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Why Developers Backed Away From Front Street

Many Saw City's Plan As Too Great A Risk

October 4, 2004
By MIKE SWIFT, Courant Staff Writer

One developer was interested in Adriaen's Landing but didn't like the idea of having to compete with other developers when he was being courted by cities across the United States.

Other developers said they were too busy to bid on the massive development project in Hartford, or were concerned that the state's plan for the entertainment, shopping and housing district at Adriaen's would not leave them enough freedom to create their own vision.

And for yet another developer, Hartford was the problem.

He had been to the empty lot between the new Connecticut Convention Center and city hall where the state has plotted out the retail and entertainment district of Adriaen's Landing. He had checked out downtown and visited the city's neighborhoods. He had duly noted the sophisticated and attractive stores in Glastonbury and West Hartford Center.

Weighing a $70 million subsidy against the risks of building a complex project on a tight urban site in a city still in the early March of its promised economic revival, the developer arrived at a clear decision: The risks outweighed the rewards.

"Everybody we talked to who took a look at it said, `This is tough.' The return is not there - mentally, physically, financially. This is just a tough project," said the developer, who spoke on the condition of anonymity for business reasons. "There are other ways to make money that are a lot easier than this."

Hartford "is a very difficult environment," said Peter Standish, an executive with Northland Investment Corp., another developer who had been interested in the Adriaen's Landing project but did not bid. "You just can't take it for granted that somebody can just walk in and make that happen."

Rude Awakening

State officials had no idea it would be like this.

When the state sold $72 million of Adriaen's Landing bonds on Wall Street this summer, officials assured bond buyers that it would take but "a few months" to replace Richard Cohen, the New York City developer who was being dropped as Front Street's developer.

That assurance, delivered with so much confidence, now appears highly unrealistic.

When the deadline arrived last Monday to submit proposals to replace Cohen, only four prospective developers did so - none of whom satisfied the state's requirements.

Gov. M. Jodi Rell, after huddling with state development officials Thursday, declared that the linchpin to the $1 billion Adriaen's Landing project would go forward. She directed the Capital City Economic Development Authority to produce a new marketing study on the demand for housing - crucial information that developers said they lacked in the failed search - and to hire a retail consultant to aid the new search for a developer.

"The response makes it clear the market does not have enough information about the recent dramatic and positive changes in Hartford," Rell said in a letter to William McCue, chairman of CCEDA. "The story of the economic development improvements since the inception of CCEDA needs to be told before we can proceed with the retail/residential/entertainment district development."

No one knows yet what form the next search will take. Dean Pagani, a spokesman for CCEDA, said state officials plan to take at least several weeks to gather themselves and figure out what went wrong.

"One of the things we want to try to do is find out why there were only four submissions," Pagani said. "That might be instructive, and there might be some very simple issues we can correct."

A series of conversations last week with developers who looked at the Front Street project, but who ultimately decided not to submit proposals, suggests that there are a host of problems the state will need to correct. Some are simple. Some are not.

The Plan

With the state already building the parking garages, utilities and streets for the shopping and living district, developers do not have an open field in how they plot their designs. And while that fact eliminates many unknowns, from a developer's point of view, it also might be a disadvantage.

Victor B. MacFarlane, the founder and managing principal of San Francisco-based MacFarlane Partners, was initially "very interested" in taking on the entertainment district, he said this week. With ties to Hartford - MacFarlane worked at the Hartford Civic Center in the early 1980s - he was intrigued by the project.

The main reason his firm didn't submit a proposal, MacFarlane said, was that he was just too busy on other projects. MacFarlane Partners specializes in urban projects and says it is the leading minority-owned real estate investment management firm in the country, with $1.3 billion in investor equity.

But, along with several developers who spoke privately, MacFarlane said developers might be concerned that so many decisions have been made. The state already has laid out where the streets, parking garages and buildings will go.

"The plan seemed to be pretty prescribed. Unless you find a developer who believes in the plan, you're going to have a problem," MacFarlane said. "Some flexibility may be warranted," he said, but added that he needed more detailed knowledge to make an authoritative judgment.

Standish, whose company is rebuilding the Hartford Civic Center mall into a high-rise apartment tower, said the 24-day window the state gave developers to produce a highly detailed proposal was unrealistic.

"It's something that takes a huge amount of preparation, research, underwriting," he said. "It's not something that can be taken lightly in a 20- to 30-day window. I think the state was fooling itself to have anybody come, in that short a time, and propose something that was meaningful or had any chance of success."

One of the nation's preeminent developers of urban entertainment and housing districts, the Cordish Co. of Baltimore, said Friday that it considered the Adriaen's Landing project. But Cordish said it simply doesn't want to waste its energies on a developer competition.

"Our situation is simple," said David Cordish, chairman of the company. "We are invited in by cities all over the United States. We actually have interest in the project, but no interest in spending time and energy on the [state's selection] process."

The City

Yes, it's impossible to walk down Main Street, Trumbull Street or Pearl Street without running into a hard hat or a construction barrier. Yes, developers have started to buy long-moribund downtown real estate and retrofit those buildings into chic apartments and condominiums. And yes, world-class architects just competed to design a new science center on the city's riverfront.

But that doesn't mean outsiders see Hartford as a hot real estate market, as a place where it's worth taking an extra risk because the potential payoff is so great. It is still far too early in the city's touted economic rebirth, a number of outside observers said.

William Hudnut, the former mayor of Indianapolis, said it was impossible to find a developer for what became the $500 million Circle Centre mall until he could produce tangible evidence that a city once known as "Nap Town" had changed.

"We were on a roll when we got the Circle Centre mall going," said Hudnut, now a senior resident fellow at the Urban Land Institute in Washington, D.C. "The domed stadium [now the home of the NFL's Indianapolis Colts] was built, and hotels and restaurants were springing up downtown, but we still had to go out and search for a developer."

Hartford, Hudnut and developers said, may need to demonstrate a string of successes - not just a convention center, a Marriott hotel and a Civic Center under construction, but projects that are open and successful.

"Hartford is a tough nut to crack," Hudnut said. "It doesn't immediately resonate with people as a good place to make an investment."

The Leadership

Since it was proposed in 1998, Adriaen's Landing has almost always been about the agenda of one man - former Gov. John G. Rowland.

With Rowland permanently out of the picture, a new Adriaen's Landing leadership dynamic appeared to be evolving this week after state officials concluded their developer selection process had failed.

Rell claimed a personal role in the project, meeting with CCEDA officials to discuss the state's next steps. And so did Mayor Eddie A. Perez, who simultaneously criticized the state's developer selection process while saying he wanted a voice in future decisions at Adriaen's Landing.

Rell directed McCue and CCEDA "to work with Mayor Eddie Perez and the city government to make sure the Adriaen's Landing project is consistent with city development goals." It was an explicit direction to share power, something Rowland never did.

Matt Hennessy, chief of staff to Perez, said the meeting could be the start of "a true partnership."

How well that partnership works remains to be seen. But the failure of the first selection process, Hennessy said, "is a good wake-up call that we've got to be more flexible with how we do this."

Reprinted with permission of the Hartford Courant. To view other stories on this topic, search the Hartford Courant Archives at http://www.courant.com/archives.

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