The controversial bailout for the city of Hartford is sending fiscal shock waves through the legislature and contributed to $100 million for the XL Center being cut from the governor's proposed capital improvement budget, a key legislative leader said Wednesday.
"The $550 million price tag, while only $30 million a year, it's a little sticker shock, causing members of both caucuses to pause," House Speaker Joe Aresimowicz, D-Berlin, said, of the long-term cost of the bailout.
The bailout calls for the state to pay off $550 million of Hartford's general obligation bonds over the next two decades.
Aresimowicz said it is likely that funding for the XL Center — along with another Hartford project, $16 million for a new parking garage near The Bushnell — will resurface before the end of the session.
The cuts were made by the legislature's finance, revenue and bonding committee late last week. Gov. Dannel P. Malloy also said Wednesday the committee's vote is not the final word and "is just one step in a lengthy process."
"It is our hope that the final capital budget will include these two important projects with statewide impact," Chris McClure, a Malloy spokesman, said Wednesday.
Malloy proposed spending another $100 million for the XL Center as part of changes to the state budget, the second half of the state's current two-year fiscal plan. Big ticket capital improvement items, such as the XL Center, are financed through the sale of bonds.
The $100 million could be used to make upgrades in advance of a sale or represent a financial commitment by the state to a potential buyer.
On Wednesday, Aresimowicz noted the state approved $40 million last year to make the aging, 43-year-old arena more attractive to a potential buyer, partly by purchasing the surrounding atrium and storefronts along Trumbull Street. Those spaces could be used for future redevelopment or for boosting income to the money-losing venue.
The Capital Region Development Authority, the quasi-public agency that oversees the arena, confirmed that it extended an offer for the space last week to owner Northland Investment Corp. The two sides are "a little ways apart" but CRDA said its offer is in line with two recent independent appraisals and one from last year. CRDA declined to disclose the offer.
One indication that it may be tough to find a buyer came last year. CRDA sought proposals for a public-private partnership for the arena and drew just one bid.
Aresimowicz and other legislative leaders say it will likely take additional state investment to make a public-private partnership attractive to a buyer or other private investor. Lawmakers last year agreed to spend another $40 million on the arena with the requirement that a buyer would be sought.
CDRA said it expects to seek a buyer or investor by the end of this month.
Spending on the aging arena has become a flashpoint for critics who say the state is borrowing too much, given recent budget deficits, especially for a venue that loses money.
Senate Republican Leader Len Fasano said he has not changed his stance on the XL Center, maintaining that state government should not be in the business of running a business.
Fasano said the legislature should wait to assess further funding until interest by potential buyers is known.
"If you can't find a buyer for it, maybe someone buys it for a buck, but the state may have to do A, B or C," Fasano said.
Sen. John W. Fonfara, D-Hartford and co-chairman of the finance committee, said Wednesday one option could include spending contingent on securing a buyer or private investor.
Spending on big-ticket improvements for the arena has ramped up in recent years. In 2014, the legislature approved $35 million to spruce up a drab interior, adding new seating, upgrading fire systems so interior doors could be removed and creating a bar facing the arena.
The idea was to extend the life of the arena until a long-term plan was developed. Meanwhile, another $3.5 million was spent on ice-making system for the arena's rink and other improvements.
Ultimately, there was not legislative support for a $250 million, top-to-bottom makeover recommended by a consultant hired by CRDA. The vision included a second concourse and more premium seating lower in the arena. The dramatic renovations would help make the arena profitable, the consultant said.
CRDA executive director Michael W. Freimuth gave a pessimistic outlook to legislators at a hearing last month on the prospect of finding a buyer.
The venue immediately could easily use $10 million for plumbing, $25 million for electrical work and $15 million for a new roof.
It would cost $40 million to demolish the arena, just to create another hole in the downtown area, Freimuth said.
Supporters of further investment in the arena said it is a key component of Hartford's revitalization, complementing new apartments and the downtown UConn campus.
The $16 million parking garage with 350 spaces would be built near The Bushnell on the site of the former state health department laboratory on Clinton Street. The building is now being demolished.
The garage is seen as laying the groundwork for transforming an expanse of asphalt parking lots into a neighborhood of housing, shops and restaurants connecting Bushnell Park to south Hartford.
The garage would lay the foundation for "district parking," with state office workers in buildings along Elm Street sharing space with future residents and patrons of The Bushnell.
"It's an opportunistic moment, developers are interested in working with us," Suzanne Hopgood, chairman of CRDA, which is heading the area's redevelopment efforts, said Wednesday. "Freeing that land is critical, which the garage allows. We'll need to find some way to include the garage in an overall public-private deal structure."
