BY: Gerry Cantlon, Howlings
HARTFORD, CT – The darkness of the long night of indecision for the XL Center continues on. Whether the sun will rise and bring forth a new day and a newly renovated building remains as nebulous as it did more than five years ago when the journey to rebuild, reboot to bring up to 21st Century standards for the arena began.
As a new administration of Governor Ned Lamont starts in the afterglow of the inauguration pageantry, the answers to questions about the building still remain unresolved, but many new avenues are being explored to continue to keep the building alive.
“For now things remain in limbo,” CRDA Executive Director, Mike Freimuth stated. “Things are no different at this point with a new administration and we’ll soon learn what their priorities are as we go forward.”
While no movement has occurred to this point, it seems some talks have begun.
“Very informal (discussions). We have had some talks with the transition team and the new Chief of Staff. Now that everyone is seated (governor and legislature) we’ll begin in earnest, I’m sure, over the next four to six weeks,” Freimuth, an appointee of former Governor Malloy’s said.
One issue that still dogs the CRDA and one that has become a mantra when canvassing the legislature in seeking to gauge the pulse for a reboot project of the XL Center that’s been stuck in neutral over the past two years is the following phrase – “Hartford Fatigue.”
“The Hartford delegation in on board, but as for places outside (of Hartford), I can say that we get a lot of resistance from New Haven, Waterbury, Bridgeport, or New London. What about us? Certainly, while the legislature is more Democratic than the previous legislature, it’s still tempered and people express some weariness about Hartford.”
The $550 million bail-out of the city in the last budget cycle played a part in the “Hartford Fatigue.”
Absolutely, (the bailout) comes up in every conversation I have.” Freimuth said demurely.
Freimuth told Cantlon’s Corner there is a nascent plan to potentially expand the CRDA, which is already a very large public entity with sprawling tentacles into sports and housing development in-and-around Hartford plus throughout the state. The idea being kicked around is to make mini-CRDA’s in each of the above-mentioned cities. The idea, however, is purely in its infancy.
“We’re at a point where we handle hundreds of millions of dollars and we have just X-amount of staff to handle this. If we say add 20 projects from New Haven, or a Waterbury, then how could we handle that? What would the mechanism look like? Way too early to say if this has any legs, but it’s been bandied about. I don’t want to get ahead of ourselves here. It’s about how to best allocate the resources we have, and the need to accomplish the varied amount of tasks we have.”
The talks and negotiations, if you can call them that, regarding the atrium within the XL Center, which Northland Corporation holds title to, remains open and unresolved as it has been for more than two years.
“The appraisal differences remain and it is significant, and yes, eminent domain remains a part of the mixture of the stew here. I would prefer not to have to think about it, but I am ready to execute it if need be. We feel strongly about it, but to do the full lower bowl strategy we’re embarking on, the issue has to be resolved. I would prefer we reach an accommodation, but that hasn’t happened yet. It’s one of the things we have to discuss in relation to this project (with the new governor).”
The lower bowl strategy presented last month has bowed to the fiscal reality that the original $250 million price tag was neither financially palatable or could be accomplished in the current economic environment and a fluid changing building marketplace. So, the CRDA and its architects, SCI, have engaged in another very ambitious new phase to salvage the project and keep the 44-year-old building as part of the downtown revitalization and functional entertainment home for its residents and surrounding communities.
“We took out the second concourse, a major construction change in an attempt to cut costs down to around $125 million from the $250 million. There is a misconception that we are shrinking the building, we are not. We are trying to effectively utilize the space we have to accomplish that task to deliver a new modern building and maximize its revenue potentials.”
Clearly, the ambition hasn’t waned, but the creativity factor to make the building modern has tapped the resourceful capacity of the CRDA and SCI.
“We have identified in our analysis, we are more of a 12,000 seat building (It keeps the XL Center at the B level building critical in attracting concerts and shows). We’re not eliminating those other (four thousand) plus seats. Our cost analysis shows currently we’re operating as a 6,000-8,000 seat building. So we’re going the need to make changes by making the lower bowl, a premium area while building underneath a support system to build revenues streams and alleviate the pressures on the upper level as far as concession areas and restroom facilities.”
Plans call to use the Exhibition Hall which remains mostly dormant and has been used for storage space. The plan for the area below is to help facilitate more premium feature opportunities and utilize every square inch they can.
“We’re working on where to put the compressors and chillers, we have to deal with current staffing rooms like IT offices, team offices, locker rooms and build a whole new setting in the lower bowl/hall area to meet numerous needs. We are planning to relocate those rooms and offices for efficiency. There is a level we call the 61 level people can’t see from the outside that we want to explore in the structure to handle these issues. We’re still reviewing all the options.
“This makes the Trumbull block purchase important as we’re doing a review and analysis now to see if we would need only a portion of the block as opposed to the entire block and that does factor in our talks with Northland.
“We also feel this would be the best way to increase the fan experience and to help our tenants like the Wolf Pack and UCONN.
“We’re still going to need seating for concerts and larger sports events, like UCONN against an Arizona, or Wichita State, and concerts. Things would be still be tight, but we hope the plans we have presented can alleviate that pressure.”
The other part of the XL Center puzzle is the lone bidder, Oak Street Realty of Chicago. They submitted plans to purchase the XL Center which is still in the hopper along with the other elements that also will be presented to the new governor to mull over with his staff.
“Its a lot of technical financial info to this proposal that has to be sorted through. They obviously submitted a proposal to be paid back at 7.5%. Now, we believe that is a high number. It’s about debt structure versus an equity structure. In their payback analysis there is higher debt to equity (ratio) and we have to consider how much debt is amortized? The debt is an obligation on the private side.
“This in layman’s terms, it’s about guarantees, which the submission by Oak Street’s proposal has, it’s a liability and an obligation. It’s complicated and we haven’t even touched the laws governing public-private partnerships, which will make your hair hurt.”
How the recent announcement by the Federal Reserve to raise interest rates could potentially affect this project proposal going forward.
“It’s a possibility, but that could be if we move forward and we haven’t come to that part of the road yet.
“The moving pieces are all too numerous and if one piece doesn’t fit the whole structure of the quilt being created can’t be completed.
“There is some serious choreography that is required, and right now we’re trying to get all the dance partners together,” Freimuth stated.
The CRDA is trying to marshal a very varied constituency to dance to the same tune an often problematic issue with Hartford and state politics.
“We gotta look at the big picture. We’re trying to make the greatest economic impact and use all the facility we can. We want the premium level to support the main level so it seriously reduces the stress I mentioned because it’s very significant right now, and it offers the greatest opportunity to be successful for UCONN, the Wolf Pack, and concessions.”
The UCONN Letter Of Intent (LOI) agreement signed several years ago was based on a new 17,000 to 18,000 seat XL Center. But the question remains if that formula could be put inside a 12,000 seat facility?
“Philosophically, it’s the same formula, but it will have to be adjusted. It’s subject to future negotiations when we get to that point. We’re nowhere close to some of these points yet, but we have been at this for some time. I have impressed upon all the powers that be that we don’t have unlimited time here. Real, very hard decisions have to be made with this building.”
But, with the state in such financial disarray, can a real accommodation be reached to save the XL Center?
The CRDA wants it sooner rather than later as a means of augmenting the first phase of its downtown revitalization, which began on Allyn Street with the creation of new UCONN student apartments that increase human traffic flow for new restaurants/shops and hopefully the grocery store that is so badly needed downtown, plus other amenities and services sadly remaining an elusive, abstract concept at this point.
