BY: Gerry Cantlon, Howlings
Hartford, CT – The XL Center has been under enormous pressure inside its own walls for the past seven years. Its operating systems are failing one-by-one and from the outside its future is being hotly debated.
The past six weeks have seen the promises of the SCI report regarding options as to whether or not to build a new facility or not taking a couple of had, right crosses to the jaw.
Last Monday, the state budget committee announced that $500,000 will be cut from the XL Center budget over the next two years – each year – as the state tries to deal with a ballooning deficit which, the last number tossed around was between $1.4 and $1.6 billion each over the next two years.
The XL Center building is bleeding red ink to the tune of a million dollars per year.
These numbers were not exactly music to the ears of the CRDA and its Executive Director Mike Freimuth who’s in the midst of a series of very complicated high stakes negotiations on several fronts.
“No question, it is a significant budget cut,” Friemuth said. “The more you cut, the more it hurts your ability to perform the operation of the building.
“When your is operating one to two million dollars a year in the red to start, when the CDA was here now you don’t have those Whaler exit fees or Northland to cover your debts and the marketplace that has changed dramatically over the years.
“A big example, we had lower energy costs because the HVAC wasn’t functioning optimally. Since then, we now have more HVAC running (because of the renovations) than they have had in years. Our electric bill has shot up. That’s an expense that isn’t going down.”
There could be some serious short term effects as a result. “Staff vacancies are likely not to be filled and layoffs are a possibility. We have to deal with how to handle the red ink. We are projecting a deficit between $500,000-$750,000 for this year, so we have brought it down – that’s a good thing.
“As I have said all along unless we reboot or rebuild the building, the question inevitably will become how can we continue to subsidize the building?
“Clearly, given the current budget climate it’s clear it will be tougher and we’re negotiating a new contract with the union in the building and that’s another important factor in the equation.”
The CRDA is engaging in conversations with Northland Corporation over the atrium portion of the XL Center. Northland still owns the Atrium despite serious delinquency on the loan it took out to purchase it.
The atrium is a critical piece of the puzzle in seeking to build a new XL Center. It is a big part in determining if it is the $250 or $500 million version because of any acquisition of the atrium and demolition costs on the current footprint of the building.
The current atrium discussions, however, are not the final status talks at all.
“Don’t even ask me that. At this point, we are seeking to try to get the operational portion (of the atrium) under one roof. We have had very good discussions with Northland. I would say we’re at about 90% of the way there. The final 10% is tough, but I think an agreement is possible.
“We have been working on the common area with them for more than a year and this also factors into the XL budget.”
It comes down to what the services are that are involved and what it’s worth. The other portion is a far more complicated land transaction that we will not touch until we have the funding in place on the (new) building,” Freimuth said with authority and a firm voice on the subject.
The other critical piece for the CRDA is the purchase of the Church Street garage with state bonding money. The last bonding Commission meeting is this month.
The paperwork needs to be filled out by the city and it was not ready as of the beginning of April. Plus there’s a critical exit area of the garage that goes onto another piece of property that needs to be resolved to have the transaction go smoothly.
At the time of the interview, Freimuth was awaiting word from the lawyers that the purchase agreement language was all in place. It was concluded late last week in time for the May 1st deadline. The proposal now can be put on the docket for consideration by the State Bond Commission, but does not guarantee its passage.
The bonds that would be issued would facilitate the purchase from the City of Hartford to the CRDA to the tune of $14 million as they seek to close out their own budget deficit.
“This process makes my hair hurt. You’re picking at a lot of scabs here.
“This is a very difficult process and covers a variety of issues. The right of way easement and the sewer easement was a key provision in the contract and is not a small matter. It needs to be resolved to facilitate the agreement.
“It’s a city responsibility. We have no power to handle such provisions. Those are strictly city issues,” The CRDA Executive Director said.
Toss in the continued impasse with UConn who agreed to terms on a new five-year contract with the CRDA over a year ago, but has yet to sign the agreement. UConn continues to tango over gaining more event dollars that the school has in the building.
“We’re still working with IMG (the marketing agent for UConn) on the issues of the revenue stream in the building. It’s an ongoing discussion and it continues. I’m a bit battle fatigued with it, but I think we’re close on this, but it has gone on for over a year.”
The reduction in the deficit was in part due to the AAC basketball tournament. That tournament is not going to be at the XL Center next year. Combine that with the budget cuts and there is a real reason for concern.
Then, just for giggles, there’s the emergence of the financing issue for the new Hartford baseball stadium that’s set to house the Hartford Yard Goats (nee New Britain Rock Cats) of the Eastern League. That funding is coming by using state admission tax money to finance the project after promises that no state money would be used. That little move could adversely affect the XL Center project down the road.
The Excedrin bottle on Freimuth’s desk must be getting bigger every week.
“Downtown North was a safety valve, but we didn’t have that option. It was foreclosed to us. So there is no other alternative than downtown at this point.”
The CRDA is also getting some further clarification on the SCI Report. That’s still another piece of this vast building mosaic.
“We’re now awaiting some clarification on the numbers and the construction feasibility time frame. We want a firm analysis on the numbers. Given the budget, we have to have solid numbers and construction projections moving forward.
“We are looking at a series of meetings, maybe in the future, once we get the update from SCI to start the conversation that we know will have to be done regarding the building,” said Freimuth.
The pieces of the Hartford XL Center building landscape are varied and getting more complicated by the day.