Proposed XL Center Lease Would Bring Hartford $3 Million In First Two Years

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The city of Hartford would lease the XL Center to the state under a proposed 10-year agreement that would guarantee the city annual payments of $3 million in the first two years, the state’s budget director told me today.

Details of the agreement between the city and the Capital Region Development Authority were still being worked out today. The agreement is necessary so the CRDA can finalize a contract with Global Spectrum, which has been chosen to manage the XL Center for the next decade.

The city council must approve the lease. A public hearing is expected to be held April 15.

The XL Center in downtown Hartford. Handout Photo.

The XL Center in downtown Hartford. Handout Photo.

Initially, it was thought that the city would transfer ownership to the state. But the prospect of the state ending its “PILOT,” or payment in lieu of taxes program — proposed and supported by Gov. Dannel P. Malloy — would have meant an abrupt end to payments to city from the XL Center property, according to Ben Barnes, the secretary for the Office of Policy and Management.

The state doesn’t pay property taxes to buildings it owns in towns and cities, instead compensating for some of that lost revenue through PILOT.

The city has received between $2 million and $2.5 million a year in lease payments under a soon-to-expire, 20-year lease agreement with the state.

“We prefer not to pay rent to the city,”  Barnes told me. “But to discontinue all at once would’ve been highly disruptive to the city when they have extreme financial pressure.”

The city is trying to close a $70 million budget deficit for the 2013-2104 fiscal year.

The state is taking over ownership two major office buildings in Hartford — 55 Farmington Ave. and Connecticut River Plaza — to consolidate office workers.

If PILOT is ended, the state also wouldn’t make payments on those buildings, costing the city about $2 million in taxes because they have been privately owned. The legislature has not made a decision on the future of PILOT.

“The lease would offset some of the loss from 55 Farmington and Connecticut River Plaza,” said Jared Kupiec, Hartford Mayor Pedro E. Segarra’s chief of staff.

Kupiec said the city wanted to retain ownership of the XL Center because its pivotal downtown location could make the property increasingly valuable in the future.

 

 

 

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5 thoughts on “Proposed XL Center Lease Would Bring Hartford $3 Million In First Two Years

  1. The Cynic

    “Increasingly valuable in future”? That sounds like they are salivating over the value of the property when they can turn it into a parking lot :)

  2. The Bystander

    While this City official says it offsets the losses from the two building the state is buy, the numbers don’t add up, because what about the lost $2.5M from the XL Center itself ,seems the bottom line is that this “rent” just covers and replaces the existing XL Center payments and nothing offsets the losses from those two buildings. Again listen to the state, they only want to pay rent for a couple of years, as if the state created problem of so much non-taxable land will ever go away. Hartford is taking a bad deal with a smile. The ship keeps sinking but its all smiles.

  3. sue

    If this is such a great deal for all and a great place, shy doesn’t the city sell the center to Spectrum and get out of the business. Couldn’t be because then a private owner wouldn’t have to hire Hartford’s finest at double and triple pay to sit and eat donuts and drink coffee at all the events could it

  4. Former Hartford Resident

    If Hartford does not solve its budget problems and thinks that the banks and the insurance companies will pick up the tab good luck Hartford its only a matter of time before the capital of insurance does not have any insurance companies in hartford thanks to all the programs it must support and the greatiest school system in the country.

  5. Pingback: Proposed XL Center Lease Also Provides For Capital Improvements | Real Estate

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