United Illuminating Co. has filed suit against Bridgeport, Conn., to prevent it from obtaining its property on Steel Point, affecting the city’s $1.2 billion redevelopment project that includes the construction of a hotel and marina.
UI last year agreed to sell a key parcel of land to the city for $3.2 million. Questions regarding necessary regulatory approvals have slowed the project, and UI balked at the sale, prompting the city to invoke its eminent domain powers. UI is suing in state court to block the city’s seizure of its land.
A hearing at the Superior Court in Bridgeport has been scheduled for March 13. Calls to UI were not returned.
Under the project, the city will sell about $190 million of bonds this summer towards the Steel Point project, according to finance director Michael Lupkas. He said the bonds, while not tax increment financing bonds, are “very similar to TIF bonds,” as “the taxes that go in will pay the bonds, but they’re not the general obligation of the city.” Miami-based developer RCI Marine will foot the balance of the bill, he said.
Bridgeport’s Steel Point project will see a 52-acre parcel of city-owned land turned into a small community consisting of mid- to high-level housing, retail outlets, and other commercial space, tentatively dubbed “Bridgeport Landing.” City officials had originally hoped to break ground on the project in June, but Lupkas said the Fall is now a more realistic estimate.
Lupkas said that the suit may delay the project a bit, but “it’s too early to know” exactly what affect the suit will have on the project.
“At worst, it will just add cost to the project,” said Lupkas said. “One way or another, it will be worked out. The only question is at what price.”
Fitch Ratings released a report on Tuesday which said that backlash against the U.S. Supreme Court’s ruling in the June 2005 Kelo v. New London case — which affirmed the ability of local governments to acquire land for the purpose of economic development — could restrain or negatively affect credit quality over the long term.
However, Fitch “does not expect rating downgrades as an immediate response to legislation restricting eminent domain powers in most cases,” the agency said in its report. “Rather, Fitch views the potential for credit quality improvement as possibly limited by such legislation.”
It also said that over the long run, municipalities facing broad eminent domain restrictions could be at a “competitive disadvantage compared with entities that can site facilities key to vital services more easily.”
Moody’s Investors Service rates Bridgeport’s credit Baa1 with a positive outlook. Fitch has it at A-minus. Standard & Poor’s raised its rating on the credit to A-minus in October, citing positive signs of redevelopment in the city, including progress made on the Steel Point project. The upgrade brought the city back to one notch below its initial A rating, before a series of downgrades brought them to junk status in 1991, when it nearly declared bankruptcy. The city has about $625 million of debt outstanding, in addition to about $323 million of pension obligation bonds outstanding.
Bridgeport, with a population of about 139,500, is Connecticut’s largest city and is among the four largest cities in New England.
