Corporate Welfare, Malloy Corporate Welfare, Malloy
Later this morning, Governor Dannel Malloy and the State Bond Commission are slated to vote on Malloy’s deal to give tens of millions of dollars in taxpayer funds to AQR Capital, a hedge fund based in Greenwich, Connecticut.
Initial reporting on the bizarre deal came via Wait Wait? when it reported, Malloy gives Climate Change Denier $35 million in taxpayer funded corporate welfare.
Now CT Newsjunkie provides more in-depth reporting in a breaking story entitled, State Bond Commission Poised To Give Another Hedge Fund Money.
The CT Newsjunkie reports;
After a controversial decision earlier this year to give $22 million to the world’s largest hedge fund, Connecticut’s Bond Commission is looking to give $32 million to a Greenwich hedge fund managing $172.4 billion in assets.
On Tuesday, the state Bond Commission is being asked to approve a $28 million loan and $7 million in grants to AQR Capital in Greenwich. In exchange for the help from the state, the company will retain 580 jobs and create up to 217 new jobs within two years, according to the Bond Commission agenda.
The first $13 million of the loan will be forgiven if the company retains 797 jobs for two years. According to its website, the company already had 744 employees as of Sept. 30, 2016, but not all of its employees are in Connecticut. The company also has offices in Boston, Chicago, Los Angeles, London, Hong Kong, and Sydney, according to its website.
The company will receive an additional $15 million forgivable loan with the goal of another 189 jobs within five years. The company would also be eligible for $7 million in incremental grants if it creates and retains an additional 140 jobs for a total of 1,126 jobs.
When the state gave $22 million to Bridgewater Associates, the world’s largest hedge fund, the deal was criticized by a number of people on both sides of the political aisle because it comes at a time when the state is struggling with its debt, which is taking up an ever-increasing part of the state budget.
Perhaps most telling of all is that the company is ducking media questions about he deal. As CT Newsjunkie added, “
“Phone calls to the company were not returned.”
For more on the AQR deal see Wait, What? article: Malloy gives Climate Change Denier $35 million in taxpayer funded corporate welfare
To read and comment on the full CT Newsjunkie on AQR go to: http://www.ctnewsjunkie.com/archives/entry/state_bond_commission_poised_to_give_another_hedge_fund_money/
Climate Change, Corporate Welfare, Malloy, State Budget, State Deficit Climate Change, Corporate Welfare, Malloy, State Budget, State Defict
Despite Connecticut’s massive and growing fiscal crisis, Governor Dannel Malloy’s corporate welfare program continues to spin out of control. This time the recipient of the Malloy administration’s taxpayer funded give-a-way program is another massive, extraordinarily profitable hedge fund, a company headed by a multi-millionaire corporate executive who is a climate change denier.
Last Wednesday, as the nation and its citizens reeled from the results of Election Day, Governor Dannel Malloy announced his decision to give Greenwich-based AQR Capital Management $35 million dollars in Connecticut taxpayer funds.
AQR Capital Management is one of the nation’s largest hedge funds, with assets of over $159 billion. The company’s CEO, Cliff Asness, is known for his Republican, Libertarian and right-wing politics, including his consistent denial that climate change is a problem facing the world.
As the Hartford Business Journal reported in, Greenwich firm to expand with $35M in state loans, grants,
Gov. Dannel P. Malloy on Wednesday announced the company’s participation in the Department of Economic and Community Development’s First Five program, providing up to $28 million in loans and up to $7 million in grants to support the firm’s $72 million expansion project. AQR Capital will retain 540 jobs as it creates new ones, Malloy said.
Since the Malloy administration’s corporate welfare program is funded through state borrowing, the $35 million gift to AQR Capital Management will cost taxpayers well in excess of $40 million.
Making the corporate subsidy all the more outrageous, AQR’s top executive has been an extremely controversial figure in the business world.
Addressing Cliff Asness’ statements, a Fortune Magazine article published on March 11, 2015 and entitled, Top hedge fund manager: Global warming isn’t a danger, reported;
One of Wall Street’s most successful hedge fund managers is once again wading into the climate change debate. His conclusion: It’s not as big of a problem as some suggest.
