Keith M. Phaneuf
They have been hailed as natural, implacable enemies.
Mongoose and cobra. Hatfields and McCoys. Red Sox and Yankees fans.
Now add to this list the folks who support Democratic Gov. Ned Lamont’s tolls plan, and those who favor the Republican legislators’ alternative, the tolls-free “Prioritize Progress.”
Ever since Lamont reversed himself and endorsed tolls for all vehicles three months ago, the two sides have been at odds.
Each proposal has its advantages and its weaknesses, both of which have been subjected to a withering storm of public debate.
Now, with just seven weeks left in the legislative session, lawmakers must choose one, or subject Connecticut to another year of the status quo — an inadequate capital transportation program eventually headed for a congestion nightmare, or worse.
So first, here’s a short primer on how Connecticut pays for road, bridge and rail upgrades, followed by a breakdown of the competing plans.
How CT pays for transportation
The Department of Transportation’s capital program is a separate entity outside of the state budget — but they are related and affect one another.Connecticut pumps hundreds of millions of dollars into the capital program each year by borrowing — selling bonds on Wall Street.
Recently that borrowing has hovered between $700 million and $800 million per year.The federal government adds another $750 million to that in matching grants, giving the state between $1.4 billion and $1.5 billion in new capital resources each year.
The problem is Connecticut short-changed its transportation capital program for decades prior to now, and $1.5 billion in new money each year isn’t anywhere near enough to do the job.
DOT Commissioner Joe Giulietti recently told lawmakers he needs at least $2 billion to make a difference — and then that annual number would need to grow throughout the 2020s and 30s.
Lastly, that money Connecticut borrows has to be paid back, and that’s where the state budget comes in.
Every year the state makes payments —principal and interest — on billions of dollars of accumulated transportation bond issuances from years past.
That debt service line item eats up about $650 million of the budget’s $1.6 billion Special Transportation Fund. The rest goes to pay for DOT operations, winter snow removal, rail subsidies, and bus and other transit programs.
So if the state wants to borrow more money to rebuild roads, bridges and rail lines, then it needs more dollars to pay off the debt.Which brings us to …
Lamont’s tolling plan
The governor would order electronic tolls on interstates 84, 91 and 95 and on the Merritt Parkway with a base charge of 4.4 cents per mile — before discounts are offered to Connecticut motorists.
This would raise $800 million per year for the budget by 2024 or 2025, the administration says, with 30 to 40 percent coming from out-of-state motorists.
This would easily cover the debt payments on more annual borrowing.
But it would also give Connecticut the option of shifting toll receipts directly into the capital program and paying in cash — not borrowed dollars — for hundreds of millions of dollars in work, according to Lamont budget director Melissa McCaw.
Over the next two decades Connecticut could save billions of dollars in interest costs with this debt-avoidance approach.
Giulietti said he also believes a reliable, long-term revenue source like tolls could help Connecticut control its debt costs down the road.“If we can lock in what the future revenue streams can be, then it really allows for some creativity,” he added.
More importantly, McCaw said, it would finally allow Connecticut to rebuild an aging, overcrowded transportation system that’s an impediment to a healthy future.“The bottom line here is that Connecticut needs to make a decision about the path forward for transportation,” she said. “This is not just about getting a fund to balance. This is about positioning Connecticut for economic growth. … This is about making the case for families to be here in Connecticut.”
“Speeding up our rail service from Hartford to New Haven, to Stamford and New York City, with more frequent service to Waterbury and New London, with easier access to Bradley Airport and an upgraded Tweed Airport,” Lamont told legislators in his Feb. 20 budget address. “These transportation upgrades are the building blocks of our economic future.”
But tolls aren’t the only idea for financing an infrastructure rebuild. There’s also …
Prioritized Progress
“The Democrats and the governor have some people convinced the only way to do this is with tolls, and that’s simply a fallacy,” said House Minority Leader Themis Klarides, R-Derby.
In 2015, Republican legislators noted Democrats had massively increased borrowing for non-transportation purposes — and not just for schools and economic development.Rather than simply cut programs out of the state budget, Democratic legislators and Gov. Dannel P. Malloy were putting them on the credit card. Connecticut was borrowing more than $100 million per year to make payments on borrowing. And a steady stream of community-based projects — often in Democratic legislators’ districts — consistently found their way into the bonding program.
Between 2012 and 2015, bonds issued for non-transportation purposes — and repaid out of the budget’s General Fund, not its Special Transportation Fund — grew from $1.1 billion to $2 billion per year.
Republicans asked a logical question: What if Connecticut redirected about $700 million per year of this borrowing away from these other areas and into transportation?
If Connecticut combined:
$700 million in annual borrowing repaid out of the General Fund,
With the $700 million-to-$800 million it’s already borrowing and paying off out of the Special Transportation Fund,
And $750 million per year in federal grants,
It would have more than $2.1 billion each year to spend on transportation projects — and no one would have to pay tolls.
“This is about a reallocation of bonding,” said Senate Minority Leader Len Fasano, R-North Haven. “These simply are choices, but some people don’t want to make them.”
These are the basic advantages of each program. But no plan is without its flaws …
Can roads and bridges last until toll receipts arrive?
With toll receipts not due for three or four years, Lamont nonetheless has no intention to bolster funding for transportation to cover the interim.
He even wants to cancel additional resources legislators pledged to the Special Transportation Fund over the next few years.
