Archive for the ‘Economy’ Category

0Carla’s Pasta founder gets return on political donations

Carla Squatrito, founder of Carla’s Pasta in South Windsor, gave $1,000 to the Connecticut Democratic Party last month, following up on another $1,000 donation in November.

Squatrito is a regular contributor to Democratic candidates and political action committees, giving $48,150 since 1999, according to the Federal Elections Commission. She made state-level contributions as recently as 2011, but as a recipient of state funds can no longer do so. Her recent donations to the state party went to its federal account.

The federal account allows state contractors and recipients of state funds to avoid the ban on their political donations.

Last year, the Department of Economic and Community Development awarded Carla’s Pasta a $4 million forgivable loan to fund an expansion project.

In 2012, Carla’s Pasta received a $2.2 million loan and $750,000 grant from the state to install a fuel cell.

“In Connecticut, the government works,” company vice president Sergio Squatrito told CT News Junkie when Gov. Dannel Malloy visited the new fuel cell. “Too many times businesses don’t step up and say ‘without the government this would not be happening.’”

0Jackson Labs avoids local approvals as a ‘state project’

Construction on the Jackson Laboratory facility in Farmington is well on its way to completion thanks in part to unique treatment of the project: the lab didn’t need any local approvals.

The Jackson Laboratory for Genomic Medicine will receive a $297 million subsidy from the state. Gov. Dannel Malloy has touted the project for its economic-development potential.

If all goes according to plan, the time between legislative approval and grand opening will be almost exactly three years.

In addition to the monetary benefits from the state, treating the lab as a “state project” allowed to it to avoid the time-consuming and costly land-use process faced by other developers. Instead, the project received state approvals.

Mike Hyde, the nonprofit lab’s vice president of external affairs and strategic partnerships, said another developer “would follow the exact same process that we are” – if it was building on state property and had state financial support.

“I don’t know if one is more stringent than the other,” Hyde said. “I couldn’t say it was a privilege because I don’t know what the other experience is like.”

According to a March 2014 update on the project, JGM received about $9 million in state money for research, training and other reimbursable expenses.

By the end of 2013, JGM spent $64 million on construction out of $135 million budgeted. The state gave JGM a $192 million forgivable construction loan.

According to hiring projections, the subsidy amounts to about $42,000 per job per year.

The General Assembly approved Malloy’s incentives for JGM in October 2011. The new law designated Connecticut Innovations, the state’s venture capital fund, to manage the state’s relationship with JGM.

Connecticut Innovations signed an agreement with JGM in January 2012.

JGM awarded the contract to manage construction of the 183,500 square foot lab in January 2013.

Hyde said the lab plans an Oct. 7 grand opening.

In order to maintain its incentives JGM needs to reach 300 employees within 10 years. Hyde said the building could fit up to 320 people. “We’ll hit the 300 employee mark sooner than we had imagined,” Hyde said.

Hyde said JGM has 79 employees in about 11,000 square feet of temporary space and is looking for about 35 new employees. “We’re adding people at a lively clip,” he said.

Some University of Connecticut employees count toward JGM’s hiring goals.

The legal principles that allow JGM to avoid local land-use regulations are the same that allow a contractor for the Department of Transportation to build a road for the state without local approval. These principles have expanded greatly. In 1959, Attorney General Albert Coles wrote an opinion giving the state the ability to give an airport hotel on state property a liquor license instead of following local regulations.

“Therefore, it is my opinion that the airport operation constitutes a governmental function serving the public need and by virtue of its nature is immune to the zoning power of the Town of Windsor Locks,” Coles wrote a half-century ago. “The hotel with a liquor permit would be in furtherance of, rather than a deviation from, the essential airport use and, therefore, exempt from the zoning regulations of the Town of Windsor Locks.”

Update: This  post was updated to clarify that JGM did obtain state-level approvals for construction in place of local approvals.

1Jepsen’s ebook win averages 86 cents per resident

Connecticut residents are beginning to receive settlement payments from ebook publishers thanks to the efforts of Attorney General George Jepsen and his peers across the country.

Nationally the settlement amounts to $166 million, with $3 million intended for Connecticut residents, or an average of 86 cents per person.

Five publishers that settled a price-fixing lawsuit will make the payments.

Apple, another defendant in the suit, did not settle. The company is appealing a Federal District Court ruling and awaits another trial to set the amount of damages.