The hedge fund executive went on to suggest that, “based on the current pace of global warming, it will take another 500 years before the changes become a real problem.”
Connecticut crippling state debt is already making it impossible to maintain vital services and will leave future generations with impossibly high debt payments.
In fact, Governor Malloy’s unprecedented use of corporate welfare will cost Connecticut taxpayers well in excess of $1 billion and his fiscally irresponsible policies have already undermined Connecticut state government’s ability to meet its obligations in the years and decades to come.
Connecticut General Assembly, Corporate Welfare, Lockheed Martin Corporation, Malloy Connecticut General Assembly, Corporate Welfare, Lockheed Martin Corporation, Malloy
The politicians and industry officials were beaming. The media was singing their praises. The Connecticut General Assembly had just voted to give Lockheed Martin $220 million in public funds.
The question was not whether Lockheed Martin was going to get paid for producing a new line of helicopters. The question was whether, in addition to payment and excessive profits, a state government would pay the Lockheed Martin Corporation even more money in return for a promise that the company would produce those machines in their state.
And Lockheed Martin found a willing partner in the form of Governor Dannel Malloy and the members of the Connecticut General Assembly.
Yesterday, Connecticut’s elected officials voted – almost unanimously – to give Lockheed Martin $220 million in corporate welfare. Counting principal and interest, the cost to Connecticut taxpayers will exceed a quarter of a billion dollars over the next twenty years.
In return, Lockhead Martin, a $50 Billion a year company, has promised to keep Sikorsky’s headquarters in Connecticut for at least a decade, add up to 550 new jobs at the Sikorsky plant and build some new helicopters here in the state.
The underlying threat was that If Connecticut’s taxpayers didn’t cough up the blood money, Lockheed Martin would retaliate by moving the Sikorsky work to a factory in another state or overseas.
And the $220 million taxpayers will be paying?
As Chairman, President and Chief Executive Officer of the Lockheed Martin Corporation, Marilyn Hewson made in excess of $29 million in 2015. Her pay and benefits topped $106 million over the past five years. Meanwhile, the top five Lockheed Martin corporate officers pulled in approximately $62 million in pay and benefits last year.
That $220 million that Connecticut taxpayers are donating to the company barely equates to what the top five corporate officials have made over the last five years.
But Connecticut’s elected officials weren’t talking about padding the salaries of Lockheed Martin’s executives yesterday, instead they were patting themselves on the back for agreeing to the deal.
Governor Dannel Malloy crowed about the gift Connecticut was making to one of the most profitable members of the military-industrial complex saying,
“Competition in today’s worldwide economic climate is fierce, and Connecticut is showing that we remain a valued leader where businesses can maintain a competitive edge well into the future,”
Meanwhile, State Senator Catherine Osten, (D-Sprague), celebrated the deal calling it, “an unalloyed piece of good news,” and stating,
“I’m more than happy to support this deal. I think it’s a great day. I think it’s a turning point in Connecticut.”
Maintaining a competitive edge? The development is an unalloyed piece of good news?
To reiterate the obvious, this was not about whether Lockheed Martin was going to get paid to build a new line of helicopters. Not only were public and private funds paying for the helicopters, but Lockheed Martin was always going to make a massive profit on each unit.
The reference to the so-called competitive climate was simply a question of which state – or country – was willing to pay Lockheed Martin above and beyond their costs and profits in order to “win” the company’s benign neglect.
In January 1960, President Eisenhower warned us of the danger of the Military-Industrial Complex.
Yesterday, we saw that more than fifty-five years later, there were only 7 out of 187 members of the Connecticut General Assembly who had the courage and conviction to stand up to that political cabal.
Voting against the horrendous deal…
Republican State Senator Markley and Republican State Representatives Ackert, Belsito, Dubitksy, France, Sampson and Smith.
You read read more about the story and how the media covered it via:
Corporate Welfare, Malloy Corporate Welfare, Malloy
With annual sales in excess of $50 billion a year, the gigantic Lockheed Martin Corporation purchased Sikorsky Aircraft from United Technologies Corporation last year. Then, just last month, the mega-defense contractor announced that it would be laying off at least 150 workers at the Sikorsky Aircraft plant in order to ensure that it would, “remain competitive in the marketplace.”