The DOT warned in a February memo that the governor’s plan “would have significant impacts on our capital program, severely constricting the number of new projects that advance in the current, and future years.”When pressed to elaborate on what he could do under the Lamont plan until toll receipts arrive, Giulietti promised only that he could maintain the average condition or roads, bridges and rail lines using a series of short-term “patches.”Transportation advocates insist Lamont’s plan would put the capital program on a near-starvation diet in the short-term.
By comparison, Prioritize Progress would elevate spending on projects right away, and by more than $500 million per year. By the time toll receipts arrive in 2024 or 2025, the GOP plan already would have a massive head-start on Lamont’s, having invested $2 billion-to-$2.5 billion more over the next four years.
Would GOP plan collapse under debt, fiscal insolvency?
One of the reasons Lamont and others want toll revenues for the Special Transportation Fund is because the rest of the state budget is in even worse shape.
Surging pension costs and payments on non-transportation borrowing consume almost one-third of the General Fund, compared with 10 percent two decades ago. This is siphoning resources away from education, health care, social services and municipal aid.
What happens if and when the General Fund has to pay off a significant chunk of transportation borrowing?
Within a decade, McCaw says, annual debt service costs will have grown by $600 million.That’s one-third of the entire cost of today’s state program to fund local education.
And this burden “is 100 percent born by Connecticut taxpayers” with nothing from out-of-state motorists, she added.Making matters worse, the Special Transportation Fund still is headed for insolvency. Even if the General Fund is used to pay off some transportation debt, the STF would go belly up — without toll receipts — by 2026.
But transportation advocates say the problems — both with Lamont’s plan and with the Republicans’ — are solvable.
How so? By putting them together.
Could tolls and Prioritize Progress complement each other?
“We see a tremendous amount of opportunity if the two proposals were somehow merged,” said Don Shubert, president of the Connecticut Construction Industry Association.
Shubert has endorsed Lamont’s tolls proposal — but also said the governor’s plan for the next four years likely would mean not treading water but actually falling backward in infrastructure repair.
Lyle Wray, executive director of the Capitol Region Council of Governments and another advocate of tolls, has referred to Prioritize Progress as a potential “bridge to tolls.”
“How do we get from here to there?” Wray said, referring to the potential four- or five-year gap until toll receipts come in. “I would explore a merger, for sure.”
Major projects, such as the widening of I-95 in Fairfield County or repairing the elevated section of I-84 in Hartford, could proceed as planned — or maybe even faster, Shubert said.“How do we get from here to there?” Wray said, referring to the potential four- or five-year gap until toll receipts come in. “I would explore a merger, for sure.”
Why couldn’t Connecticut redirect some of the bonding earmarked for schools, economic development or community-based projects and shift it to transportation for the next four or five years, advocates ask, and then phase it out as toll revenues become available?
The answer, some say, is principle. Others say it’s politics.
Can you compromise with the ‘toll monster?’
The Lamont administration insists there is middle ground.
As long as there is a sustainable, long-term funding source for transportation involved, McCaw said, the administration would consider an interim plan that temporarily redirects borrowing for transportation purposes.
“We are happy to engage in a discussion on what the short-term opportunities are,” McCaw said, adding the plan must be fiscally sustainable.
But Republicans say it’s the Democratic governor who won’t give ground. Lamont should recognize, Fasano says, that the public simply doesn’t trust the “toll monster.”
Rep. Laura Devlin of Fairfield, ranking House Republican on the Transportation Committee, said tolls are “a flat-out money grab” for a state grasping at straws to solve it fiscal dilemma.
The reason for this hard line in the sand, Republicans say, can be found within state government’s track record.
Connecticut spent $1.3 billion in fuel tax receipts on non-transportation programs between the 2006 and 2014 fiscal years — even as the wholesale gasoline tax rose four times during that period.
And residents still are reeling from major state tax hikes in 2011 and 2015.
What isn’t in doubt, transportation advocates add, is that time is running out.
If a long-term transportation rebuild with a new funding source isn’t adopted this year, the odds of it getting done in 2020 — when legislators are up for re-election — are slim, they say.
Similarly, once Connecticut and the nation slide into recession — which some economists warn could happen as soon as next year — the odds of a transportation rebuild also shrink.
By the time the political and economic smoke clears, the state might not be ready to do anything new for four or five more years.“And no one wants that,” Shubert said. “That’s a catastrophe. You don’t want that.”
Matt Pilon As the 4:40 p.m. Hartford Line train accelerated southbound out of Berlin's new station recently, an excited Anthony Valenti turned to his business partner, Mark Lovley, standing nearby on the platform.
"That thing was 90 percent full," exclaimed Valenti, who goes by Tony.
Valenti and Lovley aren't trainspotters. Their enthusiasm was sparked by the business opportunity they say the recently launched $769 million train line presents to them and other developers.
Just across the station's parking lot, several hundred yards away, is a four-acre parcel the duo plans to redevelop into an $18 million mixed-use village, with 76 apartments and 19,000 square feet of medical office and commercial space they envision will include a restaurant and bar, coffee shop and other amenities to draw hungry and thirsty rail passengers and others from the region.
The proposed five-building project is a textbook example of transit-oriented development (TOD), which state and local officials have been promoting in recent years, seeking to make economic hay from last June's launch of the CTrail commuter service on the Hartford Line that connects New Haven to Springfield.
The beefed up rail service is perhaps a once-in-a-generation transportation development, and one that has changed the perceived value of nearby land parcels for developers.
"Without the train station here, this would be a different animal," Lovley said of the proposed project.
