Bond Commission Approves Borrowing For Hedge Fund
Over the objections of Rep. Chris Davis, R-East Windsor, and state Comptroller Kevin Lembo on Friday, the state Bond Commission approved $22 million in loans and grants for the world’s largest hedge fund.
The Bond Commission approved the package 7-2.
While both men have voted for prior bond packages and approved state assistance for private companies, they said this one stands out in the face of Connecticut’s “new economic reality.”
“Despite my general reluctance about the state picking winners and losers, I have been willing to cautiously support economic assistance to private companies — but the size, scope and nature of this particular proposal stands out and meets a new threshold that compels me to vote against it,” Lembo said in a statement after the vote.
Davis wondered why the state was giving the world’s largest hedge fund $22 million in public assistance, if they are willing to invest $500 million to expand their Westport headquarters.
He said it would seem to him that Bridgewater Associates has enough money and doesn’t need Connecticut’s help.
“We’re using public funds to support a major corporation that can afford to do this themselves,” Davis said.
This is a week after the General Assembly approved a budget that cuts more than $820 million in spending and doesn’t increase taxes.
Gov. Dannel P. Malloy said Connecticut competes with other states for these companies and when the state started discussions with Bridgewater Associates in 2012, they were looking to move their operations and their employees to Westchester County, New York.
“It would be wonderful if states didn’t compete using dollars,” Malloy said. “I would be the first governor to join that effort.”
But he said that’s not the reality.
Earlier this year, Massachusetts was able to convince General Electric to leave Fairfield and relocate to Boston. Massachusetts and the city of Boston offered the company a $145 million economic assistance package.
GE’s departure from a state it called home for 40 years was painful for state officials.
“You win some, and you lose some. Luckily we’ve won more than we’ve lost, but this hurts,” Malloy said on January 13 when the company announced the move.
Malloy continued to point out that the $145 million package Boston and Massachusetts gave GE was to move 200 jobs. The governor believes Connecticut’s economic assistance packages are more competitive and offer a greater return on investment.
As far as critics of the Bridgewater Associates deal are concerned, “I don’t worry about what people are going to say,” Malloy said.
He said with this transaction Connecticut is substantially increasing its tax base because the jobs created by Bridgewater Associates pay very well. He said with the exception of the deal the state gave to Charter Communications, he doesn’t think any other deal the state has done under the Next Five Program will have a faster payback than this one.
Charter Communications received $10 million from the state in exchange for creating 200 jobs.
Bridgewater Associates, according to state officials, will retain 1,402 jobs and create 750 new jobs with a $17 million loan. The 10-year loan, with an interest rate of 1 percent, will be forgiven if the company creates 750 jobs and retains its existing positions through the end of 2021. It will receive another $2 million grant to assist with training and a $3 million grant to install alternative energy systems.
The company also will be eligible for up to $30 million in urban and industrial site reinvestment tax credits, which must be earned and do not require approval of the state Bond Commission.
In addition to Bridgewater Associates, the state Bond Commission approved $8.7 million for Bob’s Discount Furniture, $1 million for Fabbrica LLC, $1.6 million for AI Engineers, $700,000 for CS Communication and Systems Inc., $1 million for Harman International Industries, and $1.08 million for G. Logan Steel Inc.
In total it approved $303 million in general obligation bonds, including $2 million for remediation of sediment contamination in the Mill River adjacent to the former Department of Transportation bus garage in New Haven, a $3.75 million loan to assist with completing the renovations to 80 units of affordable housing at the former Dwight Gardens Cooperative in New Haven, and $1 million in aid for relocation of the Willis K. Stetson Library to the new Dixwell Community House.