Conn.’s Sweetheart Business Deals Decline From Last Year
by Alexander Soule | Nov. 29, 2015
Despite the multiple Fairfield County corporations that have benefited from big incentive packages from Gov. Dannel P. Malloy’s administration the past few years, Connecticut’s tally of financial assistance to area companies is about half the amount doled out a year ago.
Local business received $26.7 million in direct aid for fiscal 2015, which ended in June, according to recently updated data from the Connecticut Department of Economic and Community Development (DECD). That compares with $52.3 million during the same period the year before. The data was compiled from programs for manufacturing assistance and Malloy’s Small Business Express program, which was created to help companies struggling to find financing during the recession and since extended during the economic recovery.
“If you look at all these different programs, we’ve probably served over 2,000 companies in the state, and they in turn have promised to retain or grow about 25,000 jobs,” DECD Commissioner Catherine Smith said last week at an economic forum held at Fairfield University. “In each and every one of these (deals), there are incentives for companies to grow here (and) there are ‘clawbacks’ or provisions if they don’t do what they say they are going to do. The state gets its money back — I am looking after your dollars, the taxpayer dollars that support these programs.”
The latest data excludes several incentive agreements announced by the state since 2014, which could occur due to a vesting schedule that takes effect in a later period or for other reasons. Those deals include job expansion and retention packages for Synchrony Financial (NYSE: SYF) and Pitney Bowes (NYSE: PBI) in Stamford and Datto in Norwalk, which when tallied should boost future figures.
If big-ticket sweetheart loans have won the state ample attention during Malloy’s tenure, the focus now is on whether the Connecticut General Assembly will hold the line on tax hikes passed last June. The corporate tax increases sparked protests from many in the business community, most notably General Electric (NYSE: GE), which threatened to relocate its Fairfield headquarters elsewhere.
Speaking at the same forum as the DECD’s Smith, an executive with New York City-based NewOak Capital said the company weighed incentives offered by Connecticut against costs and other factors like traffic in deciding to create a satellite office in Danbury, but that the decision has paid off.
“It did come into our minds, just (from the perspective) of the overall business model, what the operating costs would be,” said Chad Burhance, a partner with NewOak Credit Services. “Obviously there’s great incentives offered by the state of Connecticut that we could take advantage of (and) which are being reinvested back into the community at the end of the day. It is still cheaper than doing business in the state of New York. How long that is going to be? I don‘t know.”
NewOak received $3 million in incentives in the 2014 fiscal year, which would have placed it among the top three deals in fiscal 2015, the largest being Vineyard Vines’ $6 million loan to move its headquarters within Stamford to Harbor Drive, where it has pledge to employ 350 people. Also receiving multimillion dollar packages in fiscal 2015 were Novitex Enterprise Solutions, spun off from Pitney Bowes as an independent company based in Stamford offering digital and paper document services; and Memry Corp., a high-tech manufacturer in Bethel.
But deals ran the gamut, and in many instances made a major difference for companies looking to expand or for those hit by unforeseen circumstances. Illustrating the latter instance, the first aid package of fiscal 2015 went to DeYulio Sausage Co. The meat packer was forced to find a new production facility after losing its Stamford plant in a forced $1.2 million sale to the city, which asserted its power of eminent domain to take the land for the Urban Transitway in the South End. DeYulio bought a Bridgeport building for $1.4 million, with DECD furnishing the company $100,000 in the form of a grant.
“The key to me would be to look at every opportunity,” Michelle McComb, chief financial officer of Datto, said at the Fairfield University forum last Monday. “Don’t leave any stone unturned, because I think there’s a lot of different things that folks aren’t aware of and I think the (state ) government can certainly do a bit more ‘branding‘ with respect to that.“
Originally posted at http://www.ctpost.com/business/article/Conn-s-sweetheart-business-deals-decline-from-6660422.php by Alexander Soule in the CT Post, “Conn.’s Sweetheart Business Deals Decline From Last Year”. Published on Nov. 29, 2015, Accessed on Nov. 30, 2015.