Investments in new mixed-use developments around existing or proposed Hartford Line rail stations have totaled approximately $430 million, according to Judd Everhart, spokesman for the state Department of Transportation.
Those projects, which encompass 1,400 residential units and 242,000 square feet of commercial and office space, date back to at least 2010, years before the Springfield-to-New Haven line expansion debuted, but in anticipation of its potential impact.
There are nine Hartford Line stations currently in operation. Four more are planned, but don't have a state funding source.
Gov. Ned Lamont recently announced a "debt diet" that would cut state borrowing. That could affect further train-station devlopment, but Chris McClure, spokesman for the Office of Policy and Management, noted that Lamont wants to level-fund next year the specific type of borrowing — special tax obligation bonds — that have paid for a number of previous station projects.
Officials have similarly promoted transit-oriented development for properties around CTfastrak bus stations. The 9.4-mile dedicated busway, which cost about $570 million to build, launched just over four years ago.
A proper town center
Branded Farmington & Steele, Lovley and Valenti's project would be perhaps the closest thing yet to a proper town center for Berlin, a relatively sleepy town of just over 20,000 residents.
The site, which is being developed by a jointly held entity called Newport Realty Group LLC, fronts Farmington Avenue, a key two-mile corridor dotted by a mish-mash of retail, industrial and office properties.
It would also be the largest new mixed-use development for Berlin in years, said Chris Edge, the town's economic-development director.
"It's nice because our downtown area here … much like many communities, is starting to have vacancies, starting to get a little older, so hopefully it will bring some new life," Edge said. "We'd love to see some new restaurant opportunities that are different, that we don't have in Berlin, and more importantly, that we don't have on the Berlin Turnpike."
The project represents the second transit-oriented development for Berlin. The first, Depot Crossing, is right across the street. Developed by the nonprofit Corporation for Independent Living, the $3.3 million mixed-use project, with 16 apartments and ground-floor retail space, opened in 2015.
Town officials selected Newport to develop the town center in late 2015, following a competitive-bidding process. The project still needs a special permit, which Newport hopes to file as early as June, with an eye toward getting a shovel in the ground by late fall.
As of press time, Newport and the town were close to signing a $540,000 purchase-and-sale agreement for the land, which has been off the tax rolls for about seven years.
The residential units will be one- and two-bedroom apartments at market-rate rents of approximately $2.50 per square foot, Valenti said.
The state has kicked in approximately $2.1 million for remediation at the site, according to Edge.
Construction is planned in phases, with a projected 2021 completion date. Valenti and Lovley said bank financing would cover approximately 70 percent of the project cost, while their own equity would cover the rest.
It's the latest in a string of joint property investments for the two men, who have each been active for decades in Connecticut's real estate scene.
Lovley, the principal of Southington-based Lovley Development, has built 1,212 single-family homes over the past 34 years.
His portfolio includes a nearly complete 94-home project at North Ridge Golf Course in Southington, where he said four homes have sold for more than $1 million. He's also built medical and professional office buildings.
Besides commercial brokerage, Valenti's experience includes hotel and mixed-use developments. He's a partner in Hampton Inn properties in Farmington and Enfield.
Valenti and Lovley first paired up about a decade ago on a hotel project in Southington.
Their joint-project count has grown steadily since, with a total construction cost somewhere between $50 million and $60 million, Valenti estimated.
That includes a 25-unit development in West Hartford called The Townhomes at Ringgold Estates, which has 10 finished townhomes so far. The pair acquired a Dollar Tree plaza and restaurant property in Southington in 2017; they're building medical office space in Glastonbury; and have developed sites for fast-food franchisees in several towns.
Elsewhere along the line
While Berlin could soon see its largest transit-oriented project yet, there's been plenty of activity along the rest of the Hartford Line in recent years.
"Investors and developers are looking at these properties with a lot more interest than they were previously," said Robert Santy, CEO of the Connecticut Economic Resource Center, a nonprofit that offers business and economic-development services.
In Meriden, a series of mixed-use and residential projects centered around the city's rail station, located in its downtown core, will ultimately result in more than 900 new apartments, said City Manager Timothy Coon.
Projects completed or approved around Meriden's station over the past few years amount to a total investment of approximately $110 million, with the state pitching in about $7 million for remediation and other work. The apartments are already bringing new residents to Meriden, and when all is said and done, Coon expects the city to reap an additional $1 million in annual tax revenues.
"There's a lot of activity, it's cause for optimism," Coon said.
However, he said he hopes to see more interest for the 32,000 square feet of commercial space that's been built or is in the works.
Meanwhile, 25 miles to the north, Martin Kenny, president of Lexington Partners, remains pleased with his $23 million, 130-unit Windsor Station Apartments. Located next to the Windsor train station, the apartments began leasing just over two years ago and are almost 100 percent full, he said.
That includes tenants who work over the state border at MGM Springfield and Baystate Medical Center, some of whom use CTrail service to get to their jobs.
The fact that rail isn't crucial to every tenant who lives near a station is a key point about transit-oriented projects, said Santy. Creating desirable, pedestrian-friendly neighborhoods is equally significant.
"It's not always about transit, it's about creating great places," Santy said. "[Rail] is a component to a great downtown."
Windsor Station has performed well, which led Kenny and his partners last year to add another complex to their portfolio — the 186-unit Saybrook Station Apartments in Old Saybrook.
It's adjacent to a train station served by Amtrak along the Shore Line East rail line, and like Windsor Station, it too has filled up with tenants, Kenny said.