Jepsen’s office issued a statement:

“I encourage Connecticut consumers who filed claims or are otherwise eligible for credits through these settlements to check their email or mail and their retailer accounts to take advantage of the refunds that will begin arriving this week,” said Attorney General Jepsen.
Account credits and checks will be based on the number of eligible eBooks purchased during the claims period – April 1, 2010, to May 21, 2012. Whether a consumer receives a credit or a check depends on the retailer through which the eBook was purchased and, in certain circumstances, whether a claim was properly filed. Eligible consumers should check their email for communications from their eBook retailer regarding account credits. Checks will be sent by mail to eligible consumers. For more information about the settlements, please visit www.ebookagsettlements.com.
 “Consumers are entitled to a fair, open and competitive marketplace, and consumers who have suffered as a consequence of violation of antitrust laws are entitled to compensation,” the Attorney General said, “At the upcoming damages trial, Connecticut – along with Texas and New York – will be leading the effort on behalf of our partner states to obtain substantial additional compensation for consumers as well as civil penalties for the state.”
Assistant Attorneys General Joseph Nielsen, Gary Becker and Richard Porter; Paralegal Specialist Holly MacDonald; and Assistant Attorney General Michael Cole, chief of the Antitrust and Government Program Fraud Department, are assisting the Attorney General in this matter.

2Company run by son of Voices for Children co-founder on track for $3 million in state aid

The State Bond Commission will consider granting $3 million in state assistance next week to a company run by Josh Geballe, son of the co-founder of Voices for Children.

Geballe is CEO of Branford-based Core Informatics. His mother, Shelley Geballe, co-founded and ran Voices for Children for more than a decade. Voices for Children generally lobbies for increased state spending, higher taxes on businesses and a more transparent tax system.

The state aid to Core Informatics includes a loan for $2.75 million at 2 percent interest for 10 years. Principal is deferred for three years and $1 million is forgivable if the company retains 15 jobs and creates 69 more. The Department of Economic and Community Development will also grant the company $250,000 to buy office equipment.

Pittney Bowes, a First Five company, is on the bond commission agenda for $9 million in assistance. Norwalk-based Datto is on the agenda for $6 million.

Shelley Geballe is also on the board of the organization that publishes the CT Mirror.

0Do hedge funds have a future in Connecticut?

Two Fairfield County state senators made the case Thursday that hedge funds are welcome in Connecticut, despite the sometimes icy reception the industry gets from politicians and the media.

Sens. Carlo Leone, D-Stamford, and L. Scott Frantz, R-Greenwich addressed a crowd of more than 200 at the quarterly meeting of the Connecticut Hedge Fund Association at the Indian Harbor Yacht Club. David Burke, managing director at MKP Capital Management, moderated the discussion.

“We’re here to listen and to learn,” Leone said.

“We are proud to have you here,” he said. “I do believe that not everyone out there understands how you do what you do.”

Frantz thanked everyone in the audience for their contributions to the state, which pay for safety-net programs, roads and public safety for all residents. According to Frantz Greenwich sends $1.2 billion to Hartford and gets back $6 million.

“They’re just not used to getting thanked,” he said.

Both senators said their colleagues in the General Assembly underappreciate the hedge-fund industry.

“They do think money grows on trees,” Leone said.

He said he tries to make the connection between what happens in Fairfield County with what happens in the rest of the state. A “cold” downstate, he explained, is usually “more of a flu up there.”

Leone said when the light does go off “it’s more dim than bright.”

Frantz said even among Republicans “there’s not nearly enough understanding” of hedge funds. He said some in Hartford have “feelings of animosity” toward successful people.

People from other parts of the state view “that little rectangle” in the southwestern part of the state as a “$100 bill,” Frantz said. “It really boils down to envy at the end of the day.”

They both had good things to say about Gov. Dannel Malloy.

Frantz said there is a “much more business-oriented person in there now,” referring to Malloy. “You’re very well-liked up in Hartford, regardless of what you may hear.”

Leone said Malloy “struck a balance” when raising taxes three years ago. “I think he would have preferred not to raise them,” he said. “I don’t think it’s an overreach.”

Burke asked the senators why they thought Connecticut is home to so many hedge funds.

Frantz said Connecticut has a “critical mass” of hedge funds, which is one of the state’s key selling points. He said a concentration of hedge funds is a “wonderful thing to have, very difficult to get going.”

“A lot of corporations are here,” Leone said. “A lot of businesses are here.”

“The education level is quite higher,” he added. “You’re going to want to be where the people are.”

Frantz said the hedge fund industry is very attractive because it doesn’t pollute, brings educated people together and provides “high-value, high-paying jobs.”

“The last thing we need is more laws,” Frantz said, adding that “it never works” to pass legislation to attract businesses. He said Connecticut needs low taxes and a “dynamic, friendly, easy-to-navigate business environment.”

