources of revenue (taxes and bonding) that private nonprofits do not. Let me circle back to where I started — with Sen. Looney and the relationship between nonprofit organizations and government in a time of scarcity. There is no one-size-fits-all formula for addressing the issue, but it is reasonable to expect grantmaking organizations with the means to help lessen government's burden, but only in a carefully reasoned and prudent manner. n John M. Horak has practiced law at Reid and Riege P.C. in Hartford since 1980. His opinions are his own. HARTFORDBUSINESS.COM POLL Is replacing Centerplan Cos. as builder of Dunkin' Donuts Park the right move? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: Does CT have adequate affordable housing? 30.8% Yes 69.2% No John Horak OPINION & COMMENTARY ▶ ▶ As a matter of necessity (and political pressure) will grantmaking foundations need to step up ... to relieve the burdens of government ... ?

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