His experience so far has left him a fan of transit-oriented projects, but he said there can be pitfalls.
For example, property along rail lines is often contaminated from decades-old industrial activity, and remediation can be costly. Property taxes can also be unpredictable.
"Towns are thirsty for grand-list growth," Kenny said, adding that local officials should understand that construction costs are high and brick-and-mortar retail continues to struggle in the face of online competition.
That aside, he's bullish on the continued economic impact of the Hartford Line.
Without it, many developers likely wouldn't consider footing the bill to clean up contaminated properties. The rail service puts those parcels in play, Kenny said.
"Now it's in the game, it's in the ballpark," he said.
He's evaluating a third transit-oriented project right now, but declined to share details.
Contractor sues Massachusetts city for $1M in unpaid work
FRAMINGHAM, Mass. (AP) — A contractor alleging breach of contract is suing a Massachusetts city for $1 million.
The MetroWest Daily News reports that Lupachino & Salvatore alleges Framingham illegally withheld payments related to the renovation of a city ice skating rink.The Bloomfield, Connecticut-based company signed a nearly $6 million contract in 2017 for work on Loring Arena that was scheduled to finish last August.
The city says construction errors and poor workmanship delayed the full reopening. City attorney Chris Petrini says numerous construction items haven't been corrected and Framingham is withholding payments to protect taxpayers.
The contractor says it completed all work obligations on schedule and addressed remaining items by the end of 2018, and Framingham refuses to pay for work the city requested beyond the scope of the original contract.
State raiding fund meant for road repairs, money going to personnel, other costs
PAUL HUGHES AND ANDREW LARSON REPUBLICAN-AMERICAN
HARTFORD – Taxpayers pump hundreds of millions of dollars into the Special Transportation Fund to pay for highway and transportation projects, yet all that money is barely enough to keep up with basic needs of state bridges and highways, never mind make headway.
Revenues are unable to match the growth of Connecticut’s infrastructure needs and other rising expenses, particularly debt service on transportation bonds that finance the bulk of construction and maintenance projects.
And despite its original intention, the Special Transportation Fund, conceived as a source of money for financing large-scale infrastructure projects, is being used to pay a number of ongoing state agency expenses, including personnel costs, rail and bus subsidies, and various commodities.
Now, Democrats in the legislature and Gov. Ned Lamont are proposing electronic highway tolls to raise hundreds of millions more, and Republicans are recommending borrowing hundreds of millions a year for transportation improvements.
Reasons behind the need for additional transportation funding are being overshadowed in the big political fight in Hartford over how to fund it.
Blacktop conditions in Connecticut are routinely rated among the worst in the nation, and one recent report found 57 percent of the state’s major roads are in poor shape. Traffic congestion clogs rush hours and beach weekends. There are also 334 bridges and one tunnel in poor condition, according to the state Department of Transportation. Nearly one-third of the bridges and the state’s lone highway tunnel were constructed before 1950.
A DEADLY BRIDGE COLLAPSE led the General Assembly and then-Gov. William A O’Neill to establish the Special Transportation Fund in 1984 to finance a 10-year infrastructure renewal program.
Over time, legislatures and governors have expanded the dedicated fund’s purpose, revenue sources and permitted uses.
Originally, the transportation fund covered only direct costs of the transportation infrastructure program. Starting in 1987, the legislature started shifting a series of state agency costs to the transportation fund partly because of growing general fund deficits.
In addition to capital programs, the transportation fund today underwrites the operating budgets of the Department of Motor Vehicles, the Department of Transportation, and the boating division of the Department of Energy and Environmental Protection.
Payroll and fringe benefits represented slightly more than one quarter of the $1,483,711,608 in transportation fund expenditures in the last fiscal year. Personnel services added up to $211 million and benefits came to nearly $180.5 million.
In the 1998 fiscal year, personnel services for the DOT, the DMV and the state police totaled nearly $161.2 million, and benefits paid out of the transportation fund were $55.1 million. The overall expenditures were $978.6 million that year.
Public transportation represents the second largest single expense in the transportation fund after debt service. Combined rail and bus operations cost nearly $440 million in the last fiscal year.
Rail operations cost $210 million, while bus operations cost $166.1 million. In contrast, rail operations cost $53.5 million in 1998 and $94.3 million in 2008, and bus operations cost $59.3 million in 1998 and $111.8 million a decade later.
Another $39.8 million was spent last year for van services for disabled people who are unable to use local bus systems, and nearly $2.5 million more for transportation assistance in the stat’s welfare-to-work program.
ROUGHLY TWO-THIRDS OF CAPITAL SPENDING is financed through state bonds, and federal funds pay one-third of the transportation fund’s capital expenses. The DOT’s operating budget covers the remaining sliver.
The DOT spent $11.2 million out of its operating funds to pay for nonbonded transportation projects in the 2018 fiscal year, and the department’s adopted 2019 budget of $697.1 million allocated $13.6 million to that pay-as-you-go program. Lamont is only proposing to spend $30 million a year more for the next two fiscal years.
The state government relies mainly on special tax obligation bonds to fund transportation. The legislature capped STO bonds at $750 million annually for the 2020 and 2021 fiscal years. The governor’s recommended bonding package proposed $776.6 million in STO bonds in 2020 and $782.4 million the following year.
Debt service on STO bonds is repaid from fuel taxes and other revenue dedicated to the transportation fund. Principal and interest payments represented 38.7 percent of the 2018 expenditures of the transportation fund – its largest single outlay.
