At yesterday’s State Bond Commission meeting, Governor Dannel Malloy’s plan to give $1 million in taxpayer funds to the private equity company MC Credit Partners so they could move to Stamford sailed through despite the fact that days earlier Malloy announced more than $100 million in deep budget cuts to a variety of vital services as part of his effort to knock down what will surely be a significant budget deficit before the year is out.
Adding insult to injury, Malloy continues to pay for his Corporate Give-A-Way Program with funds that he is charging to the state’s credit card, meaning, he is actually borrowing the money from Wall Street, which in turn, pushes up the long-term cost to taxpayers since we have to pay back the money plus the associated interest.
According to the Malloy administration, in return for the $1 million, MC Credit Partners [Yes, McCredit is their real name], will move their office, along with their 21 employees, from New York City to space in a building in downtown Stamford, Connecticut.
The office building is owned by one of the city’s biggest campaign contributors and is already the home of two other companies that received Corporate Welfare payments from the Malloy administration.
Malloy’s political spin about the whole arrangement takes a bit of hit when one learns, thanks to a quick search on Bloomberg.com, that MC Credit Partners is already located on the 5th Floor of 2200 Atlantic Street in Stamford.
But then again, perhaps the “deal was done” long before the people of Connecticut were provided the opportunity, through the Bond Commission, to actually vote on the decision to give taxpayer funds to MC Credit Partners.
According to the language adopted by the State Bond Commission,
“These funds are requested to provide a loan to MC Credit Partners, LP to assist in relocation from New York City to Stamford. The company will create 21 new jobs. The loan will be provided at an interest rate of 2% for ten years. The company will be eligible for loan forgiveness of $250,000 if it creates the 21 jobs and retains them for two years. Additional loan forgiveness of $250,000 if the company creates five additional jobs and retains them for two years.
Just to be sure we all understand the full parameters of the deal…
Connecticut taxpayers will borrow $1 million for twenty years at an interest rate of about 3 percent. Governor Malloy, on our behalf, is then loaning our money to an extraordinarily successful private equity firm at a rate of 2 percent for ten years. Although it is called a “loan,” the company gets to keep $250,000 of our money if it maintains its present number of employees for 2 years and they get to keep another $250,000 of our money if they create an additional five jobs at some point over the next ten years and keeps those for at least two years.
For background, according to Bloomberg.com,
“MC Credit Partners LP is a private equity firm specializing in debt capital investments in middle market companies in entrepreneur, management / family owned and sponsor-backed businesses. The firm invests in all industry groups. It prefers to invest in United States, Canada, and United Kingdom… MC Credit Partners LP is based in Stamford, Connecticut.”
A bit more research reveals that MC Credit got its start in the spring of 2013 when, as Buyouts Magazine reported, the new company collected $200 million from Billionaire hedge fund manager Louis Bacon. MC Credit apparently remains affiliated with Bacon’s Moore Capital and Michael Zimmerman, who served as a senior managing director at Moore Capital, is now a senior managing director at MC Credit Partners.
Of course, the public may never know whether the $1 million that Governor Malloy gave away was necessary to “lure” the private equity firm to Connecticut, but the company is connected Louis Bacon who sits at the number 375 position on Forbes 400 Wealthiest with a net worth of $1.8 billion. Billionaire Bacon, who gave nearly $500,000 to the Conservative Party in England and was a major fundraiser for Mitt Romney has generated a fair amount of controversy over the years including getting the High Court in London to grant him a court order so that he could try and force the Wikimedia Foundation, The Denver Post and WordPress to hand over the names of “internet users” who allegedly had defamed him.
Meanwhile, back in Connecticut, MC Credit has already moved into a building that is owned by a Delaware company named ONE HARBOR POINT SQUARE LLC, which is owned by a Delaware company named HARBOR POINT HOLDING COMPANY LLC, which is owned by Paul and Carl Kuehner, of Ridgefield and Norwalk, Connecticut respectively.
As reported by the Federal Election Commission, the Kuehners and their immediate family members have donated more than $560,000 in campaign contributions in recent years. While most of their money goes to Republicans, a number of Connecticut Democratic candidates have benefited from the Kuehner’s political donations including Dannel Malloy, Chris Dodd, Ned Lamont and Jim Himes.
It should also be noted that this isn’t the first time the Kuehner brothers have directly or indirectly benefited from Malloy’s Corporate Welfare Program.
In November 2013, the conservative Watch-Dog Group Raising Hale reported,
Stamford real estate developer must spend at least $9.7 million to receive a $25 million taxpayer contribution toward a waterfront remediation project according to documents obtained from the Department of Economic and Community Development.
DECD provided two agreements related to the proposed site for the future headquarters of the world’s largest hedge fund, Bridgewater Associates, in response to a Freedom of Information Act request.
None of the publicly available documents appear to mention Bridgewater, but the company could be referenced in documents that remain secret.
DECD made the agreements with three limited liability companies related to lead developer Building and Land Technology to support the Bateman Way remediation project.
In addition to the $25 million in public money destined for BLT and its partners, DECD plans to give Bridgewater another $115 million to partially fund its move from Westport to Stamford.
BLT is also landlord for two other companies that received aid from the administration of Gov. Dannel Malloy: Deloitte, which will get $14.5 million, and Starwood Hotels, $90 million.
The State Bond Commission approved $7 million for the Bateman Way project in January. DECD completed an agreement with the companies involved on March 19.
The bond commission approved another $9 million in April. An agreement dated June 14 governs that $9 million payment and a possible future payment of another $9 million. The second $9 million still needs bond commission approval.
According to the agreements, state funding cannot exceed 72 percent of the project’s cost. If the bond commission approves the last payment of $9 million, the developer must spend a total of $34.7 million to receive the $25 million from the state.
If the last payment does not come through, the developer must spend $6.2 million of its own money to receive the state’s $16 million contribution.
The state’s agreements are with three related limited liability companies: The Strand/BRC Group, Harbor Point Holding Company and TL76 Holdings.
TL76 Holdings, a real estate operating company, is the direct recipient of the state money.
Harbor Point Holding Company LLC is the sole member of TL76 Holdings, which means Harbor Point effectively owns TL76.
In addition to directly controlling TL76, Harbor Point indirectly controls The Strand/BRC Group, which owns the 14-acre parcel being developed by TL76.
Harbor Point is the managing member of The Strand/BRC and owns 1 percent of the company. The remaining 99 percent is owned by Admirals Wharf LLC.
According to the Secretary of the State’s website, Harbor Point Holding Company also controls Admirals Wharf.
Carl Kuehner III and Paul Kuehner, the brothers behind BLT, serve on Harbor Point’s board of managers. They are joined by Gerald Ronon and Jane Smith, executives with Lubert-Adler Real Estate Funds, BLT’s Philladelphia-based partner on the project.
Initially, Lubert-Adler partnered with Antares Investment Partners on the Harbor Point project. After taking unrelated losses during the financial crisis, Antares withdrew and BLT took its place, making a $200 million investment, according to the Wall Street Journal.
Harbor Point, the joint venture between BLT and Lubert-Adler, recently sold an apartment building, Infinity Apartments, for $98.8 million.
As Wait, What? readers learned just two weeks ago, while elements of the Bridgewater deal fell by the wayside when the world’s largest hedge fund company decided not to move from Westport to Stamford, Governor Malloy has put together a second deal to help Connecticut’s wealthiest billionaire Ray Dalio and his company by giving them more than $50 million in Connecticut taxpayer money to expand their Westport headquarters. See: To Hell with Connecticut’s Middle Class – Someone needs to subsidize the Billionaires