“That’s how you get good jobs to come to the state.”

Frantz said, although the rate has slowed recently, the state budget has grown about 7 percent annually over the past 35 years. “We all know the power of compounding.”

Burke asked about the fairness of the state giving more than $100 million to Bridgewater, one of the largest and most successful hedge funds. He said he would “stand up and salute” Ray Dalio, the company’s founder, for his success but can’t understand why the state is paying so much to save jobs “that never seemed to be at risk of leaving the state.”

Bridgewater’s future landlord is also receiving millions from the state.

“It’s funny how everyone seems to be threatening to leave,” Frantz said.

The deal doesn’t make sense, Frantz said, because Dalio’s net worth “fluctuates more in a second than the value of the entire package.” However, he said paying $150 million for a new hedge fund of that size to come to Connecticut would pay off in about nine months.

Leone said “because he’s so wealthy personally doesn’t detract” from the economic impact of having Dalio and his fund in Connecticut.

Burke said it seems that taxpayers are “paying for him to have a helipad in Shippan.”

Frantz said the state has committed $386 million to the First Five, Next Five and “yet another five” programs. “There’s a ton in the way of resources,” he said. “I would argue we’re spending too much on this.”

According to Frantz, the state is spending about $75,000 per job for its incentive programs, often in forms that don’t need to be paid back, like forgivable loans. He said economic development programs more typically offer about $12,000 per job and the money is repaid.

A member of the audience said tax rates are “appreciably less” in Connecticut.

“That delta between New York City and Connecticut has shrunk,” Frantz said, adding that “new leadership in Manhattan” might improve the situation from Connecticut’s perspective.

“I would love to see taxes go down,” Leone said.

“By the way, when you hear ‘temporary tax’ that’s government speak for permanent,” Frantz said.

“Most of us here have the misfortune of traveling” on I-95 or MetroNorth, Burke said, what about transportation?

Connecticut would have to contribute $3.7 billion to make all needed improvements to MetroNorth, Frantz said. When it comes to roads, “we’re going to be underfunded here for years to come,” he added.

Leone said officials are working to get “the federal assistance that we deserve that we don’t get.”

Burke said it is difficult for the hedge-fund industry to advocate for itself because many funds also compete to manage state pension-fund investments.

“Talking to you is a risk,” Burke said, because it could create an impression of lobbying or even corruption.

Leone said the industry could “allow the lobbyists to do that on your behalf,” while Frantz said a single representative could speak on behalf of the industry.

1First Five companies give back to Democrats

Two companies participating in Gov. Dannel Malloy’s signature economic development program contributed to the Democratic Party last month, contributing to the party’s significant financial advantage over Republicans.

Employees of NBC Universal and NBC Sports gave the Democrats federal account $4,600, while the Cigna Political Action Committee contributed $5,000.

NBC Sports and Cigna are participating in Malloy’s First Five program.

Other notable donors include:

– Marianna Kulak McCall, McCall Kulak Foundation, $10,000

– Eric M. Zachs, Bantry Bay Ventures and spam-software maker Ziplink, $2,500

– Daniel E. Kleinman, partner at Hinckley Allen and board chair and legal counsel to the Travelers Championship, $1,000

Paul Nunez Jr., lobbyist with DePino Associates, $500

0Program for unemployed veterans slow-going at first

A jobs program to support the hiring of unemployed veterans has been slow to take hold with less than 10 percent of the money borrowed for the program reaching employers since 2012.

Gov. Dannel Malloy and the General Assembly created “Step Up for Vets” nearly two years ago and borrowed $10 million to fund it. The program is modeled after the Subsidized Training and Employment Program, known as Step Up, another Department of Labor program with $20 million in funding split between wage subsidies and manufacturer training.

Malloy announced plans Tuesday to continue the traditional Step Up program with another $10 million in funding. The program has spent $16 million of the original $20 million or 80 percent of its funding.

The funding went to about 2,000 new employees at 500 small businesses who were paid an average wage of $15.72 per hour, according to department.

The program for veterans has helped about 100 unemployed veterans get hired at an average wage of nearly $17 per hour, spending less than $1 million, or 10 percent, of the money allocated.

Last year, the General Assembly expanded eligibility for the program.

“At that time, it was only open to veterans if they were a combat veteran of Operation Enduring Freedom in Afghanistan or military operations in Iraq,” said Nancy Steffens, a spokeswoman for the Labor Department.

Steffens said “many returning veterans from those wars opted to go back to school instead of work,” which led to the program’s expansion.

“Since that time, many more veterans have been eligible for the program,” she said. “It has been much easier for the agency to match employers with veterans that can take part.”

