Hartford Business Journal

20 Hartford Business Journal • July 18, 2016 www.HartfordBusiness.com EDITORIAL State employee move is blessing, curse for Hartford D owntown Hartford is getting a shot in the arm as hundreds of state employees begin to move into one of the center-city's largest office towers — 450 Columbus Blvd., formerly known as Connecticut River Plaza — which has stood vacant for several years after its largest tenant, UnitedHealthcare, moved to CityPlace I in 2010. The state's decision to buy the building in 2013, however, represents both a blessing and curse to the Capital City. First, the good news: The state's purchase of 450 Columbus (along with 55 Farm- ington Ave., formerly owned by The Hartford, which the state bought around the same time in 2013) has helped push down the stubbornly high vacancy rate of the city's prime Class A office buildings, which typically firms up area rents and boosts the values of surrounding properties. No doubt in recent years investor inter- est in Hartford has increased, especially as nearby larger markets like Boston and New York have become overheated, leading to a spat of office sales that has improved the overall health of the city's commercial real estate market, which had been sluggish in the wake of the Great Recession. Just as important, the state's purchase of 450 Columbus is bringing more feet to the street, adding vibrancy to the central business district's weekday crowds and hopefully bringing new merchant activ- ity to the Constitution Plaza area, which is looking to add a restaurant. In an announcement last week, the Department of Administrative Services (DAS) said the movement of more than 2,000 workers downtown and the approximately 100,000 annual visitors to the agencies to be locat- ed there will have a significant impact on the downtown economy. Meantime, the state's decision to con- solidate leased office spaces into owned properties was meant as a smart, poten- tially money-saving move in the long term, a strategy taxpayers should rejoice. The downside to the state's Hartford office-tower purchases, however, is that it takes two large properties off the city's tax rolls. Together, 450 Columbus and 55 Farm- ington contributed about $2 million in city tax revenues. Any state-owned properties, of course, are exempt from property taxes. The state does compensate Hartford with pay- ments in lieu of taxes (PILOT) for properties that it owns — including for its newest acquisi- tions — but city have officials have long complained that it's not sufficient in covering the potential lost revenue. (The state reimburses the city $214,336.58 in PILOT payments for 55 Farmington Ave., according to DAS spokesman Jeff Beckham. The reimbursement for 450 Columbus Blvd., wasn't available at press time.). The issue of tax-exempt property is a major concern for Hartford, which is starving for new revenues in the face of growing deficits that have put the city on an unsustain- able fiscal path. With more than 50 percent of Hartford's property already tax exempt, city and state leaders must figure out how to get more properties on the tax rolls. Grow- ing the grand list, along with creating new jobs and improving education for city resi- dents, is the only way Hartford will improve its long-term fiscal health. This is an issue Hartford Business Journal is taking a deeper look into. Stay tuned in the weeks ahead for possible solutions. n OTHER VOICES Staying great will require state to change policies By Chris Powell W hile Connecticut recently has been ranked poorly in surveys of business conditions throughout the country, the state still ranks high in many measures of quality of life, including per-capita income, edu- cation, health, productivity and social mobility. There doesn't seem to be any rank- ing for natural beauty of states, but as sum- mer begins Connecti- cut would have to rank near the top in that respect as well, with much of the rest of the country either too hot or, as in Cali - fornia, tormented by wildfires and drought. No one in Connecticut is ever far from lush green woods, walking and biking trails, playgrounds and ballfields, clean rivers and streams, the ocean, and almost entirely benign wildlife. (While Florida has its good points, they don't include the alligators.) But according to the most recent Quinnipiac Univer- sity poll, the public mood in Connecticut is the most sour it has been since anyone can remember, with 72 percent of respon- dents claiming to be somewhat or very dis- satisfied with living conditions here and 80 percent describing the state's economy as mediocre or worse. The problem is not that things are really so bad in Connecticut. Indeed, most of the rest of the world probably would be thrilled to have the chance to live here. Rather, the prob- lem is that the state used to be even better but in recent years has been declining in impor- tant respects, as the nation itself has been. In essence the cause is probably the old corruption of prosperity. Societies and juris- dictions become prosperous through indus- triousness, ingenuity, and morality or religion that makes a virtue of restraint. But having become prosperous, people start thinking that their prosperity is the natural order of things rather than the product of work and restraint, and so they begin to squander it. In Connecticut that squandering has been done largely through government: The removal of government employee compensation from the ordinary democratic process, welfare pol- icy that perpetuates dependence and discour- ages self-sufficiency, education policy that mis- takes mere attendance for learning, and wealth redistribution that punishes productivity and rewards anti-social behavior. These policies erode wealth production, and so prosperity diminishes even as the share of the population relying for its income on wealth redistribution by government grows and gains control of the political system, mak- ing nearly impossible the correction of the most expensive and counterproductive policies. Having twice imposed big tax increases in the last six years only to see state tax revenue and living conditions decline, Gov. Malloy and the General Assembly realized this year that the tax-more-and-spend-more approach to public policy has failed. Instead they enacted a bud- get that more or less froze spending and taxes. But tax revenue is still falling. If Connecticut's decline is to be reversed, such restraint on spend- ing and taxes can be only a first step. The next steps for restoring Con- necticut must be to audit the expensive mistaken policies, to question state gov- ernment's priorities in budgeting, some of which are grotesque, and to begin exacting sacrifices from the government and wel- fare classes rather than from the classes that have been doing most of the sacrific- ing lately, the taxpay- ers and the helpless needy. For come November, Connecticut will lose its weather advantage to Southern states, and the state's advantages in all the other quality-of-life categories will not sus- tain themselves; they must be nurtured by policy. If prosperity was the natural order of things, Hartford, considered the richest city in the country a century ago, would not now be among the poorest. It was policy change, which created and concentrated poverty and social disintegra- tion, that caused that to happen. n Chris Powell is managing editor of the Journal Inquirer in Manchester. HARTFORDBUSINESS.COM POLL Is CT doing enough to develop its next-generation manufacturing workforce? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: How did your company perform (financially) in the first half of 2016? 15% Better than expected 30% As expected 55% Worse than expected Chris Powell OPINION & COMMENTARY ▶ ▶ The issue of tax-exempt property is a major concern for Hartford, which is starving for new revenues in the face of growing deficits that have put the city on an unsustainable fiscal path. … Growing the grand list, along with creating new jobs and improving education for city residents, is the only way Hartford will improve its long-term fiscal health. ▶ ▶ The problem is not that things are really so bad in Connecticut. Indeed, most of the rest of the world probably would be thrilled to have the chance to live here. Send Us Your Letters The Hartford Business Journal welcomes letters to the editor and guest commentaries for our opinion pages. Electronic submissions are preferred and welcome at: editor@HartfordBusiness.com.

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