BY: Gerry Cantlon, Howlings
HARTFORD, CT – Nearly two years after a report from SCI Architects was released, and four years after selecting a new management company, (Global now Spectra), the time for decisions to be made on the aging, crumbling, mess better known as, “The XL Center” is finally at hand.
At 6 PM on Tuesday in meeting Room 21 on the sixth floor of the CT Convention Center, the first formal public hearing was held to put forward a full concrete plan to replace the XL Center. The meeting took place amid a state budget that is in critical condition with a projected $1.3 billion dollar deficit for next year and a budget that has mandated 54% spending requirements for 2017 with future budget deficits and budgets with higher numbers in the short term.
“We can’t ignore the reality. We have to go forward or not. We have been babysitting this thing for years. We have been kicking the can down the road for so many years we have lapped ourselves,” said the CRDA Executive Director Mike Freimuth at the conclusion of the hour and 25-minute public hearing.
Freimuth acknowledges that passage of any legislation, in whatever form it could come in, is highly contested.
“We know we have the support of the Hartford delegation. We also know there is a high level of anxiety in the rest of state.”
One of the fiercest opponents spoke during the public comment portion of the evening’s presentation and the lone dissenter of 14 people who spoke..
Senator Joe Markley (R) from Southington and the 16th District made clear his perspective that the money, either for the $250 or $500 million dollar proposal, is not feasible at this time.
“To say there is money for $500 million, there is not, and neither is there for $250 million either. It’s not there. Bonding at that level and in general in the state is crowding our essential state services and whatever the final price tag will be, I don’t is a wise expenditure of money for something we’ll have to subsidize. Nothing in this presentation makes me think that in the end, this will be a profitable enterprise. I also doubt that given the comparable markets, it is unlikely they will attract a major league sports franchise.”
Freimuth understands the Senator’s arguments, but the CRDA is only in the position to present options for dealing with the XL Center. The CRDA has no power of the purse—persuasion is its biggest tool. Freimuth made clear the options before the state and region.
“The real question becomes in real time what will happen. I don’t expect this to be approved tomorrow either, but I don’t think we can go about and do nothing either.
“The budget is the budget and I respect about arguing one project over another. I understand Mr. Markley’s concerns about the money. When I go before he and the other senators for a million or a million a half dollars (every year) and they look at us and say we have daycare centers, homeless shelters and nutrition programs to fund and I genuinely understand it. However, where are we gonna get the money? We have to go through the justification process every time.
“Now the question becomes, ‘Do we have a model to make this profitable on a year to year basis in a transformed arena?’ I do. If we don’t change here and do something, we’re going the way of New Haven (closing and demolishing the XL Center).” Freimuth stated.
The question becomes if the issues are structural or financial?
“It’s both really,” Freimuth said. “The first question is obvious. The building is on borrowed time. Lights don’t work, faucets don’t turn on. Pipes break and any of the other numerous things that have gone wrong – its continuous. The second question is economic pro forma. Is the state going to continue to write checks against red ink? Since we started handling things, we have been up around $3 million. That’s not good. Last year, we did better than we have and came in under a million at $800 thousand and clearly we’re in tough economic times, but decisions have to be made. As bad as the physical issues are, the thinnest of margins is the economic model that could be the determining factor.”
Matt Banyon, the lead architect of SCI Architects and who handled the report, recited much of that information, but added several key caveats to the argument for going ahead with the project as well as a dire warning. “I can say the slow/fast pace of the situation. Operational decay has accelerated. You can go three weeks and everything is OK, and then you have three things go wrong in a week, and as the building gets older and older, you can get into life safety issues here that could shut it down like New Haven.”
Banyon did have praise for the structural portion of the building.
“90 percent of the structure is very strong and sound. We went to our structural engineers and they studied things and said that you could build two more floors and so they’re in relatively good shape, the upper floors. The building has been protected from the rain and the freeze thaw cycle we have here (in the winter).
“The costs are expected. What costs a dollar today will be a $1.20 and eventually will cost $1.40. It doesn’t accelerate like inflation, but costs do go up and you’re never gonna build a cheaper or less expensive building than you can now.”
One of the most critical components to ANY new building that would be built is that the CRDA is seeking to acquire the title to the atrium portion of the building and the property from Trumbull Street to Asylum in an effort to make certain construction impediments be eliminated.
Northland Corporation and the CRDA have been far apart on what the costs of acquiring the title would be and have been negotiating over the finer points of contract language for over a year. Despite appraisals that each side submitted, a second one is presently under way by the CRDA to assess the value based on what is being negotiated.
“We’re not going at this like it’s a Cape Cod house selling for $300 thousand,” Freimuth said with a laugh. “We have serious differences over what we think it’s worth and we’re doing a second appraisal because they didn’t accept our first.”
While there is an NDA (non-disclosure agreement) in place between the parties, Freimuth went as far as he ever has and probably legally can in discussing this thorny part of the equation.
“They believe we are a unique building unlike any other building in its value and I say then give us an alternative and we’ll look at it and so far we haven’t done that, so we said, ‘We’ll have another set of eyes look at this. What they think its value is and that’s what we have been working on for a better part of a year.”
Combined, the building portion and the atrium, and the purchase of the Trumbull block is likely in the $500 million range though many may think it’s higher than that.
Then there’s the state budget mess and the continued dip in the state bond rating. The state’s rating could go lower thus making the borrowing costs even higher for this capital budget request which would be a 20-year financial commitment by the state. That committment while still dealing with goods and services being cut, a pension system that is commonly recognized as a major issue eating up a large part of the budget now. In outlying years, how can the legislature that’s already dealing with medical programs and infrastructure needs, possibly be able to address with this and those?
Cantlon’s Corner can report that MSG, contractually required to notify the CRDA by December 31, 2016, will renew their option (which was at their disposal) for the fifth and final year of their deal. The Rangers will receive $1.5 million next season from Global to operate the Hartford Wolf Pack. The $1.5M is one of the highest affiliation fees in the league.
“We have had discussions, and while we have not received anything yet in writing, but we’ll be ready to roll next season for Year 5,” said Freimuth
The foundation of the building for a re-booted or refurbished XL Center, pick your phrase, will be installing a brand new ice surface and its supporting mechanical components to update it from its 1979 status to 2016. A critical question to the success of that portion is, ‘What type of piping will be used?’ Will the new system use PVC piping, which has smaller costs in a large project, but as seen in Barclays Center in Brooklyn, could have a deleterious outcome.
The success of the projected 12 week shutdown of the XL Center tentatively scheduled for mid-May through mid-September 2017 can also be exclusively reported.
“It will be steel piping as this project will be the foundation of a new arena,” Freimuth unequivocally said.
The clock has officially started ticking on whether the XL Center will usher in a new dawn or signal the end of an era. Which way that ultimately goes at this point is truly unknown.