Lack of growing pains: Town's economic development efforts questioned
Updated 8:21 am, Wednesday, March 13, 2013
Drive west on Interstate 95 from Fairfield to Stamford, which bills itself as "The City That Works," and you'll find a cache of corporate headquarters: Charter Communications, WWE, Kayak, NBC Sportsnetwork and the Gartner Group, to name a few.
Back in Fairfield, there are three: General Electric, Sturm, Ruger & Co. and Bigelow Tea.
"The commercial tax base, as bad as the economy is," doesn't seem to be slowing down in places like Stamford, Norwalk or Shelton, said Board of Finance Vice Chairman Robert Bellitto Jr. when the town's proposed $287 million 2013-14 budget was unveiled. "When I look at Fairfield, I haven't seen that level of success."
He wants to know what the administration of First Selectman Michael Tetreau is doing to "move the needle" in order to shift the tax burden from residential to commercial properties.
The town's grand list of all taxable properties -- reported at $10.9 billion as of January 2013 -- has increased less than 1 percent in each of the last two years. Commercial and industrial property accounts for 10.70 percent of the grand list, while residential properties are 82.52 percent of the grand list.
"If you look, they have a 20 to 25 percent (commercial) vacancy rate," Tetreau said. "In Fairfield, it's five to eight percent."
The relocation of smaller businesses existing buildings in Fairfield is not going to move the development needle, according to Community and Economic Development Director Mark Barnhart.
"In Fairfield, 4.5 percent of the land mass is zoned for commercial and industrial use," Barnhart said. "It's not a huge number."
There are basically two large commercial sites left for potential commercial development in Fairfield -- the Fairfield Metro Center property controlled by a private developer, and the former Exide property on the Post Road, which needs an environmental cleanup before redevelopment can move forward.
"Where we are today, you need to have property zoned for industrial/commercial use that is suitable, it has to be priced in a way that it would attract investment, and you have to have a motivated seller," Barnhart told the Fairfield Citizen. "And then, at the end of the day, you need to get it through the land-use boards."
Barnhart said the town has not had a problem in terms of attracting investment in Fairfield. "It's really been more a factor of market supply and demand, and to some extent, the ability to secure the necessary approvals," he said.
But for any of that to "move the needle" of the grand list, Barnhart said, requires a large piece of undeveloped or under-developed property. "There aren't that many," he said. Blackrock Realty, owner of about 27 acres of the 35-acre Metro Center site, which encompasses the town's third railroad station, is "working diligently to find potential tenants. ... He is building a property that is attractive to large corporate uses, which would be beneficial to the town in the long run."
Currently, the largest office space available in Fairfield is in the 30,000-square-foot range. "After that, we don't have office space suitable for a large corporate headquarters," Barnhart said.
The numbers of corporate headquarters moving from one place to another are few, he said, and those moves take time and planning. That planning is easier when the Class A office space already exists, Barnhart said.
"The Stamford Center Business District has a pretty significant office vacancy rate," he said, as does Norwalk's Merritt 7 complex. "Our vacancy rates are fairly low compared to other parts of the county. Part of that is due to the relatively small size of our retail and office market. That would change with the Fairfield Metro Center, it would increase office space by 40 percent when it's built out. That's a pretty big deal."
Bellitto said what he hasn't seen, and would like to see, "is some concerted effort to court some of these developers, as repugnant as it may seem. That's what I'm missing. Norwalk and Stamford seem to be out in front selling the town. It doesn't see seem like we have that same level of selling."
Stamford and Norwalk also have a tool at their disposal that Fairfield does not. Under state statute they have the ability to provide tax-abatement incentives that are partially reimbursed by the state. Barnhart said there continues to be a debate over the merits of such tax abatements, and whether they are worth it in the long run. Indeed, there was growth in 2010 in Stamford's Enterprise Zone, but some businesses there, like RBS and UBS, couldn't be fully taxed because of the incentive program.
But that doesn't mean, Barnhart said, that he -- the town's only full-time economic development staffer -- and the Economic Development Commission aren't "selling" Fairfield.