Now comes word that Governor Dannel Malloy and the corporate behemoth have reached a reached a “tentative deal” in which Connecticut taxpayers will give Lockheed Martin more than $220 million dollars in return for the defense contractor’s commitment to keep Sikorsky headquartered in Connecticut and create up to 550 jobs over the next 16 years. The company is also promising to increase total payments to Connecticut-based subcontractors between now and 2032.
While Malloy has been a huge fan of using corporate welfare to buy the loyalty of successful corporations, this particular deal will be one of the largest in Malloy’s career.
While details are a bit scarce, it appears that of the $220 million being given to Lockheed Martin, Connecticut will borrow about two-thirds of the money and reduce the company’s tax liabilities by the remainder.
Considering taxpayers will then be liable for the principal and interest associated with the borrowing scheme, the total cost to taxpayers will exceed a quarter of a billion dollars meaning the subsidy from Connecticut taxpayers to Lockheed Martin will be in the range of $500,000 to $600,000 per promised job.
The CT Mirror is reporting that the Connecticut deal includes the following elements;
- The company would earn grants of up to $8.57 million annually over the term of the agreement by meeting benchmarks such in jobs, payroll spending, use of in-state suppliers and spending on machinery, equipment, and other long term investments.
- Sales and use taxes would be exempted up to $5.7 million per year over the term of the agreement.
- If Lockheed Martin exceeds the target-level employment by 100 to 550 jobs in any given year of the agreement, it will be eligible for a performance incentive grant of up to $1.9 million, for a total of up to $20 million.
Due to the size of the deal, a special session of the Connecticut General Assembly will be needed to approve the project, a session that has apparently been set for September 28, 2016,
You can read more about this developing story at:
Connecticut Offers Stratford-Based Sikorsky Incentives To Stay (CT Newsjunkie)
Sikorsky, Malloy cut tentative deal to produce new helicopter in Connecticut (CT Mirror)
Malloy, Lockheed Martin Reach Deal to Keep Sikorsky HQ in Connecticut (Courant)
Corporate Welfare, Economic Development, Malloy, Stefan Pryor Corporate Welfare, Economic Development, Malloy, Stefan Pryor
“Pryor didn’t seem to care much for Connecticut’s children as education commissioner, so it stands to reason he wouldn’t hesitate to steal our jobs now that he is working in Rhode Island,” – Jonathan Pelto
As Neil Vigdor explains in the CT Post’s Former Malloy cabinet member recruits GE to Rhode Island;
A castoff from Gov. Dannel P. Malloy’s cabinet is coming back to haunt Connecticut with another reminder — or parting shot — that General Electric is the one that got away.
This time, to Rhode Island, where Malloy’s former education commissioner, Stefan Pryor, has played a key role in the recruitment of a new GE Digital venture to Providence.
Rhode Island leaders announced the deal Thursday, which includes an initial commitment of 100 jobs in return for $5.65 million in economic incentives.
Front and center was Pryor, the state’s commerce secretary.
It comes six months after Connecticut lost GE’s global headquarters to Boston, subjecting Malloy to intense criticism over the state’s business climate and retention efforts by his administration.
“We are excited to welcome this new GE Digital center to the Ocean State,” Pryor said. “GE is one of the world’s most important and innovative companies. This state-of-the-art center will bring high-wage advanced industry jobs to Rhode Island, enhancing the tech industry cluster that will ensure the state’s long-term economic success.”
A spokesman for Malloy declined to comment Thursday.
The vast majority of the 100 jobs will be new positions, according to a GE spokeswoman, who said the company did not put the digital venture out to bid when asked if Connecticut was in the running.
Rhode Island officials say the deal could yield hundreds of additional jobs.
GE still maintains a workforce of 4,000 employees in Connecticut, which Malloy’s defenders say has been overlooked in the relocation of the company’s headquarters.
But Malloy’s critics say that Pryor’s recruitment of GE Digital to Rhode Island, which had been in the running for the headquarters, adds insult to injury.
