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36 Hartford Business Journal • December 5, 2016 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL XL Center renovation key to Hartford's future T he future of the XL Center has been brought back into the spotlight, although nothing new has developed since the Capital Region Development Authority (CRDA) last year backed a $250 million plan to renovate the 41-year-old arena. CRDA held a public hearing last week before formally adopting the plan, which the Hartford Business Journal supports, although we understand the decision to invest a quarter-billion dollars, or more, in a sports venue won't be an easy one, especially as the state remains mired in a fiscal crisis. But this is an investment the state must make, or it risks losing any chance of creat- ing/maintaining a vibrant Capital City that attracts people, particularly Millennials, to live, work and play. This isn't just about offering entertainment, it's a workforce-development issue as well. Hartford and the state as a whole already have difficulties attracting human capital; adding a permanent dead zone in the core of downtown would deteriorate the region's attractiveness even further. In the last few years, CRDA considered several options, including continuing to patch up the arena with smaller annual investments and spending nearly $500 million to build a new facility. Putting "patches on patches," as CRDA Executive Director Michael Freimuth called it, could just end up creating a money pit for the state with largely nothing to show for it. The state has already allocated $40 million since 2014 to upgrade the arena, but many problems still exist and it's not feeding into a larger plan to save the facility long term. Meantime, building new is largely impractical, not only because the building would likely need to find a new home — possibly outside downtown, which makes little sense — but also because there will likely be no political support for spending that much money. The $250 million investment will basically yield a new arena in its current location, creating the best possible outcome. To be fair, we understand some state lawmakers' trepidation about investing such a large sum in an entertainment venue at a time when the state's fiscal crisis is forcing deep cuts to social services. At the Nov. 29 public hearing, conservative Sen. Joe Mark- ley (R-Southington) spoke eloquently, even convincingly, about the state's inability to afford "these kinds of projects," raising red flags about the significant increase in bond- ing under Gov. Dannel P. Malloy, which has also drawn our criticisms and concerns. He said the state shouldn't spend money on projects that continually require heavy subsidies, arguing the XL Center will likely continue to be a money loser even with a major renovation, particularly as competition for concerts and other events intensifies from casinos and other venues. He also dismissed the notion of Hartford ever getting another NHL hockey team (the project architects admit that renovating the arena offers no guarantees the city will be able to attract a team, but they also say doing nothing guarantees the NHL will never return). We don't disagree with many of Markley's points, and this investment shouldn't be made with the idea it will attract NHL hockey back to the Capital City, which is very unlikely. But the senator fails to grasp the bigger picture of what an active XL Center means to not only Hartford — whose residents, businesses, boosters and officials came out in support of the renovation plan — but the region as a whole. Small businesses around the XL Center, mainly restaurants and bars, depend on event traffic to keep their doors open and many companies downtown use the venue to entertain clients and employees and see it as a selling point of working in the city. Take that away and the allure of living, working and playing in Hartford is severely diminished, putting another dent in the heart of Connecticut's commercial epicenter. n RULE OF LAW Union efforts to block state's outsourcing troubling By John Horak M y Aug. 1 column, "State's nonprofit- contracting system broken", and this newspaper's Aug. 22 editorial, "CT's fiscal crisis presents reform opportunities," both addressed the need for foundation-level reform of the state's social services delivery system using the Department of Developmen - tal Services (DDS) as a case in point. I am circling back to this topic because of new information that casts the state-employee union's involvement in the matter in a nega- tive light — suggesting that it owes someone either a credible expla- nation or an apology. Here is the back- ground: DDS has a $1 billion budget and pro- vides care to approximately 16,000 people with intellectual disabilities — either directly (with its employees) or indirectly (by contracting with IRS-approved nonprofits whose mission is to care for the disabled). DDS is planning to lay off 605 employees and to outsource the work to non- profits in the state. The estimated savings ($70 million annually) is attributable to the fact