"We're meeting with businesses, prospective investors, all the time," he told the Citizen. "A lot of times, people are looking at Fairfield because of the underlying demographics. ... It's a very nice community with attractive office space and a lot of amenities."
When dealing with a site relocation consultant, Barnhart said, officials are often asked what kind tax incentives are offered by the town. "We try to put a positive spin on it, but we don't have any," he said.
All in all, though, Barnhart said, tax abatements are just the icing on the cake; more important factors are the cost of the land and the available labor force. "We're not attracting companies that are not familiar with the northeast tax structure," he said.
Barnhart's department has put together a video to market the town to prospective businesses. "There are, obviously, limits," he said, "but we don't employ a `shotgun-hope-for-the-best' approach."
The days of cold calling and mass mailing, which he said brought a pretty low return on investment, are gone. "We're more targeted," Barnhart said. "We get leads from a variety of different sources, and we'll aggressively pursue any leads we get to their logical conclusion."
Marketing videos are one of the key portals, especially for large corporations, he said. "They'll look at a town's website, so that can be a key marketing tool," he said, noting that the municipal website is in the process of being redesigned. The EDC, he said, is considering its own companion website.
"It's pretty clear when you talk to a site location consultant that before they call a community, they've done a great deal of research," Barnhart said.
Often, during a discussion on the town's tax base, some longtime residents might bring up the "If only Exxon ..." argument. Decades ago, Exxon sought to move a division headquarters to town, but that move never happened. The Town Plan and Zoning Commission approved the application in October 1977, but neighbors appealed that decision in court. Rather than fight the lawsuit, Exxon instead chose to locate the building in Darien. The land, instead, was developed residentially and is known as Greenfield Hunt.
Now, some look to the former Bullard factory site in the southeast corner of town as one way to shift the tax burden. The Fairfield Metro Center, a joint project between the town, the state and private developer Blackrock Realty, was launched on that former industrial property more than a decade ago. Blackrock sold a portion of the 35-acre site to the town and state for development of its third train station, which opened in December 2011.
On the private portion of the property, the developer's plans call for a multi-million-dollar project that include commercial offices, retail and even a Hilton Hotel. Principal Kurt Wittek continues to maintain those elements will eventually be built, although nothing has been formally proposed -- or approved. He recently sought to change a plan to build one of the retail buildings into apartments, but that plan has been withdrawn.
Wittek has blamed the lack of development on the site, in part, on what he claims is an arduous permit-approval process, which bogged down construction of the train station, and was complicated by the 2008 downturn in the economy.
"The building is not built," Selectman Kevin Kiley said at a recent meeting. "We have this conundrum. He has this piece of land we can't do much about."
The Fairfield Metro property is one of the few areas in town, Kiley said, where there can be any substantial development.
"We have a developer who does not have the financial ability, or was in debt," Kiley said. He thinks the town should "fight tooth and nail" against Wittek's housing proposal. "We need to find a way to get that piece of land developed," he said, adding the town needs to find a "developer who is willing to partner with us."
Approval from land-use boards in town can sometimes be the sticking point for a developer trying to move from concept to reality.
"We still have a lot of smaller developments proposed all over the town," Tetreau said. "A good number get turned down by zoning. We have to look at all the different aspects."
In 2010, for instance, a medical office and ambulatory surgical center was proposed for 5545 Park Ave., a potential $7 million investment in town, according to the developer's lawyer. It was denied by the Town Plan and Zoning Commission.
In 2012, St. Vincent's Medical Center sought to build a 25,000-square-foot medical office building on the same property, and the EDC sent a letter of endorsement to the TPZ. That application was also denied.
Another application to build a medical office building at the corner of Sasco Hill and Post roads was also denied, until the developer purchased the adjoining piece of property.
The EDC routinely reviews development proposals, often hearing a presentation from a developer or its lawyer before deciding whether to support a project. One thing the commission will consider is what kind of economic impact a proposal will have on the broader community.
"Communities are always changing," Barnhart said. "It's a dynamic environment. You have to question if the change will be for the better or for the worse."
There is "that push and pull between the two extremes," he said.
Here is a link to the "Fairfield Video Tour Book" produced for the town's Community and Economic Development Department: http://bit.ly/ZFGTvh