“It may cause an initial bruising to Governor Malloy as far as his feelings go,” said state Rep. John Frey, R-Ridgefield. “GE was so put off Governor Malloy’s presentation and dialogue last summer and fall that I sincerely doubt that they had any conversation with Connecticut about this opportunity.”
During his tenure as Connecticut’s education commissioner from 2011 to his 2014 resignation, Pryor had a rocky relationship with teacher unions and some education advocates over standardized testing and charter school expansion.
Some had publicly called for his ouster, including Jonathan Pelto, a former petition candidate for governor.
“Pryor didn’t seem to care much for Connecticut’s children as education commissioner, so it stands to reason he wouldn’t hesitate to steal our jobs now that he is working in Rhode Island,” Pelto said.
Corporate Welfare, Democratic Legislators, Kevin Lembo, Malloy, State Budget, State Deficit, Wyman Corporate Welfare, Kevin Lembo, Malloy, State Budget, State Deficit, Wyman
Yesterday – June 9, 2016 – Governor Dannel Malloy, who once pledged to run the most transparent administration in history, vetoed an extremely important piece of legislation that would have ensured that there was proper oversight over Malloy’s outrageous corporate welfare and economic development programs.
As the CT Mirror Reported,
“State Comptroller Kevin P. Lembo called the veto “deeply troubling” and a blow against transparency. “
According to the news story;
“Malloy also wrote that transferring the analysis of tax credits from DECD to Program Review was “unnecessary and unwarranted.”
That drew a rebuke from Lembo, a fellow Democrat who testified at a public hearing in March favor of giving the job to Program Review, a bipartisan committee with a staff of non-partisan researchers and analysts.
“If objectivity really matters, we always want an independent third party to evaluate our work,” Lembo said Thursday in an emailed statement. “This is why teachers grade tests and students don’t just assign their own grades. Furthermore, this is a terrible loss of transparency where we need it most.”
Lembo said the veto, following a decision to provide $22 million in state bond funds to a rich hedge fund over his objection, is “deeply troubling.”
“The state owes it to businesses and all taxpayers to fully analyze the return on investment that these sizable and important programs actually deliver in order to assess whether such resources are fulfilling their intended purpose or, if not, whether state funds would be better deployed to other economic development or infrastructure investment,” Lembo said.
Malloy’s latest effort to keep Connecticut’s citizens in the dark about how badly government is managed comes on the heels of an incredible move by Malloy (and the Democrats in the legislature) to literally prohibit the “Independent” Office of Fiscal Analysis from warning elected officials and the public about upcoming budget deficits.
As a May 12, 2016 Wait, What? article reported;
Meanwhile, the same outrageous implementation budget bill includes unprecedented language that allows cities and towns to simply cut their local public school budgets by the amount of any reduction in state aid to those schools.
This means that while a number of cities and towns will be getting a major pot of cash dumped on the non-education side of the budget, they won’t even have to maintain their efforts to fund their schools.
And if those two sections weren’t telling enough, any member of the Connecticut State Senate and State House of Representatives who votes in favor of this bill will be taking the truly unprecedented step of adopting a law that would literally PROHIBIT the non-partisan office of Fiscal Analysis from reporting on future budget expenditures and possible deficits that are the result of the annual increases that go with maintaining current services.
THIS IS EXTREMELY IMPORTANT!
With no public hearing, no public input and no public notice, Malloy and the Democratic leaders of the General Assembly have included language in this year’s budget implementation bill that intentionally prevents the media and the public from knowing the true ongoing costs of state government.
The CT Mirror’s Keith Phaneuf explains this incredible development in his latest article;
Future state deficit forecasts are likely to shrink significantly under a method imposed in the new state budget plan that disregards billions of dollars in annual expenditures not fixed by contract or federal mandate.
The language, proposed by Gov. Dannel P. Malloy, is included in an omnibus policy bill to help implement the proposed $19.76 billion budget for the fiscal year beginning July 1.
House Minority Leader Themis Klarides, R-Derby, blasted the measure — which was released only a few hours before the Senate was expected to debate it Wednesday morning — as a means to hide Connecticut’s fiscal woes from the public.