The share of debt service has hovered around the 40 percent mark over the last 30 years, but the yearly expenditures increased from $372.5 million in 1998 to $575 million last year, an increase of 54 percent.
Lamont anticipated debt service payments to increase from $645.7 million this fiscal year to $690.5 million in 2020 and $756.6 million in 2021 in his proposed two-year, $43.1 billion budget plan.
Lamont says tolls are needed to pay for repairs, but taxpayers are already pumping millions into Special Transportation Fund
HARTFORD – A Republican alternative to electronic highway tolls will be aired later this week, prompting legislators to revisit the issue of transportation funding.
The Finance, Revenue and Bonding Committee is scheduled to conduct a hearing Friday on the GOP plan to use a combination of state bonding and federal funding to finance transportation projects.
The Transportation Committee already has reported out three competing tolling bills that House Democrats, Senate Democrats, and Gov. Ned Lamont proposed.
The House and Senate Republicans have cast their Prioritize Progress plan as a sensible and more prudent solution to the state’s transportation funding challenges than tolls. It would provide $65.4 billion for transportation needs over 30 years.
Democrats have been daring the two GOP caucuses to propose legislation so the implications could be better understood, including having the legislature’s budget office score the Republican plan.
The finance committee voted Feb. 20 to draft a bill, and the legislation was published April 4. There is no fiscal note for Senate Bill 1121 at this time.
The House and Senate GOP first proposed their Prioritize Progress plan in 2015. The 2019 version anticipates spending approximately $1 billion in state bonding and another $1 billion matching federal funds a year for 30 years.
The plan anticipates that $750 million in special tax obligation bonds would be issued annually. The state government primarily uses STO bonds to fund transportation projects. These bonds are repaid from revenue dedicated to the Special Transportation Fund.
Under Prioritize Progress, the state would issue general obligation bonds to supplement the STO bonds. The annual allocations for the first 10 years would range from $623.1 million to $739 million. Initially, $703.7 million in GO bonds would be issued for the upcoming 2020 fiscal year that starts July 1.
The Republican plan also counts on slightly more than $730 million in matching federal funds each year.
The combination of STO bonds, GO bonds and federal funds would provide roughly $2 billion a year.
Meanwhile, the Democratic bills have cleared committee. There are differences among the trio, but each propose to put tolls on Interstate 84, Interstate 91, Interstate 95, and portions of Route 15 comprising the Merritt and Wilbur Cross parkways.
All three bills would charge different variable rates during peak and off peak hours for passenger cars, medium trucks, and heavy trucks, and each would offer discounts to purchasers of a state-issued electronic pass and frequent commuters.
THE LAMONT ADMINISTRATION estimated that its tolling plan could raise $800 million a year when tolls are fully up and running, and out-of-state drivers would pay as much as 40 percent of the total take.
The estimate was extrapolated from a Department of Transportation study released in November. The administration’s scaled back plan first assumed 53 tolling locations every 6.6 miles on the four targeted highways. Now, Lamont says there will be only 50 gantries.
The House proposal requires the legislature to vote twice to direct DOT to prepare a tolling plan and then seek federal approval. Under the bill, the plan would be deemed approved for submission if both the House and Senate fail to vote within a specified 15-day window.
The House bill also establishes a quasi-public transportation authority to set toll rates, rank transportation projects and make other decisions.
The Senate bill and the governor’s legislation would only require one vote of the legislature authorizing the drafting and submission of a tolling plan. No other approvals would be needed other than a final OK from the Federal Highway Administration.
Also, both bills have the DOT set toll rates. The Senate bill would bar the department from raising rates for 10 years.
Costco, day care facility will receive up to 60% each in tax breaks to build in South Windsor
Peter Marteka
"That thing was 90 percent full," exclaimed Valenti, who goes by Tony.
Valenti and Lovley aren't trainspotters. Their enthusiasm was sparked by the business opportunity they say the recently launched $769 million train line presents to them and other developers.
Just across the station's parking lot, several hundred yards away, is a four-acre parcel the duo plans to redevelop into an $18 million mixed-use village, with 76 apartments and 19,000 square feet of medical office and commercial space they envision will include a restaurant and bar, coffee shop and other amenities to draw hungry and thirsty rail passengers and others from the region.
The proposed five-building project is a textbook example of transit-oriented development (TOD), which state and local officials have been promoting in recent years, seeking to make economic hay from last June's launch of the CTrail commuter service on the Hartford Line that connects New Haven to Springfield.
The beefed up rail service is perhaps a once-in-a-generation transportation development, and one that has changed the perceived value of nearby land parcels for developers.
"Without the train station here, this would be a different animal," Lovley said of the proposed project.
Investments in new mixed-use developments around existing or proposed Hartford Line rail stations have totaled approximately $430 million, according to Judd Everhart, spokesman for the state Department of Transportation.
Those projects, which encompass 1,400 residential units and 242,000 square feet of commercial and office space, date back to at least 2010, years before the Springfield-to-New Haven line expansion debuted, but in anticipation of its potential impact.
There are nine Hartford Line stations currently in operation. Four more are planned, but don't have a state funding source.
Gov. Ned Lamont recently announced a "debt diet" that would cut state borrowing. That could affect further train-station devlopment, but Chris McClure, spokesman for the Office of Policy and Management, noted that Lamont wants to level-fund next year the specific type of borrowing — special tax obligation bonds — that have paid for a number of previous station projects.
