Jay DeVivo, Guest Blogger on The Hartford

Today's guest blogger is Jay DeVivo, candidate for Simsbury Board of Selectmen. Jay is AVP of Risk Management at Cigna Reinsurance. Prior to joining Cigna, he consulted for start-up and publicly traded companies, primarily in the areas of strategic marketing and product development. He is a volunteer coach with the Simsbury Little League, and serves as an appointed member of the Town of Simsbury's Economic Development Commission and Recycling Committee.

This is a long read, but worth your time! Here's Jay concept for the re-use of The Hartford Campus:

The Connecticut Innovation Lab:  A Modest Proposal for the Re-use of The Hartford Campus.

No town wants to lose its largest taxpayer.  However, we must view The Hartford’s departure as an opportunity to be seized, and create a new source of economic development that will help fuel Simsbury for the next 30 years.   There are many ways this might be achieved, this post will discuss just one.

Over the past few months, I have done some brainstorming with other Simsbury residents on a potential re-use of the Hartford site.  We have come up with an idea with a working name of the “Connecticut Innovation Lab.”  The purpose of this blog post is to the share the idea more broadly, solicit additional feedback, and begin building momentum for the project. 

The Idea

The goal is to repurpose the Hartford building into an innovation hub that will drive growth in four industries the state of Connecticut has identified as keys to our future economic growth.  The Connecticut Innovation Lab will house start-ups and the innovation groups of mid-to-large-sized companies.  The open environment will foster a sharing of best practices and the cross-pollination of ideas among companies and across industries.   The lab will serve as community center for business - hosting speakers, events, and collaborative symposia.

What the Connecticut Innovation Lab will do:

·         Bring hundreds of high-paying jobs to Simsbury

·         Establish Simsbury as an innovation center and business destination

·         Become a foundation for long-term growth of the grand list

·         Provide a new source of business to existing Simsbury-based companies

·         Serve as a model of responsible economic growth by leveraging Simsbury’s strengths to attract the people businesses that value them

What the Connecticut Innovation Lab will not do:

·         Fill 600,000 square feet of office space overnight

Connecticut’s growth drivers

The state has identified four industries where Connecticut either already has a critical mass of expertise, or we have the resources to develop them into major sources of economic output.  These are:

1.      Financial services/insurance

2.      Bioscience

3.      Precision manufacturing

4.      Clean tech

The core companies in the lab will either be in one of these industries, or develop solutions for companies that are.

Who will be at the lab?

The goal of the lab is to develop an innovation ecosystem.  Some members may play a more prominent role, but all are adding value to system.  Below is overview of type of participants we want to attract.

1.      Start-ups

Any Connecticut-based start-up would be welcome into the lab, though the recruiting focus will clearly be on companies that serve one of Connecticut’s growth drivers.  Some potential sources include:

·         Connecticut Innovations (CI) funded companies (CI – www.ctinnovations.com - is the state’s venture capital fund)

·         Non-lab space for UConn Incubator companies or graduates

·         Crossroads Venture Group (CVG – www.cvg.org - is a professional organization with over 400 members that promotes capital formation in Connecticut)

2.      Mid-to-Large sized companies

Between 6 and 12 mid-to-large companies that have a significant presence in Connecticut will be recruited to locate their innovation groups in the lab.  There may be multiple companies per vertical, but competitive overlap will be minimized.

What’s in it for larger companies?

·         Innovation equals profits.  A study by the American Productivity and Quality Center found that companies in the top 20% of profitability derived 42% of their profits from new products – a 50% greater share than their competitors.

·         Innovation is hard at the home office.  It is difficult for groups charged with helping companies “think differently” do so when they are an island in their headquarters surrounded by colleagues executing yesterday’s strategies. 

·         Innovation cannot happen in a vacuum.  Companies need exposure to new ideas and perspectives to re-imagine their own businesses.  When innovators are grouped together, the multiplier effect is exponential.

·         Innovation is aided by access.  By co-locating with start-ups, larger firms get access to technology and applications before their competitors.

3.      Work-from-homers

There are a significant number of local people that work from home in either 1-3 persons businesses or for firms whose primary office is out of the area. These people need a place to work to keep them engaged and creative.

4.      Foreign companies

Many companies looking for a North American beachhead want proximity to New York.  We can get them between 2 major cities – New York and Boston - at a much lower cost than metro New York.  Simsbury also has outstanding schools and lifestyle options that are attractive to companies coming from Latin America and Europe.  These companies can range from start-ups to mid-sized businesses.

5.      Technology sponsors

Lab companies will always be free to choose whatever technology solutions work best for their businesses, but on site support and advice will make technology sponsors’ services compelling.  Candidates include:

·         Amazon Web Services

·         Google

·         Rackspace

6.      Business service providers

·         Legal

·         Capital sources

·         Marketing/advertising

·         Administrative services

·         IT support

7.      Vendors

Companies providing services for fun or convenience.  Services may include include:

·         Cafe

·         Tap room of a local brewer

·         Shipping

·         Child care

·         Massage

8.      Education

A school (or schools) in the lab would be a tremendous benefit to students and companies alike.  Possibilities include:

·         K-12 (or some portion)

o       Montessori

o       Magnet schools

·         Post-secondary schools

o       Satellite campus for a university

o       Small college

o       Technical school

Lab model

The lab will be set up as an all-inclusive workspace where businesses and individuals can purchase flex space that may range from a single chair at table to an office, to several thousand square feet of space.   The model is based on Cambridge Innovation Center (www.cic.us).

The Challenge

There are plenty of challenges in plan this ambitious, but the central issue is one of control and costs. The Hartford has been extraordinarily cooperative with the town by including us in the process of finding the next use for their campus. The Hartford is not, however, in the Innovation Lab Building business.  While the town of Simsbury can take the lead in promoting the project, the operating and maintenance costs for the facility are estimated to be about $6 million per year, and Simsbury cannot afford to subsidize the project.

Potential solutions

If control and costs are the barriers to getting this project off the ground, the solution will come from cooperation.  If the Hartford does not find a buyer or major lessee for its property, here’s one way a cooperative solution could look that would allow Simsbury to pursue the re-deployment of the Hartford campus as the Connecticut Innovation Lab.

·         The Hartford donates the building to Simsbury; this gives the Hartford property tax relief and Simsbury control over the building.

·         Simsbury’s revenue stream on the building goes from property taxes to lease income (note: this is just for the building, not the entire campus). 

·         The state, through the Department of Economic and Community Development agrees to cover the operating costs of the facility.

·         In exchange for covering the costs, CI-funded companies receive 1-year of free office space and CI /DECD receives participation in net income on the facility

·         A successful Connecticut Innovation Lab makes the rest of the property, including the 40-acre parcel more valuable, and the Hartford can sell if for than it otherwise would.  Similarly, Simsbury’s tax revenues are higher on land with greater economic value.

There are hundreds of permutations on this concept and any solution acceptable to all stakeholders may look much different, but it is clear that getting the lab off the ground will require cooperation among The Hartford, the town, and the state.

Uses for the rest of the campus

If the lab is successful, potential uses for the rest of the campus include: 

·         Specialized business space (e.g. studios, lab facilities)

·         Retail

·         Urban-style housing (e.g. lofts, apartments)

·         Hotel-style housing  (Entrepreneurs from outside the region may want to stay over a couple of nights each week.  They could purchase a supplemental package from the lab that would entitle them to a certain number of overnight stays per month.)

·         Conventional hotel space

·         Retail

·         Fuel cell site