Malloy and his budget director, Benjamin Barnes, have been critical for several years of the deficit-forecasting methodology used by the legislature’s nonpartisan Office of Fiscal Analysis.
OFA generally tries to assess both the current and future costs of all programs, staffing, grants and other expenditures, whether fixed by contract or federal requirement, or simply set by state law.
The new methodology would disregard cost increases in most state programs, excepting debt service, retirement benefits and federal entitlement programs.
“Moving away from ‘current services’ will help us ensure that government does not continue to increase spending on autopilot,” the governor said Wednesday. “As part the budget agreement, the state will change how it does business, and give residents and businesses the predictability they seek as government works to live within its means.”
The language is nothing but a blatant effort by Malloy and the Democratic legislature to hide the true costs of maintaining state services and preventing voters from understanding the ramifications of taxes and spending.
Dismissing the most fundamental notions of open government and democracy, Malloy and the Democratic leaders are engaged in a new political strategy based on keeping the citizens ignorant about how their government functions and how it spends their money.
No real Democrat would vote for such a measure.
But Democrat Malloy and Democratic legislators voted for Malloy’s maneuver and now Malloy has added salt to the wound by making sure no one outside of his own administration reviews the corporate give-away-program that is costing Connecticut taxpayers hundreds of millions of dollars.
Bridgewater Associates, Corporate Welfare, Economic Development, Malloy, Ray Dalio Bridgewater Associates, Corporate Welfare, Economic Development, Malloy, Ray Dalio
Yesterday, CNBC reported that with more than $100 billion under its management, Ray Dalio’s Bridgewater Associates is once again the world’s largest hedge fund.
Tomorrow, Governor Dannel Malloy and his appointees on the Connecticut Bond Commission will approve a corporate welfare package for Bridgewater Associates that will cost taxpayers $22 million plus. The plus “part” is due to the fact that Malloy is actually borrowing the money to give to the giant hedge fund, meaning Connecticut taxpayers must pay back the money, along with the associated interest.
As for the entire debacle, long-time Wait, What? readers will remember that this is actually Plan B of Malloy’s effort to subsidize one of the most successful companies in the world.
The Connecticut Bond Commission agenda explains the latest version of the plan as follows:
These funds are requested to provide a grant-in-aid and loan, under the First Five Program, to Bridgewater Associates, LP to assist with expansion of its facilities in Westport, Wilton and Norwalk. The company will retain 1,402 jobs and create 750 new jobs. The loan will be provided at an interest rate of 1% for ten years with principal deferred for five years. The company will be eligible for loan forgiveness if it creates the 750 jobs and retains the existing jobs by the end of 2021. Also included are a $2 million grant to assist with training and a $3 million grant for installation of alternative energy systems.
As an aside, Dalio’s pay – last year – dropped to $1.6 billion, down from the $2.3 billion a year he collected a couple of years ago.
Things are tough all over… Malloy’s solution;
While middle class families across the state struggle with massive costs, such as student loans with rates of 8% or more, not to mention rising energy costs, as a result of Malloy’s economic development strategy, Connecticut taxpayer will be loaning one of the 1%’s most elite members with a $17 million dollar loan at 1% [go –figure] with no payments due for five years – and, should the company stick to its present business trajectory – they don’t have to pay back the loan at all. In addition to the $17 million, Dalio and his company will get $2 million to help subsidize their worker training program and $3 so that they can install some “alternative energy systems.”
Meanwhile, Connecticut’s state budget deficit is about $250 million and growing, The Malloy administration has laid off about 1,000 state employees in the last few weeks and Malloy’s new budget counts on his ability to ax as many as 3,000 more state employees in the coming couple of months.
Called by some, the Reverse Robin Hood Strategy, were in Connecticut we know it as Dannel Malloy’s approach to the advanced capitalist system, one in which taxpayers work extra hard so that their government can give money to successful businesses.
For those who want to know more about Malloy’s horrendous Bridgewater give-a-way program, some of the details can be found in previous Wait, What? posts on this issue.