Officials have similarly promoted transit-oriented development for properties around CTfastrak bus stations. The 9.4-mile dedicated busway, which cost about $570 million to build, launched just over four years ago.
A proper town center
Branded Farmington & Steele, Lovley and Valenti's project would be perhaps the closest thing yet to a proper town center for Berlin, a relatively sleepy town of just over 20,000 residents.
The site, which is being developed by a jointly held entity called Newport Realty Group LLC, fronts Farmington Avenue, a key two-mile corridor dotted by a mish-mash of retail, industrial and office properties.
It would also be the largest new mixed-use development for Berlin in years, said Chris Edge, the town's economic-development director.
"It's nice because our downtown area here … much like many communities, is starting to have vacancies, starting to get a little older, so hopefully it will bring some new life," Edge said. "We'd love to see some new restaurant opportunities that are different, that we don't have in Berlin, and more importantly, that we don't have on the Berlin Turnpike."
The project represents the second transit-oriented development for Berlin. The first, Depot Crossing, is right across the street. Developed by the nonprofit Corporation for Independent Living, the $3.3 million mixed-use project, with 16 apartments and ground-floor retail space, opened in 2015.
Town officials selected Newport to develop the town center in late 2015, following a competitive-bidding process. The project still needs a special permit, which Newport hopes to file as early as June, with an eye toward getting a shovel in the ground by late fall.
As of press time, Newport and the town were close to signing a $540,000 purchase-and-sale agreement for the land, which has been off the tax rolls for about seven years.
The residential units will be one- and two-bedroom apartments at market-rate rents of approximately $2.50 per square foot, Valenti said.
The state has kicked in approximately $2.1 million for remediation at the site, according to Edge.
Construction is planned in phases, with a projected 2021 completion date. Valenti and Lovley said bank financing would cover approximately 70 percent of the project cost, while their own equity would cover the rest.
It's the latest in a string of joint property investments for the two men, who have each been active for decades in Connecticut's real estate scene.
Lovley, the principal of Southington-based Lovley Development, has built 1,212 single-family homes over the past 34 years.
His portfolio includes a nearly complete 94-home project at North Ridge Golf Course in Southington, where he said four homes have sold for more than $1 million. He's also built medical and professional office buildings.
Besides commercial brokerage, Valenti's experience includes hotel and mixed-use developments. He's a partner in Hampton Inn properties in Farmington and Enfield.
Valenti and Lovley first paired up about a decade ago on a hotel project in Southington.
Their joint-project count has grown steadily since, with a total construction cost somewhere between $50 million and $60 million, Valenti estimated.
That includes a 25-unit development in West Hartford called The Townhomes at Ringgold Estates, which has 10 finished townhomes so far. The pair acquired a Dollar Tree plaza and restaurant property in Southington in 2017; they're building medical office space in Glastonbury; and have developed sites for fast-food franchisees in several towns.
Elsewhere along the line
While Berlin could soon see its largest transit-oriented project yet, there's been plenty of activity along the rest of the Hartford Line in recent years.
"Investors and developers are looking at these properties with a lot more interest than they were previously," said Robert Santy, CEO of the Connecticut Economic Resource Center, a nonprofit that offers business and economic-development services.
In Meriden, a series of mixed-use and residential projects centered around the city's rail station, located in its downtown core, will ultimately result in more than 900 new apartments, said City Manager Timothy Coon.
Projects completed or approved around Meriden's station over the past few years amount to a total investment of approximately $110 million, with the state pitching in about $7 million for remediation and other work. The apartments are already bringing new residents to Meriden, and when all is said and done, Coon expects the city to reap an additional $1 million in annual tax revenues.
"There's a lot of activity, it's cause for optimism," Coon said.
However, he said he hopes to see more interest for the 32,000 square feet of commercial space that's been built or is in the works.
Meanwhile, 25 miles to the north, Martin Kenny, president of Lexington Partners, remains pleased with his $23 million, 130-unit Windsor Station Apartments. Located next to the Windsor train station, the apartments began leasing just over two years ago and are almost 100 percent full, he said.
That includes tenants who work over the state border at MGM Springfield and Baystate Medical Center, some of whom use CTrail service to get to their jobs.
The fact that rail isn't crucial to every tenant who lives near a station is a key point about transit-oriented projects, said Santy. Creating desirable, pedestrian-friendly neighborhoods is equally significant.
"It's not always about transit, it's about creating great places," Santy said. "[Rail] is a component to a great downtown."
Windsor Station has performed well, which led Kenny and his partners last year to add another complex to their portfolio — the 186-unit Saybrook Station Apartments in Old Saybrook.
It's adjacent to a train station served by Amtrak along the Shore Line East rail line, and like Windsor Station, it too has filled up with tenants, Kenny said.
His experience so far has left him a fan of transit-oriented projects, but he said there can be pitfalls.
For example, property along rail lines is often contaminated from decades-old industrial activity, and remediation can be costly. Property taxes can also be unpredictable.
"Towns are thirsty for grand-list growth," Kenny said, adding that local officials should understand that construction costs are high and brick-and-mortar retail continues to struggle in the face of online competition.
That aside, he's bullish on the continued economic impact of the Hartford Line.
Without it, many developers likely wouldn't consider footing the bill to clean up contaminated properties. The rail service puts those parcels in play, Kenny said.
"Now it's in the game, it's in the ballpark," he said.
He's evaluating a third transit-oriented project right now, but declined to share details.
Contractor sues Massachusetts city for $1M in unpaid work
FRAMINGHAM, Mass. (AP) — A contractor alleging breach of contract is suing a Massachusetts city for $1 million.
