The Business Council of Fairfield Council

THE NEW CANAAN MEN’S CLUB

February 2, 2018

The Business Council of Fairfield County is a private, 501(c)6 corporation headquartered in Stamford, serving businesses and major non-profit institutions. Founded in 1916, The Business Council provides issue leadership and growth services throughout Connecticut, with greatest focus on Fairfield County.

Our initiatives accelerate enterprise growth and

job creation, develop and retain a diverse talent pool, and support public-private partnerships in the pursuit of high performing, resilient infrastructure.

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Gathering data and building awareness.

Anticipating and preparing for the future.

Connecting leaders to place – and each other.

Understanding and translating the voices of multiple constituencies so that sustainable solutions – not temporary fixes - are found.

Engaging members to take action on the most important issues where we are most likely to make a catalytic impact.

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Place

Trends

Demographics

Elected leaders

Acceptance of change

Talent recruitment, retention and development.

Cost and regulatory framework.

Access to customers and prospects.

Peer professional relationships.

Connectivity to drivers of economic and social change.

Culture of permanence or transience. (Fight or flight)

Brand.

Place contains and presents challenges and opportunities.

Misidentifying or misdefining place will lead to suboptimal strategies and unintended outcomes.

Connecticut has regional cultures and economies without regional governance.

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NYC

BOSTON

L.I. Sound

Westchester County, NY

HARTFORD

◦ Transportation infrastructure Metropolitan Transportation Authority (MTA) I-95, Merritt-Hutchinson River Parkways Airports: LGA, JFK, EWR, HPN

◦ Media (broadcast, NY dailies) ◦ Federal Reserve Bank of New York (2nd District) ◦ Housing ◦ Workforce ◦ Long Island Sound ◦ Culture and recreation opportunities ◦ Health care (hospital systems) ◦ Sports team allegiances ◦ Impact of Federal government actions

◦ State government Governor and other statewide constitutional officers

General Assembly Taxes, regulation, etc. ◦ U.S. Senators ◦ Impact of Federal government actions

◦ Transportation Infrastructure I-91, I-84, Rt’s 44 & 2 Airports: Bradley, Green, Logan

◦ Media (local broadcast, Hartford Courant) ◦ Federal Reserve districts ◦ Housing: 60-90 minute drive ◦ Workforce: 60-90 minute drive ◦ Long Island Sound: Hartford is inland, on

Connecticut River ◦ Culture and recreation opportunities ◦ Health care ◦ Sports team allegiances: Boston ◦ Perception of state government as dominant

force in daily life ◦ State government as largest employer and

industry

Highway infrastructure investments in 1950’s – 1970’s made universal, point to point, personal transit economically feasible. (Car)

Economic growth patterns created by automobile led to decline of established cities and urban centers.

Decline of NYC led to HQ “flight to suburbs” where costs were lower, high quality labor was plentiful (women entering workforce), public spaces were safer and continued proximity allowed for operational continuity.

HQ’s weren’t anchored in Connecticut – and M&A consumed many. ◦ 34 Fortune 500’s in Fairfield County in 1990.

◦ 10 today.

Financial services industry found HQ logic (cost, talent, proximity to NYC) compelling. Telecom technology enabled industry movement in the ways highways had enabled earlier arrivals.

Consulting and professional services communities followed HQ’s and financial services.

Some indigenous industries (manufacturing-based) declined, while others (health care, education, retail and consumer services) grew.

Improved conditions in NYC in 1990’s and 2000’s demonstrated that earlier “flight” was also expansion of the regional economy.

The “new” in NYC has long been the “next big thing” in Fairfield County.

The “new” in NYC has long been the “next big thing” in Fairfield County. ◦ Shift from agriculture to manufacturing ◦ Technology adoption: rail, electricity, telephone ◦ Shift from manufacturing to knowledge work ◦ Demand for educated workforce ◦ Enterprise leaders physically separated from places of

production and masses of customers ◦ Capital as industry vs. ingredient ◦ Modern definition of HQ ◦ Specific industries

Financial services

Digital media production and distribution

Census: CT growth slower than US, faster than NY and NJ

CT cities growing.

US Births: Minority officially majority

The baby boom wave continues to move through workforce, extending/reshaping expectations and age distribution.

