If urban investment was so simple and there was one dominant philosophy or strategy, there would be little preventing the renewal of the nation's cities. Realism however tells us that the vast differences in governmental structures, economic marketplace, tax policies, historical roots, geography and even weather patterns have and will continue to have substantial influence on the success or lack of it in cities like Hartford.
Generally for a city to be successful, it needs a balance in its demographics, its politics and economic base. Of course achieving improvements at the micro level is often frustrated by larger regional and national macroeconomic trends. Often whole regions get known by the fortunes or misfortunes of their central city. Likewise, the image and salability of a city is often established by its downtown central business district.
Investing in Hartford will demand an assertive state policy operating on a variety of fronts. If successful, it'll help the entire region and rebuilding the downtown greatly improves the overall appeal of the city itself. It's for this reason the state has opted to invest in downtown Hartford; in such facilities as the XL Center and the Convention Center; to propose the relocation of its flagship university's branch into the downtown; to leverage transit dollars to connect Hartford better with its suburbs as well as larger regional economic engines such as Boston and New York; while also launching a strategic series of purchases to consolidate state office operations at a time when owning and operating is better than leasing across a scattered geography. No single solution, no one element is a magic solution in and of itself.
Establishing a residential market for young professionals and entry level workers and a market rate housing stock to meet today's as well as a future demand is likewise critical. Downtown Hartford's current residential vacancy rate hovers at 3 percent with very little new product having been constructed in nearly 30 years. Meanwhile, a younger workforce has little offered to it in the way of downtown rental product with amenities and within walking distance to major employment centers and arts and entertainment venues. Add to this the likely increased demand pressure of 3,500 new students and faculty from UConn-Hartford. Add again a factor that must recognize that the state workforce is aging (in its mid-50s and counting) and will soon be hiring younger workers with entirely new housing expectations and demands (who are not all interested in living in suburbia and seek greater involvement in urban life) and you can see how the demand increases. Finally one must recognize the new urbanism and creative class demands that are driving urban renewal and attempt to catch this movement in Hartford.
The Capital Region Development Authority (CRDA) was established in mid-2012 in an attempt to think more holistically about the downtown and was authorized to invest, not grant, up to $60 million in an attempt to jump start housing investment in the downtown marketplace. Confronting CRDA were the realities of a geographic area with so many dated commercial office buildings with so little marketplace value that they are not even considered in commercial vacancy reports.
Consequently, CRDA has begun to invest in two types of housing products in the downtown with a priority for market rate housing. First it has focused on larger scale impact projects such as 777 Main Street, Front Street and the restoration of the former Sonesta hotel. Secondly, we are investing in smaller deals to in-fill along critical streets such as Asylum, Allyn, Ann Uccello and Pratt, with units with a variety of sizes, layouts, price points and providing a re-use strategy for buildings that no longer serve their initial purpose or meet today's business demands. In Hartford, market rental rates, especially for the renovated walk-ups, are very affordable.
The first such project to gain CRDA's endorsement is the conversion of 777 Main Street with 286 apartments. The investment comes in two ways: first, in the form of equity whereby CRDA can share in the project's upside and risk taking, and secondly in the form of a more traditional loan that fills the gap between the cost to build the project and its value upon completion.
Our goals are to meet the demand for new housing while calibrating the absorption of these units. The larger projects need a longer lead time; the smaller ones can be available sooner. Likewise, the price points are higher with more amenities in the larger deals while the smaller ones perform at a lower rent and address market demand for certain size units in the downtown core. Increasing discretionary spending in the downtown, driving demand and sustainability for retail growth and not restricting the units upside in order to attract future investor interest are our objectives.
Government can serve the role of a stimulant when the economic times dictate it and off set market distortions. Investing in housing which has always made up a major component of the overall economy's structure is critical to the vitality of the central business district.
Suzanne Hopgood is chairman of the Capital Region Development Authority.