The MetroWest Daily News reports that Lupachino & Salvatore alleges Framingham illegally withheld payments related to the renovation of a city ice skating rink.The Bloomfield, Connecticut-based company signed a nearly $6 million contract in 2017 for work on Loring Arena that was scheduled to finish last August.
The city says construction errors and poor workmanship delayed the full reopening. City attorney Chris Petrini says numerous construction items haven't been corrected and Framingham is withholding payments to protect taxpayers.
The contractor says it completed all work obligations on schedule and addressed remaining items by the end of 2018, and Framingham refuses to pay for work the city requested beyond the scope of the original contract.
State raiding fund meant for road repairs, money going to personnel, other costs
PAUL HUGHES AND ANDREW LARSON REPUBLICAN-AMERICAN
HARTFORD – Taxpayers pump hundreds of millions of dollars into the Special Transportation Fund to pay for highway and transportation projects, yet all that money is barely enough to keep up with basic needs of state bridges and highways, never mind make headway.
Revenues are unable to match the growth of Connecticut’s infrastructure needs and other rising expenses, particularly debt service on transportation bonds that finance the bulk of construction and maintenance projects.
And despite its original intention, the Special Transportation Fund, conceived as a source of money for financing large-scale infrastructure projects, is being used to pay a number of ongoing state agency expenses, including personnel costs, rail and bus subsidies, and various commodities.
Now, Democrats in the legislature and Gov. Ned Lamont are proposing electronic highway tolls to raise hundreds of millions more, and Republicans are recommending borrowing hundreds of millions a year for transportation improvements.
Reasons behind the need for additional transportation funding are being overshadowed in the big political fight in Hartford over how to fund it.
Blacktop conditions in Connecticut are routinely rated among the worst in the nation, and one recent report found 57 percent of the state’s major roads are in poor shape. Traffic congestion clogs rush hours and beach weekends. There are also 334 bridges and one tunnel in poor condition, according to the state Department of Transportation. Nearly one-third of the bridges and the state’s lone highway tunnel were constructed before 1950.
A DEADLY BRIDGE COLLAPSE led the General Assembly and then-Gov. William A O’Neill to establish the Special Transportation Fund in 1984 to finance a 10-year infrastructure renewal program.
Over time, legislatures and governors have expanded the dedicated fund’s purpose, revenue sources and permitted uses.
Originally, the transportation fund covered only direct costs of the transportation infrastructure program. Starting in 1987, the legislature started shifting a series of state agency costs to the transportation fund partly because of growing general fund deficits.
In addition to capital programs, the transportation fund today underwrites the operating budgets of the Department of Motor Vehicles, the Department of Transportation, and the boating division of the Department of Energy and Environmental Protection.
Payroll and fringe benefits represented slightly more than one quarter of the $1,483,711,608 in transportation fund expenditures in the last fiscal year. Personnel services added up to $211 million and benefits came to nearly $180.5 million.
In the 1998 fiscal year, personnel services for the DOT, the DMV and the state police totaled nearly $161.2 million, and benefits paid out of the transportation fund were $55.1 million. The overall expenditures were $978.6 million that year.
Public transportation represents the second largest single expense in the transportation fund after debt service. Combined rail and bus operations cost nearly $440 million in the last fiscal year.
Rail operations cost $210 million, while bus operations cost $166.1 million. In contrast, rail operations cost $53.5 million in 1998 and $94.3 million in 2008, and bus operations cost $59.3 million in 1998 and $111.8 million a decade later.
Another $39.8 million was spent last year for van services for disabled people who are unable to use local bus systems, and nearly $2.5 million more for transportation assistance in the stat’s welfare-to-work program.
ROUGHLY TWO-THIRDS OF CAPITAL SPENDING is financed through state bonds, and federal funds pay one-third of the transportation fund’s capital expenses. The DOT’s operating budget covers the remaining sliver.
The DOT spent $11.2 million out of its operating funds to pay for nonbonded transportation projects in the 2018 fiscal year, and the department’s adopted 2019 budget of $697.1 million allocated $13.6 million to that pay-as-you-go program. Lamont is only proposing to spend $30 million a year more for the next two fiscal years.
The state government relies mainly on special tax obligation bonds to fund transportation. The legislature capped STO bonds at $750 million annually for the 2020 and 2021 fiscal years. The governor’s recommended bonding package proposed $776.6 million in STO bonds in 2020 and $782.4 million the following year.
Debt service on STO bonds is repaid from fuel taxes and other revenue dedicated to the transportation fund. Principal and interest payments represented 38.7 percent of the 2018 expenditures of the transportation fund – its largest single outlay.
The share of debt service has hovered around the 40 percent mark over the last 30 years, but the yearly expenditures increased from $372.5 million in 1998 to $575 million last year, an increase of 54 percent.
Lamont anticipated debt service payments to increase from $645.7 million this fiscal year to $690.5 million in 2020 and $756.6 million in 2021 in his proposed two-year, $43.1 billion budget plan.
Lamont says tolls are needed to pay for repairs, but taxpayers are already pumping millions into Special Transportation Fund
HARTFORD – A Republican alternative to electronic highway tolls will be aired later this week, prompting legislators to revisit the issue of transportation funding.
The Finance, Revenue and Bonding Committee is scheduled to conduct a hearing Friday on the GOP plan to use a combination of state bonding and federal funding to finance transportation projects.
