Good things may not be brought to life in Fairfield in the immediate wake of General Electric”™s announced exit from the town. But if Fairfield real estate developer Kleban Properties and Fairfield University have their way, much greater things may well be on the horizon for the Easton Turnpike property.
On March 28, Kleban made good on its earlier promise to explore purchasing the 68-acre GE campus, which the company announced in January it would vacate to move its corporate headquarters to Boston. In an exclusive agreement, Kleban and Fairfield University will work together to renovate and develop the property as a high-tech hub that will encompass health care-related technology, an executive education center, and additional features aimed at drawing additional big-name corporations to Fairfield.
“[GE”™s decision] was devastating to me as a lifetime resident of Fairfield,” Albert Kleban, the 85-year-old chairman of the company, said. “I could see an immediate downfall in real estate values, employment, and the tax base.”
However, he added, “Whenever I find myself with a negative in this world, I enjoy turning it into a positive.” With that in mind, he met within hours of GE”™s announcement with Fairfield First Selectman Mike Tetreau to discuss the already ambitious plans he held for the property.
“I showed him a check for hundreds of thousands of dollars to show that I meant business,” Kleban said. “Mike and the city of Fairfield immediately showed their support.”
Kleban identified three goals for the project: Economic viability; providing a greater number of employment opportunities than the roughly 800 jobs that will be lost by General Electric leaving; and increasing the tax base of Fairfield. To the last point, Fairfield University Executive Vice President Kevin Lawlor confirmed that the university will lease the property from Kleban, thus keeping it subject to property taxes. “Returning the property to the tax rolls is a good thing,” he said.
“It”™s great to hear the specifics,” Tetreau said. “I”™m very excited about the potential of this coming to fruition.”
Citing the proposed increased tax benefit and employment over what GE has been offering, he added, “This is great news about the future and the potential for the town and the region.”
The developer and university have enjoyed a mutually beneficial relationship for some time. In addition to owning the former Borders property in downtown Fairfield that now operates as the university”™s campus bookstore, Kleban partnered with the school and the town to create an off-campus business accelerator, the Fairfield University Entrepreneurial Lab (F.U.E.L.). Also, Kenneth Kleban, Albert”™s son and company president, serves on the advisory board to the university”™s Dolan School of Business.
Kleban said he maintains a “special relationship” with Fairfield University President Jeffrey P. von Arx, who along with Lawlor convinced the board of trustees to approve the agreement.
“We”™re glad to be associated with it,” said Lawlor. “We envision a first-class property that can attract executives from the area and offer customized support for corporations.” Given the university”™s strong nursing and business programs, he added, “it seemed like a great fit.”
A considerable stumbling block in all of this is the fact that Kleban does not currently own the property ”” and possibly never will.
“I”™m prepared to offer whatever it takes ”” within reason ”” to buy it,” Kleban said. While his company and GE have been in negotiations for several months, “We haven”™t talked price yet. I”™m ready to pay the price that a public company will demand for such a property, but if another company in China or somewhere comes along ”¦”
GE announced in January its plans to abandon what had been its corporate home since 1974, having already made its displeasure known over Connecticut Gov. Dannel Malloy”™s tax hike signed in June 2015. That legislation, representing a $1.5 billion tax increase, tripled the sales tax on data processing and significantly increased corporate tax liability throughout the state.
According to the latest town of Fairfield”™s assessment figures available, General Electric is Fairfield”™s second-largest taxpayer, with a valuation of $70,792,220; Kleban Properties holds the top spot, at $75,637,594.
Malloy”™s action coincided with GE”™s moves to cut corporate costs and shift its focus to software development, thus attracting what it believes are workers who prefer to live and work in large cities. Several cities actively campaigned to become the new home of the company ”” which generated nearly $150 billion in revenue in 2014 ””including New York City and Providence, R.I. Boston, with input from Massachusetts, won the day with a combined incentives package reportedly worth around $150 million, plus the fact that it offers a number of high-profile universities and tech companies. GE announced in mid-March that it plans to move to a roughly 2.5-acre piece of land in its historic ”” and potentially pricey ”” Fort Point Channel district.
“We want to be at the center of an ecosystem that shares our aspirations,” GE CEO Jeffrey R. Immelt said in a statement.
“This hurts,” Malloy said after GE”™s announcement. “You win some and you lose some.”
Some in Boston are now wondering if they”™ll be losing more than they originally thought. A provision in the GE/Boston agreement states that if the company “occupies any properties owned or leased by the Boston Redevelopment Authority [which reportedly may take over ownership of some of the older buildings that GE has its eye on], for a lease term up to 20 years, the Company shall be responsible for only annual operating expenses, property taxes not abated ”¦ and interior renovations costs.”
Notably absent from the agreement is the word “rent,” which could mean that GE will not be on the hook for leasing the waterfront property ”” a development that has resulted in some squawking in the Boston newspapers.
Meanwhile, General Electric announced this week that it is selling its GE Asset Management division in Stamford to Boston-based asset management firm State Street Corp. for a reported $485 million; State Street has indicated the office”™s 275 employees will remain in Stamford.
Kleban, who described his Fairfield proposal as “paramount in my mind” and something that will “be our legacy if we can make it happen,” said that while he is eager to move forward, “General Electric has a different agenda than we have. They”™re not moving to Boston until 2018.”
A GE spokesman would say only that “We don”™t have any updates on this at the present.”
“I”™m ready to move tomorrow morning,” Kleban said. “We have the funds in place, and have the support. And although I”™m sort of in the twilight of my life, I”™m committed to making this happen. We want to make this not a negative for Fairfield any longer, but a major, major positive.”
