Barely two weeks after a golden shovel groundbreaking, a planned outlet shopping center at Rentschler Field has been halted and is likely dead due to the developer’s 11th hour financial problems, a surprised and disappointed Mayor Marcia Leclerc told The Courant Friday afternoon.
“It’s certainly discouraging,” Leclerc said, “but I’m glad it’s happening now and not halfway through the project.”
The developer, Horizon Group Properties, was short $10 million for the work, according to an email that company CEO Gary Skoien sent Thursday night to Leclerc. United Technologies Corp., which owns the land, would not work with Horizon on a solution, Skoien wrote.
“For the last 5 days we have been working on a plan to mitigate the impact of the $10M reduction of loan proceeds from our lender,” Skoien wrote. “In all my many years, we have never had a lender do this so late in the game.”
“We regret that Horizon Group Properties appears to have suspended its outlet center project due to financing issues,” a statement from UTC said. “We are disappointed for the town of East Hartford, which has been a strong partner and wonderful home to thousands of UTC and Pratt & Whitney employees for decades.”
With musicians playing and project brochures fanned out on tables, state and local officials gathered on Oct. 26 to break ground on the planned 282,000-square-foot center. Airplane-shaped flash drives with project information, a nod to the storied aviation history of the site, were distributed to newspaper and TV reporters and other guests. Speakers talked about the 1,200 construction jobs the project would create and 1,300 permanent jobs that would be available when the shops opened in November 2018.
“I thought that they had everything teed up,” a disappointed Sen. Tim Larson, D-East Hartford, said Friday.
Skoien wrote to Leclerc that he had presented options to UTC leaders, including “guaranteeing the $10M or subordinating the ground lease to the loan until we could identify a source for the shortfall.” But corporation officials would not agree to any deal, he wrote.
“They view it differently,” Skoien wrote of UTC. “It is their land and their money and we all know that this project hardly hits the radar screen of a massive industrial conglomerate.”
Horizon Group Properties said in an email that “the meltdown in the retail financing market resulted in our lender suddenly and unexpectedly reducing our construction loan by $10 million. … The Company was already committed to invest $32M of equity in the project but was not in a position to invest an additional $10 million. This is particularly painful because the project was 65% leased with some of the best names in the industry and we know the Hartford market is very strong and would absolutely support an outlet mall. Horizon Group Properties has worked relentlessly to make this a successful project, but without the appropriate financing in place, we cannot move forward.”
With the death of the project, Horizon will lose close to $10 million, Skoien wrote.
“We are also going to lose an opportunity to build a great center that I believe would have been quite successful,” he wrote. “And you are going to lose a great project for your Town and a real job producer. I am sorry for both of us.”
Town council Minority Leader Esther Clarke said she was shocked by the news.
“I can’t believe that it’s true,” Clarke said. “I hope that they can solve their financial problems and come back and do it.”
“Bring on Amazon,” Larson said, referring to that company’s plans to build a second North American headquarters. The state is pitching the Hartford-East Hartford and Stamford regions as sites for the mega-project.
Covering about 40 acres, the outlet center’s initial $100 million phase was to include 70 shops, along with restaurants, a central courtyard with a fireplace and a children’s play area. Horizon representatives said there was a potential to expand the shopping center by 140,000 square feet, adding 30 to 35 stores. It was to be the first retail development on the 650-acre Rentschler Field property since Cabela’s opened in 2007. Horizon and United Technologies signed an agreement paving the way for the outlet center in August.
The town council had unanimously approved a tax break of up to $16.86 million for the Rentschler shops, breaks that would come from deferring the increase in the real estate assessment on the property, or the difference between the value of the vacant land and the value of the development. The town still expected to see about $9 million in real estate taxes over the 10 years and an additional $2 million over the same period through personal property tax revenue from each of the 70 retailers. The state had invested $12 million for road, utility and other infrastructure construction at the site.“
Leclerc wrote back to Skoien on Thursday, saying there were avenues to pursue to save the project, including asking unions to finance some of the cost.
“Of course I am perplexed by the need to shut down a project that will cause you to lose millions of dollars, credibility, and a good project,” Leclerc wrote.
“While I sense you have thrown in the towel,” the mayor wrote, “I would suggest you hold off folding the project until we have time to see what options may exist outside of the conventional funding you are familiar with.”
But Skoien wrote back, “Marcia, I appreciate all your help. Thank you. I have to stop. When UTC is unwilling to risk a dime to make this happen, the writing is clearly on the wall. We tried.”
Leclerc on Friday tried to find a bright spot, noting that the overall retail environment has been dismal, with outlet shops one of the few bright spots.
“I have to believe that maybe it’s all for the best,” she said. “Maybe there’s a better use of the land. Maybe they just weren’t the right developers with the right amount of capacity to do this.”