DECD defends First Five program following Alexion layoffs

DECD defends First Five program following Alexion layoffs


HARTFORD — The Department of Economic and Community Development is fighting back against calls for legislative oversight of the controversial First Five program.

Commissioner Catherine Smith told the Finance, Revenue, and Bonding Committee Friday the requirement could force recipients to share sensitive information publicly to get legislative approval, something some companies are unwilling to do.

The conflict could deter companies from applying to the program, which provides low-interest loans to entice larger companies to move to or remain in Connecticut. Portions of the loans can also be forgiven if certain benchmarks, such as employment levels, are met.

“I believe it would put us at a severe disadvantage for being able to recruit and retain some of our larger companies here in the state,” Smith told the committee.

The remarks came during a public hearing on a Republican bill that would require Finance, Bonding and Revenue Committee approval before DECD could expend any more funding under the program, officially called First Five Plus because it has since been expanded to offer funding for up to 20 companies.

The proposal was submitted earlier in the legislative session, but Friday’s hearing was just days after Alexion Pharmaceuticals announced its plan to lay off 210 employees. Alexion accepted $51 million in loans and grants through First Five to move its headquarters from Cheshire to New Haven in 2016.

The company was awarded a 10-year loan of $20 million at a rate of 1 percent, with principal and interest deferred for five years, as well as loan forgiveness of $16 million to $20 million based on the creation of between 200 and 300 full-time jobs. It has also received a $6 million grant for lab construction, and tax credits of up to $25 million over a period of 10 years.

ESPN, one of the original First Five recipients, also underwent a round of layoffs recently. Smith said Friday that the 15 companies currently in the program have a combined 3,759 employees after the layoffs, 759 more than their collective minimum.

Still, Republicans continue to question whether the state is properly monitoring whether companies are meeting requirements.

“I think there’s legitimate questions about how successful the program has been and what results it has generated,” Sen. Len Suzio, R-Meriden, a member of the finance committee, said after Friday’s hearing.

Rep. Christopher Davis, R-Ellington, pointed out the entire General Assembly voted on incentive packages for United Technologies Corp. and Lockheed Martin subsidiary Sikorsky.

“If in fact it’s true that this (First Five) program is so successful and doing great things, would (committee approval) be something that’s more of a formality?” he asked Smith.

Smith said UTC and Lockheed Martin are used to such public debates as federal defense contractors, but other companies might not welcome the same process.

She said other publicly traded companies might be concerned that public discussion could affect stock prices and business activity. Others could have legal restrictions on the information they can share.

“It may not be the way the government runs, but it is the way a lot of private companies run,” Smith said.

Some Democrats on the committee backed Smith, saying the Republican proposal would result in too much overstepping by the legislature.

“It seems like we’re micromanaging,” said Rep. Hilda Santiago, D-Meriden.

Santiago said she understands the concerns — a recent state audit found a lack of DECD oversight of similar programs — but said the solution could be allowing the legislature to call for more auditing, not authority over the agency. 203-317-2266 Twitter: @reporter_savino

Support Quality Local Journalism

Latest Videos