In December the Auditors of Public Accounts raised concerns with operation of the Step Up program. The auditors found recipient businesses that owed back taxes and employees who were not newly-hired, as required by the law.

The department agreed with the audit findings and plans to improve the screening process.

Auditors also found the department imposed an arbitrary $12,000 limit on the subsidies, but the department defended the practice because the limit allows the program to “serve as many eligible employees as possible.”

When the Step Up law initially passed, residents of only 39 towns were eligible for the program.

0Warning to campaigns: State list of banned contributors isn’t definitive

The list of state contractors banned from contributing to political campaigns is the best effort of state agencies, but it isn’t definitive, a reality highlighted by the absence from the list of several companies with publicly-acknowledged state relationships.

For example, six of the 11 First Five companies getting economic development assistance from the state are not on the Sept. 30 list of state contractors prohibited from contributing to a statewide campaign.

The Department of Economic and Community Development, which administers First Five, did not respond to a request for comment.

Over the summer, the Department of Transportation announced Stamford Manhattan Development Ventures as its preferred developer for a transit-oriented development project in Stamford, a relationship expected to include $35 million in state aid for parking garages.

Yet Stamford Manhattan does not appear on the latest list of banned state contractors.

A DOT spokesman said the agency is “researching the issue.”

The list, administered by the State Elections Enforcement Commission, includes current and prospective state contractors, both legally-defined categories.

“Whether or not you’re on the list is not the defining factor,” said Joshua Foley, an attorney and spokesman for SEEC.

A contractor is defined as a company with a single contract worth at least $50,000 or a series of contracts worth $100,000 in a single year. The statute includes agreements for “a grant, loan or loan guarantee” in the definition of state contacts.

Companies cannot make political donations in Connecticut, so the contractor ban prohibits principals of contractors – another term specified in the law – from contributing. The principals banned from donating include owners, certain executives, managers who negotiate with the state and directors (except when the contractor is a nonprofit).

It is also illegal for certain family members of principals to contribute to campaigns.

Foley said a campaign’s treasurer is liable if he or she accepts an illegal contribution, but there is protection when a contractor lies.

State contractors have 30 days to fix an illegal contribution.

Foley said a contractor who makes illegal contributions could have contracts voided and face a ban on future agreements with the state, plus civil penalties.

SEEC uses the state’s Core-CT accounting database to identify active state contractors, according to Foley. He said SEEC then asks agencies to confirm the computer-generated list is correct.

“That doesn’t mean people not on the list are not state contractors,” Foley said. “We do the best we can with our lists.”

The list’s shortcomings appear to be linked to a more complex part of the law governing prospective state contractors.

There are two ways for a company to become a prospective state contractor. If a company obtains a prequalification certificate to do work for the state, it is a prospective state contractor and therefore its principals cannot legally donate to campaigns.

Companies also become prospective state contractors when they submit “a response to a state contract solicitation” such as a request for proposals or a loan or grant application.

For example, if Acme Contracting submits a response to an RFP, Acme’s principals cannot donate to a campaign between its submission and when the state enters into the contract.

SEEC relies on agencies to report prospective contractors of both types, according to Foley. He said prospective contractors – since by definition they don’t have a contract – won’t appear in Core-CT.

The Department of Administrative Services, which plays a large role in state purchasing, electronically generates one list of prospective contractors because companies responding to its RFPs are typically prequalified, according to a spokesman.

Connecticut’s contractor ban makes a distinction between which branch of government a company contracts with. If a company contracts with the executive branch, its principals cannot contribute to the statewide campaigns of constitutional officers.

If a company contracts with the much smaller legislative branch, its principals cannot contribute to General Assembly candidates.

However, an executive-branch contractor can give to legislative campaigns and vice versa.

If a candidate participates in the Citizens’ Election Program, which uses government money to subsidize campaigns, neither category of state contractor can give to the campaign.

Eleven companies are currently listed on the First Five website. Cigna, CareCentrix, Deloittte, Navigators and Pitney Bowes are on the prohibited list.

Alexion, Bridgewater, Charter Communications, ESPN, NBC Sports and Sustainable Building Systems do not appear on the list of executive branch contractors.

SEEC’s Foley said this could happen if the state is providing the companies with tax credits.

Some companies that have agreements with the state also don’t appear on the list, although it is unclear if their agreements meet the definition of state contract. For example, Harbor Point Holding Company controls TL76 LLC, the recipient of $16 million in state grants and eligible for up to $9 million more, but it isn’t on the list of state contractors.

The Strand/BRC Group LLC owns the property TL76 will develop using the state grant, but it isn’t on the list either.