Yes, you heard right…CT taxpayers give $115 million to Bridgewater, world’s biggest hedge fund (8/19/2012)
Slam-Dunk! Touch-down! Goal!!!! Taxpayers come through for American’s highest paid CEO (1/11/2013)
Damn process gets in the way of the Bridgewater Associates corporate welfare give-a-way (10/2/2013)
“This is stealing from the poor and middle class to make a billionaire even richer” (Pelto, August 2012) (6/27/14)
To Hell with Connecticut’s Middle Class – Someone needs to subsidize the Billionaires (9/16/2015)
Oh, and as for the $2 million Connecticut taxpayers are giving to help Bridgewater Associates train their staff? Check out,
Bridgewater’s Co-CEO Once “Supervised Subordinates Stripping Off Articles Of Clothing And Setting Them On Fire During A Team-Building Exercise”
As long-time Dealbreaker readers know, we have been writing about the slightly unorthodox culture at Bridgewater Associates since 2010, when we received a spiral-bound copy of Principles, the hedge fund’s unofficial company handbook penned by founder Ray Dalio. At the time, it was surprising to learn of an asset management firm that explained its reasoning for why employees shouldn’t hesitate to identify and eliminate weak colleagues via a discussion about “a pack of hyenas [taking] down a young wildebeest”; told them that failing to confront a person about their shortcomings to their face made you “a slimy weasel”; pushed them to ask themselves if they’d “earned the right to have an opinion”; insisted that “firing people is not a big deal”; and quizzed them on all of the above and more.
Amazingly, though, the Westport-based hedge fund continues to surprise us with the new and innovative ways it conducts its business, many of which are on display in a Wall Street Journal article today, examining life under the Tao of Dalio..
Trustfalls…ON STEROIDS: “Mr. Jensen also cut a distinctive path as a manager. About three years ago, he supervised subordinates stripping off articles of clothing and setting them on fire during a team-building exercise at an official company retreat.
No doubt Ray Dalio and his company need the money more than we do.
Corporate Welfare, Malloy Corporate Welfare, Malloy
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
Bridgewater Associates, Corporate Welfare, Malloy, Ray Dalio Bridgewater Associates, Corporate Welfare, Malloy, Ray Dalio
Here we go again!
As tens of thousands of Connecticut families struggle to pay their local property taxes due to the state’s inadequate funding of public education, Governor Dannel Malloy is giving scarce public funds to some of the wealthiest companies in the country.
As the Hartford Courant reports today in their article entitled, “State Proposes $52 Million In Subsidies To Giant Hedge Fund,”
Bridgewater Associates, the world’s largest hedge fund, can qualify for up to $52 million in tax credits, grants and a loan from taxpayers as it renovates and expands its headquarters in Westport, state officials say.
Bridgewater Associates, which has about 1,500 employees, originally was offered a $115 million incentives package in the state’s First Five program, but it abandoned its plan to build a new headquarters in Stamford after local residents’ opposition. (See: Bridgewater Associates Abandons Plan To Build in Stamford.)
Although it has not been widely reported, before Bridgewater Associates “abandoned” their move to Stamford, the Malloy administration spent millions to help Bridgewater Associates facilitate the move.
But today’s news means that while Governor Dannel Malloy effort to “lure” Bridgewater Associates from Westport to his pet project called Harbor Point in Stamford with that $115 million publicly financed corporate welfare package failed, Connecticut’s taxpayers are now being put on the hook to give Ray Dalio and his gigantic Hedgefund $52 million to help subsidize a half-billion dollar upgrade to their Westport corporate headquarters.
For those who haven’t followed the saga, the following Wait, What? posts are worth a read;
See: NEWSFLASH – I gave a billionaire $115 million today (and if you’re from CT, so did you!) (8/15/2012); Yes, you heard right…CT taxpayers give $115 million to Bridgewater, world’s biggest hedge fund (8/19/2012); Slam-Dunk! Touch-down! Goal!!!! Taxpayers come through for American’s highest paid CEO (1/11/2013) and “This is stealing from the poor and middle class to make a billionaire even richer” (6/27/2014)
The background to this latest development is that for more than three years, Malloy has been working to hand taxpayer money over to Ray Dalio, one of Connecticut’s 16 billionaires.