that the nonprofit employees are paid approximately half as much as the state employees. The SEIU is trying to stop the outsourcing. In my August editorial, I rebutted ridiculous union assertions that nonprofits were in it to "make a profit" and paid "their workers close to half of what the professional union caregivers earn." Simply put, the IRS prevents the non- profits from operating on a for-profit basis, and the employees make so little not because their nonprofit employers want to make a bigger profit, but because our social-service system has been rigged to produce this result. The rigging is simple in form and devastat- ing in its effect. The nonprofits are functionally 100 percent cash dependent on the state (under a one-sided contract system) and they can't pay their employees with money the state won't give them. The state has used its leverage over the nonprofits to shortchange them for over a decade — which is why their employees' wages have fallen so far relative to their counterparts at the state. People with lifelong involvement in the field have told me that before the shortchanging started, the wage scales were roughly equivalent — so we (and the union) know whose employees got the better deal in the meantime. Here's the new information I mentioned above: I did not realize until recently how large a percentage nonprofit employees are also union members. I knew there were some, but recent information from some nonprofits suggest it could be as high as 50 percent. To be fair, the precise data seem unavailable, but the point is that the percentage is high enough to be trouble- some simply because the union has as much of an obligation to protect the interests of the non- profit employees in the union (helping them get a raise) as it does in protecting the interests of the state employees (helping them keep their jobs). Here is another way to look at it: The non- profit employees pay union dues too, such that if I were one of them I might ask if my dues are being used to pay for efforts to save the jobs of my higher-paid comrades at the state; or, why isn't my union not lobbying hard to get more state money to my nonprofit employer so it can give me a raise? There is more: My sources tell me the union hinders a nonprofit's ability to reward excellent performance monetarily unless it gives all employees of the same rank the same reward — so no reward is given. Since August, the union has taken its campaign on behalf of the state workers to court (Mathews v. DDS filed in September and SEIU Local 2001 v. DDS filed in Octo- ber). Litigation is very expensive and if I were a union member working for a nonprofit, I'd wonder if that's how my dues are being used. This newspaper's Aug. 22 editorial gets right to the heart of the problem by invoking a 2011 legislative Program Review and Inves- tigations Committee report, which concluded "that it is on average about twice as costly for residential care in public settings, with little to no difference in the quality of care provided." The report recommended "an accelerated pace of moving away from a 'dual service system' to a private sector service model." The two things I would add to this are that in this context the phrase "private sector" means privately governed, but not private ownership — because nonprofits have no shareholders and are "owned" by the com- munities they serve. Second, there is plenty of room in the middle between the compensation of state workers and that of nonprofit workers to ensure fairness while still saving the state some much-needed money. n John M. Horak is a retired lawyer and the director of TANGO Nonprofit Education and Consulting in Farmington. HARTFORDBUSINESS.COM POLL What should CT do with the XL Center? ● Rebuild for $500M ● Renovate for $250M ● No more investment To vote, go online to HartfordBusiness.com. Last week's poll results: Do you plan to spend more or less on holiday shopping this year, compared to 2015? 9.8% More 63.4% Less 26.8% Same John Horak LETTER TO THE EDITOR State should build zero-emission electricity system Dear Editor: Gov. Malloy understands that carbon emissions from the transportation sector pose a serious risk to our planet ("Electric vehicle rebate program gets $2.7M in funding," Nov. 18, 2016). After recognizing that we have a problem, the next step is to take action. That means cleaning up fossil-fuel emissions from our cars — one of America's major sources of dangerous carbon pol- lution — and transitioning to a carbon-free trans- portation system. At the state level, Malloy has announced an alloca- tion of $2.7 million toward a consumer-rebate program that will help incentivize the sale of electric vehicles. Malloy should also double the strength of the Re- gional Greenhouse Gas Initiative (RGGI) to accelerate our progress in cleaning up carbon pollution from power plants, while increasing the amount of power we get from clean, renewable energy sources. Ultimately, we should build a zero-emission elec- tricity system that does not put our climate or our com- munities at risk. Melanie Perl 2074 Park Street, Hartford, CT 06106