Foley said questions about corporate relationships like these are complex. “I can’t opine on that over the phone,” he said.

According to Foley, a parent company can be a state contractor and have a subsidiary that isn’t, while a subsidiary can be a state contractor while its parent company isn’t.

The Connecticut Democratic Party recently returned a $10,000 donation that may have fallen in this category.

5Developer to get $2.50 from state for every $1 invested

A Stamford real estate developer must spend at least $9.7 million to receive a $25 million taxpayer contribution toward a waterfront remediation project according to documents obtained from the Department of Economic and Community Development.

DECD provided two agreements related to the proposed site for the future headquarters of the world’s largest hedge fund, Bridgewater Associates, in response to a Freedom of Information Act request.

None of the publicly available documents appear to mention Bridgewater, but the company could be referenced in documents that remain secret.

DECD made the agreements with three limited liability companies related to lead developer Building and Land Technology to support the Bateman Way remediation project.

In addition to the $25 million in public money destined for BLT and its partners, DECD plans to give Bridgewater another $115 million to partially fund its move from Westport to Stamford.

As of October, there was still no agreement between DECD and Bridgewater.

The company’s $750 million headquarters spanning 850,000 square feet is intended for Stamford’s South End, part of the $3.5 billion Harbor Point redevelopment project.

BLT is also landlord for two other companies that received aid from the administration of Gov. Dannel Malloy: Deloitte, which will get $14.5 million, and Starwood Hotels, $90 million.

The State Bond Commission approved $7 million for the Bateman Way project in January. DECD completed an agreement with the companies involved on March 19.

The bond commission approved another $9 million in April. An agreement dated June 14 governs that $9 million payment and a possible future payment of another $9 million. The second $9 million still needs bond commission approval.

According to the agreements, state funding cannot exceed 72 percent of the project’s cost. If the bond commission approves the last payment of $9 million, the developer must spend a total of $34.7 million to receive the $25 million from the state.

If the last payment does not come through, the developer must spend $6.2 million of its own money to receive the state’s $16 million contribution.

The state’s agreements are with three related limited liability companies: The Strand/BRC Group, Harbor Point Holding Company and TL76 Holdings.

TL76 Holdings, a real estate operating company, is the direct recipient of the state money.

Harbor Point Holding Company LLC is the sole member of TL76 Holdings, which means Harbor Point effectively owns TL76.

In addition to directly controlling TL76, Harbor Point indirectly controls The Strand/BRC Group, which owns the 14-acre parcel being developed by TL76.

Harbor Point is the managing member of The Strand/BRC and owns 1 percent of the company. The remaining 99 percent is owned by Admirals Wharf LLC.

According to the Secretary of the State’s website, Harbor Point Holding Company also controls Admirals Wharf.

Carl Kuehner III and Paul Kuehner, the brothers behind BLT, serve on Harbor Point’s board of managers. They are joined by Gerald Ronon and Jane Smith, executives with Lubert-Adler Real Estate Funds, BLT’s Philladelphia-based partner on the project.

Initially, Lubert-Adler partnered with Antares Investment Partners on the Harbor Point project. After taking unrelated losses during the financial crisis, Antares withdrew and BLT took its place, making a $200 million investment, according to the Wall Street Journal.

Harbor Point, the joint venture between BLT and Lubert-Adler, recently sold an apartment building, Infinity Apartments, for $98.8 million.

The Strand/BRC has applied for an Army Corps of Engineers permit to dredge part of the West Branch of Stamford Harbor. Public comments on the application were due last month.

4Former state rep gets $80,000 job reviewing unemployment appeals

Democratic state Rep. Bruce “Zeke” Zalaski of Southington didn’t run for re-election last year after a decade in the legislature, but he didn’t retire from public service either.

In January, Gov. Dannel Malloy appointed Zalaski to the Employment Security Board of Review within the Department of Labor.

According to a department spokeswoman, Zalaski earns $3,229.28 each pay period, which amounts to more than $80,000 year.

The board decides on unemployment insurance appeals. Its decisions can be appealed to superior court.

Zalaski joined former Middletown Mayor Domenique Thornton on the Board of Review. Malloy appointed Thornton in 2012.

Both Thornton and Zalaski faced arrest for allegedly drinking and driving while in elected office.

A judge dismissed 2005 charges against Thornton within a week of the incident. Republican Sebastian Giuliano went on to defeat Thornton two months later. Thornton’s arrest continued to generate controversy in Middletown and its police department after she left office.

Zalaski announced his decision not to run again in May of 2012. He was arrested the previous December for driving while intoxicated and that February a judge put him in an alcohol education program, according to the Courant.