🔒Amid rising debts, continued membership declines, exclusive Hartford Club will open doors to public

For the second time in five years, the Hartford Club has overcome an imminent threat to its longtime downtown clubhouse created by unpaid debts.

On Feb. 18, the 147-year-old private club delivered $330,765 to Hartford’s tax collector, who had been planning to auction off the Georgian-style clubhouse at 46 Prospect St. this May because the club defaulted last year on a tax repayment agreement struck with the city in 2017.

A group of members who helped save the club from foreclosure in 2015 by raising approximately $1 million to buy the club’s mortgage from Berkshire Bank, dipped into their pockets again this time, providing the six-figure loan used to pay off the property tax balance, according to club directors.

The payment eases immediate pressure, but the club, frequented by some of the region’s top business and political leaders, is not out of the woods yet.

It still owes $435,000 in city personal property taxes as well as $222,000 in unpaid state admission and sales and use taxes, for which the state issued a lien on the club last summer.

The club also defaulted last year on a $300,000 low-interest loan from the Department of Economic and Community Development (DECD), which helped finance renovations that aimed to reverse years of declining membership.

That hasn’t happened and amid the continuing and deepening financial difficulties, Hartford Club leaders say the private-club business model they’ve been trying to save is no longer viable, and they are now plotting a major strategic shift that would include opening club facilities to the general public and potentially reconfiguring some space for new uses like boutique hotel rooms and a rooftop bar.

“There was a thought that we could improve and increase membership to the point where we would be able to handle our financial obligations,” said Eric George, president of the Insurance Association of Connecticut, who has been board president at the club since last March. “Reality came and settled in, and that did not occur.”

In recent years, the Hartford Club has sought to reverse membership losses by relaxing its formal dress code, marketing to younger recruits and upgrading its facilities, including a new and larger bar, refinished flooring and a reappointed members lounge. But it’s still lost more than a third of its members (it now has less than 300) in the three years since it got the DECD loan, according to George.

While the recent losses are steep, remaining members are ponying up an additional several hundred thousand dollars to the club through a recent special assessment, or”bond” — the first in a decade at the club — issued at George’s direction.

Similar private clubs around the country have also struggled over the years for various reasons, including generational shifts, and some have closed.

The strategic shift would change the club’s core identity, George said, but it must pursue nonmembers willing to spend money on dining and entertainment options to remain viable.

“The community is obviously a lot bigger than our membership,” he said.

Envisioning a new model

Board member Anthony Viscogliosi, principal of Manchester-based venture capital firm Viscogliosi Brothers, has led the effort to envision a new business model for the club.

Myriad ideas have been generated by studying several private clubs, including in Detroit and New York City, that have done major turnarounds. He said he hopes to combine successful elements from each of them.

In addition to a rooftop bar and boutique hotel rooms, other options to reconfigure the club’s 42,000 square feet include: a garden cafe, new dining options, expanded cigar and dining room, coworking space, leasable space for other clubs, and a craft brewery, among other ideas.

The reason members were willing to put up their own money once again to get the club out of trouble, Viscogliosi said, is that there’s now a new vision in place.

“People invest in a plan,” said Viscogliosi, who is part of the 1873 LLC group that made the recent loan to the club to avoid a tax auction. “It takes time to develop a plan and then more time to develop a strategy to implement that plan.”

However, the plan isn’t final yet, and the club will have to first take care of its back taxes, and then secure the right partnerships, in order to make it a reality.

A sale-leaseback of the building at some point in the future isn’t out of the question, George said, and the model is likely to involve bringing in third-party partners and investors.

Club leaders are in talks with the city and state regarding new repayment arrangements for their nearly $670,000 in back taxes, and hope to make good on those debts within the next year or so, they said.

The club is also on the hook to pay back approximately $264,000 that remains on the DECD loan, which it received in exchange for agreeing to create five new jobs by this summer.

DECD in December agreed to modify the loan agreement. However, the agency said the club’s mounting city and state back taxes influenced how much it was willing to adjust terms. DECD agreed to defer some payments through this summer, but it didn’t change the principal owed nor the 2027 payoff date.

“Our options were to call in the loan and pay off the tax liens to get control of the building or work with the organization through the modification in hopes that it would re-establish itself, pay their tax liens and eventually continue to pay back their loan,” DECD spokesman Jim Watson told HBJ.

Looking ahead

Changes under the Hartford Club’s new strategy will be more visible starting next year, but they subtly kicked in this month, as the club is now accepting non-member banquet function clients.

Officials say they are vying for a private-public hybrid model because there would still be amenities exclusive to dues-paying Hartford Club members.

“The Hartford Club is going to continue to exist, and we are open for business,” George said. “The club doesn’t go away under a new model.”

What would go away, he hopes, is the financial problems that have burdened the club.

“The issues we are dealing with right now don’t exist under the rubric we have planned,” he said.