According to Forbes Magazine, Dalio is a high-ranking member of the list of “The World’s Billionaires.”
Dalio’s worth is estimated at $15.5 billion, bolstered by income of more than $1 billion last year. His annual salary is down sharply from 2011 when Dalio earned $3.9 billion, making him the highest paid person in the United States. As of now, Dalio ranks #30 on Forbes list of the richest 400 and #2 among Hedgefund owners. The number of billionaires who call Connecticut home has actually jumped from 9 to 16 since September 2014.
According to the latest announcements, Malloy’s new plan is for the state of Connecticut to borrow $17 million at about 3 percent a year and lend it to Dalio’s company with a rate of 1 percent interest.
The Courant reports added that,
“The entire loan could become a gift, depending on how Bridgewater meets its job creation targets. But the exact terms are still being negotiated”
In addition to the $17 million loan, the Malloy administration will be giving Dalio and his company $2 million for employee training and $3 million to subsidize the company’s energy costs. Apparently these funds would also come from money that the state has borrowed as part of its economic development activities, meaning the long term cost to taxpayers is actually significantly higher than $5 million.
Finally, Dalio and his company would also be given $30 million in tax credits over the next 10 years under the “Urban and Industrial Sites Reinvestment Program.” The actual impact of the tax credits would be that Bridgewater’s tax liability to the state of Connecticut would drop by $30 million.
As to how Malloy can get away with using money for urban renewal on a project in Westport, the Hartford Courant explains,
“Westport is not a distressed city, and the office park is not a brownfield, but because Bridgewater Associates’ investment is so large, it qualifies for the credits.”
Malloy’s rationale appears to be his ongoing reliance on the old theory of “trickle-down” economics which claims that if government uses its taxing and expenditure policies to redistribute wealth from the Middle-Class to the rich, the wealthy will be able to create even more wealth which will then trickle down to the rest of society via more jobs and higher tax revenues.
As if to reiterate how the economic strategy as consistently failed, Reuters is reporting today that;
“Hewlett-Packard Co, which is splitting into two listed companies later this year, said on Tuesday it expects to cut another 25,000 to 30,000 jobs in its enterprise business as the tech pioneer adjusts to falling demand.
The latest cuts, on top of layoffs of 55,000 workers previously announced under Chief Executive Officer Meg Whitman.”
As the independent think-tank, Citizens for Tax Justice has reported, Hewlett-Packard Co, has been a major recipient of taxpayer funded corporate welfare. In addition to direct subsidies, HP ranks #13 on the list of major corporations that have the most money hidden in “off-shore investments” in order to avoid paying federal and state taxes (See: Offshore Shell Games 2014 The Use of Offshore Tax Havens by Fortune 500 Companies.)
Citizens for Tax Justice notes,
“As of 2013, the 287 Fortune 500 companies that report holding offshore cash had collectively accumulated close to $2 trillion that they declare to be “permanently reinvested” abroad. That means they claim to have no current plans to use the money to pay dividends to shareholders, make stock repurchases, or make certain U.S. investments. While 72 percent of Fortune 500 companies report having income offshore, some companies shift profits offshore far more aggressively than others. The thirty companies with the most money offshore account for nearly $1.2 trillion. In other words, six percent of Fortune 500 companies account for 62 percent of the offshore cash.”
Corporate Welfare didn’t work with Hewlett-Packard Co, and won’t work with Ray Dalio’s Bridgewater Associates…but that fact certainly isn’t stopping Governor Dannel Malloy from giving one of Connecticut’s billionaires $52 million more of our money.
Corporate Welfare, Malloy, State Budget, State Debt, State Deficit Corporate Welfare, Malloy, State Budget, State Debt, State Deficit
The headline in today’s Hartford Courant – Malloy: No ‘Meaningful’ Cuts In Business Aid.
FACT: As the CT Mirror’s Keith Phaneuf has consistently explained in his news articles, Connecticut faces a $1.4 billion budget deficit in next year’s state budget and the projected state deficit over the next three years exceeds $4.5 billion. [Compare that to the $3.7 billion deficit that Malloy “inherited” when he took office in 2011…a deficit that led to a record breaking $1.5 billion tax increase.]
