🔒Lehman to retool CT’s economic-development playbook in 2020

David Lehman’s career went through a major transition in 2019 as he moved from Wall Street to Columbus Boulevard in downtown Hartford.

That’s where the former Goldman Sachs banker’s new corner office sits overlooking the Connecticut River. Lehman was appointed by Gov. Ned Lamont as the state’s Department of Economic and Community Development commissioner last February, and he spent 2019 meeting with business leaders, gaining an understanding of the state’s economic-development programs and contemplating new strategies to grow Connecticut’s economy.

After getting the lay of the land in 2019, 2020 will likely be a year of action for Lehman. His agenda includes helping launch a new economic-development plan for the state, reforming Connecticut’s economic-incentives playbook, and focusing on workforce development, Opportunity Zones and regulatory reform.

“I’m focused on how we can grow the economy in a really equitable way — and how we can have top-quartile growth as opposed to low-quartile growth,” Lehman said.

So far in office, Lehman has helped redefine, a new, deeper relationship between his agency and its economic- and market-research affiliate, the Connecticut Economic Resource Center (CERC). In 2019, Lehman and others worked to restructure CERC’s board of directors and give it a larger role in business retention and recruitment on behalf of the state.

CERC is now led by CEO Peter Denious, a former investment banker, and co-chairs James Smith, the former CEO of Webster Bank and Indra Nooyi, ex-Pepsico CEO.

CERC and DECD are working together on a new economic-development plan for the state that will be revealed in late January or February. It will focus on industries key to the state’s future growth and rest on four pillars: transportation, talent, fiscal stability and placemaking, or creating a clear path to growing jobs in cities.

“It’s going to be a holistic look at what do we have going and what do we need to be addressing as it relates to employment workforce,” Lehman said. “This will be a strategy where there is clear implementation and action items as opposed to just another report for the bookshelf.”

In addition to the plan, Lehman said CERC will also be looking to hire a few more people to help with business recruitment, including from out of state.

Incentives reform

Lehman will also push a new economic-incentives strategy in 2020, which will focus on four key programs, including two new concepts.

The overall goal is to move toward a performance-based, “earn-as-you-go” system, meaning employers won’t reap state incentives until they create a certain number of jobs or make a certain level of investment.

That will prevent the cash-strapped state from having to clawback funds from companies that fail to live up to their deals.

The new strategy will not require the state to borrow money up front to incentivize job growth, Lehman said, although the programs’ annual costs, or what caps might be instituted, haven’t been fully fleshed out.

Lamont has already significantly scaled back economic aid to private companies, Lehman said.

“I don’t think we need to have or should have the best or most aggressive job-creation incentives,” he said. “I think we need to have a competitive strategy that works for taxpayers and grows the economy.”

The four major programs the state plans to focus on include:

• A modified Small Business Express program that will no longer offer state loans or grants, but instead morph into a loan-guarantee program run by private banks. The change requires legislative approval.

• The Grow CT Rebate, which is provided to companies in certain major industries (finance and insurance, advanced manufacturing, health care, bioscience, technology, and digital media) that create at least 25 jobs paying above-average wages. The company would be reimbursed an amount equal to 25 percent of the state income tax paid by the new employees. The benefit would increase to 50 percent of the state income tax paid if a company is located within an Opportunity Zone, Lehman said. The payments would start at the beginning of year three and run through year seven, but could be extended two years beyond that.

• And a greater focus on two existing incentive programs: the Urban and Industrial Site Reinvestment Tax Credit and the Sales & Use Tax Relief Program.

Other focus areas

Two other major focus areas in 2020 will be workforce development and pushing investment in Opportunity Zones.

Lehman is on Gov. Ned Lamont’s recently launched Governor’s Workforce Council, which includes 24 members, many of them high-profile CEOs.

The group will likely devliever recommendations on how to improve the state’s workforce-development ecosystem by the end of the year.

“It’s going to be a data-driven workforce strategy that is going to be centralized and under the authority of the governor as opposed to this fragmented workforce strategy we have in Connecticut where many disparate groups and agencies are doing their own thing,” Lehman said. “We need to make sure we are all going in the same direction. I think that is going to have a huge impact.”

Lehman and DECD have also staked out a major role in encouraging investments in Opportunity Zones, which are specially designated areas — particularly in low-income cities — that offer investors federal capital-gains tax breaks.

DECD has set up a concierge-service website that identifies numerous investment opportunities in the state’s 72 eligible Opportunity Zones.

DECD will also help expedite permitting within state agencies and concentrate incentives and other available money, including brownfield dollars, for OZ projects.

“I’m really bullish about Opportunity Zones,” Lehman said.