🔒State employee move is blessing, curse for Hartford

Downtown Hartford is getting a shot in the arm as hundreds of state employees begin to move into one of the center-city's largest office towers — 450 Columbus Blvd., formerly known as Connecticut River Plaza — which has stood vacant for several years after its largest tenant, UnitedHealthcare, moved to CityPlace I in 2010.

The state's decision to buy the building in 2013, however, represents both a blessing and curse to the Capital City.

First, the good news: The state's purchase of 450 Columbus (along with 55 Farmington Ave., formerly owned by The Hartford, which the state bought around the same time in 2013) has helped push down the stubbornly high vacancy rate of the city's prime Class A office buildings, which typically firms up area rents and boosts the values of surrounding properties.

No doubt in recent years investor interest in Hartford has increased, especially as nearby larger markets like Boston and New York have become overheated, leading to a spat of office sales that has improved the overall health of the city's commercial real estate market, which had been sluggish in the wake of the Great Recession.

Just as important, the state's purchase of 450 Columbus is bringing more feet to the street, adding vibrancy to the central business district's weekday crowds and hopefully bringing new merchant activity to the Constitution Plaza area, which is looking to add a restaurant. In an announcement last week, the Department of Administrative Services (DAS) said the movement of more than 2,000 workers downtown and the approximately 100,000 annual visitors to the agencies to be located there will have a significant impact on the downtown economy.

Meantime, the state's decision to consolidate leased office spaces into owned properties was meant as a smart, potentially money-saving move in the long term, a strategy taxpayers should rejoice.

The downside to the state's Hartford office-tower purchases, however, is that it takes two large properties off the city's tax rolls. Together, 450 Columbus and 55 Farmington contributed about $2 million in city tax revenues. Any state-owned properties, of course, are exempt from property taxes. The state does compensate Hartford with payments in lieu of taxes (PILOT) for properties that it owns — including for its newest acquisitions — but city officials have long complained that it's not sufficient in covering the potential lost revenue. (The state reimburses the city $214,336.58 in PILOT payments for 55 Farmington Ave., according to DAS spokesman Jeff Beckham. The reimbursement for 450 Columbus Blvd., wasn't available at press time.).

The issue of tax-exempt property is a major concern for Hartford, which is starving for new revenues in the face of growing deficits that have put the city on an unsustainable fiscal path. With more than 50 percent of Hartford's property already tax exempt, city and state leaders must figure out how to get more properties on the tax rolls. Growing the grand list, along with creating new jobs and improving education for city residents, is the only way Hartford will improve its long-term fiscal health.

This is an issue Hartford Business Journal is taking a deeper look into. Stay tuned in the weeks ahead for possible solutions.