But instead of telling the truth about Connecticut’s growing fiscal crisis during his recent re-election campaign, Malloy claimed that there was no deficit, that he would not propose or accept any tax increases in his second term, that he would actually implement more than $260 million in targeted tax cuts for certain groups, that he would preserve the level of funding to cities and towns, that he would not make cuts to “vital” state programs and that he would not need to talk to the state employee unions about concessions.
And now, after the election, when even his own budget office is finally telling the truth about this year’s $100 budget deficit, Malloy continues to deny the reality of the fiscal crisis that is facing the state and its residents.
As the Hartford Courant is reporting, Malloy went before the MetroHartford Alliance (chamber of commerce) yesterday to proclaim that the “State budget shortfall won’t hit business aid “in any meaningful way.”
When the Courant’s Dan Haar asked Malloy how his massive corporate welfare program could go unscathed in the face of the upcoming budget deficits, Malloy explained that “One reason is that most of the economic development spending is “capital-based,” meaning it is financed with borrowed money. ‘We’ll be in good shape with respect to the business programs,’ Malloy explained.
Translated to English, Malloy was telling the Hartford Courant that since his Corporate Welfare Program is put on the State’s credit card, he has no intention of cutting back on its largess.
Apparently in Malloy’s mind, his ongoing and excessive taxpayer funded program to give successful corporations large financial gifts isn’t made with “real” money. It is simply borrowed money that only adds to Connecticut’s long-term debt.
But what about the fact that Connecticut’s state debt and obligations already exceed $68.4 billion, an incredible sum of money that Connecticut taxpayers will have to pay back over the next twenty to twenty-five years – in addition to their regular federal, state and local tax payments? (See yesterday’s Wait, What? post entitled, “WARNING! WARNING! The state of Connecticut’s Fiscal Health”)
For Malloy’s answer to that, we need only turn to headline #2: Commission Poised To Exceed Malloy’s Self-Imposed Bonding Cap (CTNewsJunkie)
“The state Bond Commission is expected to borrow $267 million in general obligation bonds Wednesday during its first meeting since July. The amount will exceed Gov. Dannel P. Malloy’s voluntary bonding cap by about $167 million.
The governor, who controls the Bond Commission’s agenda, has set a “soft” annual borrowing limit of $1.8 billion for the last two years. Although he stayed under the soft cap in 2013, he is poised to exceed it after Wednesday’s agenda, which puts state borrowing at about $1.97 billion for 2014.
‘Governor Malloy has prioritized projects that were long overdue because they improve our quality of life and create jobs. The agenda reflects both the readiness of current projects and the importance of making these investments in infrastructure, public education and job creation right now,’ Malloy’s spokesman Andrew Doba said in a statement Tuesday.”
Among the bond items that will be voted on today…
- $25 million more in borrowing for Connecticut Innovations, Inc. to support more venture capital “investments” in companies
- And another $19 million for the Manufacturing Assistance Act program, the largest beneficiary being a $10 million gift to Electric Boat/General Dynamics, a multi-billion dollar company that paid its new CEO $18.8 million last year.
As we sit on the deck of this ship with no lifeboats, perhaps the most serious question is whether the Democrats will stand up to Malloy and finally use their authority to turn this ship of state away from the iceberg field that lies ahead?
Sadly the answer to that question is almost definitely a big NO!
Watch the Democratic Constitutional Officers and the Democratic Legislators on the State Bond Commission vote in favor of Malloy’s plan today to speed up rather than turn away from the extreme financial danger that lies straight ahead.
By noon, Connecticut taxpayers will be in debt another $297 million, an amount that includes the $10 million so that Malloy can send that check to Electric Boat/General Dynamics, a company that had $32 billion in revenue last year.
$32 billion in revenue last year —- Connecticut’s entire annual state budget …. $20 billion.
Lesson NOT learned!
Update: The State Bonding Commission “swiftly and unanimously approved borrowing nearly $267 million to fund dozens of new capital projects.” So there you go, after criticizing the practice of excessive borrowing, even the Republican members of the Bond Commission voted to borrow more.