State Proposes $52 Million In Subsidies To Giant Hedge Fund [Courant]

September 16, 2015

Hartford Courant

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.

At the time the company began renegotiating for a package, it had $1,400 employees — almost 200 more than in 2012 — and it projects it will add an additional 750 over the next 10 years.

The state intends to borrow $17 million and then lend it to the hedge fund at 1 percent interest. The entire loan could become a gift, depending on how Bridgewater meets its job creation targets. But the exact terms are still being negotiated, the state said.

The state is giving Bridgewater Associates $2 million for employee training and up to $3 million for using renewable energy at its Westport campus.

In exchange for spending $505.5 million on the project, the hedge fund can qualify for up to $30 million in tax credits over the next 10 years under the Urban and Industrial Sites Reinvestment program. 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.

Senate Minority Leader Len Fasano said the fact that an office park in Westport can qualify in a program designed to help the state’s distressed cities suggests to him that the urban tax credit program’s guidelines should be tightened.

The law says that the project should receive the taxpayer subsidy only if the state has determined that it will collect more in taxes as a result of the hires than if the expansion didn’t happen, and only if the project was “economically viable only with use of the urban and industrial site reinvestment program.”

Fasano continues to question whether the hedge fund — whose founder is a billionaire — needs a subsidy to make the investments.

He said Tuesday: “I think it was a really bad deal before when they were moving [to Stamford]. Now I think it’s an even worse deal now that they’re staying. When the head of the hedge fund is making billions of dollars us giving him tens of millions of dollars is a rounding error in his taxes.”

Fasano said the money could have been better spent in Small Business Express — another state subsidy program limited to companies with fewer than 100 workers. The state has dedicated more than $200 million to that program.

Department of Economic and Community Development Commissioner Catherine Smith said, “I can’t disagree there are other sources where they could find capital,” but she said she still believes the tax credit portion of the package follows the spirit of the law because founder Ray Dalio was considering moving the company to New York.

“If we haven’t been able to put an economic incentive in front of them, there was a chance they would leave the state,” she said.

And, Smith said, because of the high pay of Bridgewater employees, the state will receive more in income taxes from those new workers than it is giving the company, including the 3 percent interest the state has to pay to borrow the money it’s distributing.

“As a taxpayer, you should feel pretty good that these dollars that we put into these deals that are going to be returned to the coffers,” she said.

The State Bond Commission has to approve the entire package, but it has never rejected one of the First Five packages before. Despite the name, there are 13 large companies that have received the incentives packages. There are two remaining slots in the program, and Smith said she expects to seal deals for those slots before it expires.

The next meeting of the State Bond Commission is scheduled for Sept. 25, but because negotiations have not concluded, the department will not ask for it to be considered then. Smith said it could go up for a vote either late this year or early next year