The Transportation Committee already has reported out three competing tolling bills that House Democrats, Senate Democrats, and Gov. Ned Lamont proposed.
The House and Senate Republicans have cast their Prioritize Progress plan as a sensible and more prudent solution to the state’s transportation funding challenges than tolls. It would provide $65.4 billion for transportation needs over 30 years.
Democrats have been daring the two GOP caucuses to propose legislation so the implications could be better understood, including having the legislature’s budget office score the Republican plan.
The finance committee voted Feb. 20 to draft a bill, and the legislation was published April 4. There is no fiscal note for Senate Bill 1121 at this time.
The House and Senate GOP first proposed their Prioritize Progress plan in 2015. The 2019 version anticipates spending approximately $1 billion in state bonding and another $1 billion matching federal funds a year for 30 years.
The plan anticipates that $750 million in special tax obligation bonds would be issued annually. The state government primarily uses STO bonds to fund transportation projects. These bonds are repaid from revenue dedicated to the Special Transportation Fund.
Under Prioritize Progress, the state would issue general obligation bonds to supplement the STO bonds. The annual allocations for the first 10 years would range from $623.1 million to $739 million. Initially, $703.7 million in GO bonds would be issued for the upcoming 2020 fiscal year that starts July 1.
The Republican plan also counts on slightly more than $730 million in matching federal funds each year.
The combination of STO bonds, GO bonds and federal funds would provide roughly $2 billion a year.
Meanwhile, the Democratic bills have cleared committee. There are differences among the trio, but each propose to put tolls on Interstate 84, Interstate 91, Interstate 95, and portions of Route 15 comprising the Merritt and Wilbur Cross parkways.
All three bills would charge different variable rates during peak and off peak hours for passenger cars, medium trucks, and heavy trucks, and each would offer discounts to purchasers of a state-issued electronic pass and frequent commuters.
THE LAMONT ADMINISTRATION estimated that its tolling plan could raise $800 million a year when tolls are fully up and running, and out-of-state drivers would pay as much as 40 percent of the total take.
The estimate was extrapolated from a Department of Transportation study released in November. The administration’s scaled back plan first assumed 53 tolling locations every 6.6 miles on the four targeted highways. Now, Lamont says there will be only 50 gantries.
The House proposal requires the legislature to vote twice to direct DOT to prepare a tolling plan and then seek federal approval. Under the bill, the plan would be deemed approved for submission if both the House and Senate fail to vote within a specified 15-day window.
The House bill also establishes a quasi-public transportation authority to set toll rates, rank transportation projects and make other decisions.
The Senate bill and the governor’s legislation would only require one vote of the legislature authorizing the drafting and submission of a tolling plan. No other approvals would be needed other than a final OK from the Federal Highway Administration.
Also, both bills have the DOT set toll rates. The Senate bill would bar the department from raising rates for 10 years.
Costco, day care facility will receive up to 60% each in tax breaks to build in South Windsor
Peter Marteka
Costco and Educational Playcare will receive tax reductions of up to 60%
each to build in South Windsor, the town council has decided. Costco, which
plans to build a 160,000-square-foot warehouse along Buckland Road, north of
Evergreen Walk, will receive an annual tax reduction of 60%, or $270,319, for
its first 10 years of business. Educational Playcare, a day care facility, will
see a 50% tax break, or $37,769, on its planned $2.8 million building at 742
Ellington Road. Both plans were approved unanimously by the
council and economic development commission. The town’s “tax partnership
program” encourages the development and expansion of businesses in South
Windsor through tax and other economic incentives. The program is “designed to
retain and attract businesses that will generate substantial additional tax
revenues and employment opportunities while providing quality goods and services.”South
Windsor has previously granted tax breaks to businesses including Coca-Cola
Bottling Company of Northern New England, aerospace engineering company
Electro-Methods Inc. and Aldi.“This
is a great shot in the arm to the town for purchasing,” Town Manager Matthew B.
Galligan said of the Costco project.Costco would be located on
former tobacco fields adjacent to LA Fitness. It would be the second Costco on
the eastern side of the Connecticut River, joining one in nearby Enfield. There
are also locations in New Britain, Waterbury, Milford and Norwalk. Company
officials asked the town for the tax break due to high development costs,
including $16 million for the building and $11 million in site work.“They
love the area and think this is a great place to open a warehouse,” Costco
spokeswoman Carrie Wood said. “The soils are very unstable and there is a lot
of work underground that needs to be done to stabilize the building so it
doesn’t move with the water there. ... When you look from the outside, it looks
like you can just plop a building down, but there’s a lot more work behind the
scenes and the expense is very high.”Wood
said the Costco would include a 16-bay gas station. The project would bring 250
jobs — half of them full-time — to the area.It’s been wonderful to
work with this town,” she said. “Not all towns throughout the New England area
work like this.”The
16,000-square-foot Educational Playcare project will be built on Ellington Road
near the intersection of Pleasant Valley Road. The company is the largest
privately-owned day care facility in the state, with 19 other locations across
Connecticut. Educational Playcare’s Harry Freeman said the town has a need for
day care services.South Windsor has been
struggling to provide before- and after-school care for children. The parks and
recreation program, “4th R,” is filled, with dozens of children on a waiting
list.“The
good news is you guys are doing a heck of a good job attracting a lot of people
to this fine town,” he said. The center will hire 45 employees and take care of
250 children. The entire project cost is $4 million.“This is where the longest
waiting list is for the town’s before and after care program,” Mayor Andrew
Paterna said. “We are putting it into an area and really serving a need.”