Perspective:
New London Mayor Michael Passero goes in depth answering the questions that have been raised about the controversial plan to move city offices from several locations in the core of the downtown to leased space in Shaw’s Cove.
A proposal pushed by Mayor Michael Passero and backed by the City Council to move most city offices serving the public from the central downtown to rented offices in Shaw’s Cove, at the corner of Howard and Bank streets, has faced criticism from those who consider it an abandonment of downtown.
Day Editorial Page Editor Paul Choiniere asked Mayor Passero some of the questions that are being raised about the proposal, including what it means for the future of City Hall and why he thinks other downtown buildings the city would be abandoning can be sold and redeveloped. The following are his answers, including urging the council to hold a public hearing. The responses are edited for space.
Why do you think renting space for city offices is a better option than New London owning all its office space?
There are a number of reasons. Municipal budgets do not provide for the capital investment necessary to maintain government buildings. The lack of proper maintenance and capital improvements to municipal facilities leads to a short lifespan, requiring a complete renovation or abandonment on a short cycle. As a tenant in leased offices the city can require that the building be maintained to a higher standard, guaranteeing a quality work environment and sustained investment in the building. Efficiencies can be achieved because the private sector has access to incentives to invest in their properties, such as tax benefits and building appreciation that governments can’t utilize.
Moreover, when a local government rents from a third party instead of building or renovating on its own, it avoids all construction liability, the inflated costs associated with a government funded project, the potential for cost overruns, and the burden of financing the debt. Once commercially leased space is delivered and the municipality occupies the building, it saves on operational and maintenance costs over the term of the lease. Over a 20- to 30-year lease, the city will be relieved of the burden of maintaining its offices and will be able to devote the savings to supporting other government functions or simply lowering the cost of municipal services.
Can you cite examples of other cities that have taken this approach?
The city’s principal source for data on common practices among Connecticut municipalities is the Connecticut Conference of Municipalities (CCM). It does not collect data on the percentage of office space that other municipalities lease as opposed to own. We are compiling data on how common the practice is statewide and across the country. The practice is common at the state and federal government level. To this point, our decision has been driven principally by a comparison of the projected costs of continued ownership versus leasing.
Does it concern you that the city will have no equity in the offices it is paying for?
The city currently does not hold much equity in its three satellite office buildings. In fact, the buildings have become a liability. The maintenance costs to keep up with the deterioration of these buildings has been a burden on our taxpayers for too long and there has been a reluctance to incur the debt required to renovate the structures. The fiscally responsible path is to sell the buildings to a private developer capable of financing restoration of the buildings and reinstate them to the taxable grand list. Private investment will restore value to the properties and the market place will incentivize the owners to maintain and increase over time their equity in the building. In the end, the taxpayers benefit from the increase in the taxable grand list, preservation of important structures and getting out from under the liability of public ownership.
What would become of City Hall if this plan goes through? What would its function be?
Let me be clear, the plan to consolidate city offices into a single, leased commercial building has never included abandoning City Hall. Our City Hall will still be the center of city government and will be more efficiently supported by having the additional required 50,000 square feet of office space that cannot fit in City Hall consolidated into one leased commercial office building. This will allow the government to function more effectively and efficiently and to better serve our residents.
The third floor of City Hall, including the mayor’s and City Council’s offices and the Council Chambers, will continue to be utilized as they are today. It is anticipated that the second floor will be used for the back offices of the Finance Department. We have not made a final decision on the offices on the first floor, but we anticipate that it will continue to be utilized for the Registrar of Voters and perhaps permit the Probate Court to expand.
The plan is to consolidate the offices that currently do not fit into City Hall and are spread between three buildings comprising a total of over 100,000 square feet, into a single, suitably sized 50,000-squarefoot commercially leased space.
What would be your response to those who say your administration and the City Council are effectively abandoning the downtown by negotiating to lease office space in Shaw’s Cove?
To those who say we are abandoning downtown, I say let’s talk. I want to explain to them how this move will be bringing offices closer in the short term while we restore City Hall and increase its capacity. If a lease is successfully negotiated with Shaw’s Cove 6, the relocated offices would only be half a mile from City Hall, and all employees formerly working at the Martin Center would be moved into the downtown under this plan. The satellite office would be at the Columbus Square intersection, right next to some of the newest downtown housing opportunities, including the now underway Parcel J building.
Under the plan, the city would end its use of three buildings that have housed various city functions — the Martin Center on Broad Street, the Stanton Building on Union Street and the finance building on Masonic Street. Wouldn’t abandoning the Union and Masonic Street properties aggravate the problem of high vacancy rates in the downtown?
With the city owning these properties, we are not fully utilizing their potential. By selling them, the city would be in a position to get the right developer for these buildings and ensure that we are working with someone who will redevelop them and make them work for the city rather than drain its resources. We have already been contacted by interested developers, and I am confident we would be able to secure a deal that will help with the city’s economic revival.
Given the high vacancy rates, why would you have any confidence the buildings the city is leaving could be sold and would be utilized?
Location, location, location. The three city buildings each have their own unique qualities that we believe will make them very attractive to developers, not the least of which is the available parking that comes with each. The problem with much of the remaining vacant space in the downtown district is the degree of investment that is required to restore structures that have been vacant for many years, and in some cases decades. While the city’s buildings need a level of investment that would not be economically feasible for the city to undertake, they would be attractive to a developer who can leverage tax credits and other incentives to finance the redevelopment.
Was the request for proposals process fair? At least one downtown property has complained he was kept in the dark.
The process was fair. The city followed its normal process for requests for proposals, with notice in the classifieds of a newspaper having a general circulation within the city and notice on the city’s website. Additionally, there have been numerous articles written by the press during the past four months while the administration has been working with the council on the proposal.
In response to the downtown property owner who has complained that he was not notified about the RFP; reaching out directly to specific local and regional developers would have compromised the RFP process, disadvantaging anyone who did not receive direct communication.
The council has selected a potential landlord and is negotiating, yet it has not held a public hearing concerning this major decision to move and consolidate city offices. Shouldn’t the public have a chance to be heard at a hearing before a long-term lease agreement is signed?
Before any lease is entered into and before any municipal building is abandoned with services relocated, the plan will be referred to the Planning & Zoning Commission for an opinion on whether it conforms with the city’s plan of development. This process will permit one opportunity for the public to comment. I would encourage, and it would be customary, for the City Council to also schedule a public hearing on the proposal prior to taking any action.
If this plan moves forward, what kind of timetable are you looking at?
By our current timetable, our goal is to move into a new space during the first quarter of 2020.