1990 2000 2010

Number % Number % Number %

Native pop 726,684 88% 733,529 83% 723,015 80%

Born in CT 384,885 47% 399,184 45% 390,849 43.2%

Born other state 314,957 38% 308,179 35% 305,791 33.8%

Born out of US 26,842 3% 36,166 3% 26,375 2.9%

Foreign born 100,961 12% 149,038 17% 182,327 20%

TOTAL Pop 827,645 882,567 905,342

US Census, 1990, 2000 and 2010 from 2006-2010 5-year estimates; DP02 SELECTED SOCIAL CHARACTERISTICS IN THE UNITED STATES

2.7 0.3

50.1

2.8

17.5

26.6

North

America

Oceania

Latin

America

China 3% India 6%

Haiti 4% Brazil 7% Jamaica 5% Ecuador 6% Mexico 5% Guatemala 5%

UK 4% Italy 3% Poland 3%

American Community Survey, 2005-2009 5 year estimates

Babies Born to Foreign Born % of Pop that is Foreign Born

Fairfield County 1 in 3 (34.5%) 20%

Bridgeport 1 in 2 (46%) 27%

Danbury 1 in 2 (51%) 32%

Greenwich 2 in 5 (41%) 23%

Norwalk 1 in 3 (32%) 23%

Stamford 1 in 2 (52%) 36%

CT 1 in 5 (22%) 14%

Westchester 1 in 3 (36%) 25%

NYCo 2 in 5 (37%) 29%

NYS 1 in 3 (31%) 22%

US 1 in 5 (21%) 13% American Community Survey Estimates, US Census, 2008-2012 5-yr estimates

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In 2000, the median age of the US population reached 35.3 – the highest in our history; 37.3 in Fairfield County

In 2010, the median age in US was 35.8 and 39.5 in Fairfield County

Of the 5 yr age groups 60-64 experienced largest growth in US (56%) and in Fairfield County (38%) from 2000- 2010

US Census, 2000 and ACS 2008

Regional trends and patterns

Connecticut context

Implications for Fairfield County

Understanding context is the first step toward purposeful action.

Economies evolve primarily organically, not jurisdictionally.

Policymakers tend to act within jurisdictions.

Tri-state economy ◦ Three states and a major city – four strategies.

Fairfield County ◦ Twenty-three municipalities – twenty-three strategies.

Businesses locate, operate and adapt within economies, influenced by jurisdiction, but not controlled by them.

Urgent ◦ State fiscal condition

◦ Business climate/reputation

◦ Federal tax and regulatory changes

◦ 2018 state elections

Strategically important ◦ State fiscal condition

◦ Transportation underinvestment

◦ Education and workforce development

◦ Competitiveness of cities

◦ Developing/revitalizing growth industries

CT has not replaced all jobs lost in recession. Fairfield County has recovered all. High office vacancy rates in cities ◦ Densification and economic change in key industries and

nature of HQ’s. ◦ Organic growth being placed elsewhere in search of

talent, customers, infrastructure, incentives and long term cost certainty.

Growth: Synchrony Financial, Sikorsky, hospital systems,Charter Communications, Preferred Brands, Gartner.

Relocation: Henkel, Sema4, Deutsch Family Wine & Spirits

Slow labor pool growth

Emerging skills shortages

Aging infrastructure

Income and achievement gaps

Unattractive cities in an age of urban (and especially millennial) renaissance.

Vulnerability to sea rise/climate change

Public sector post-employment burden

Focus on crises crowding out focus on future

Highly productive workforce

Proximity to NYC

Immersion in NYC economic trends

Access to virtually unlimited private capital

Extremely desirable smaller communities with great quality of life and excellent schools

Multiple population centers on rail lines

Continued foreign and domestic immigration

FY18 Gubernatorial and legislative agreement to avoid new taxes (after multiple years of tax increases). ◦ Entering a reelection season ◦ Continuing impact of “Diagnostic” study

• Addressed deficit caused by: Mismatch between spending levels and revenue base.

Inaccurate forecasts of economic growth.

Remix of jobs, with different compensation levels.

Boomers retiring from state and municipal governments (including schools) with Ozzie & Harriet era benefits.

State subsidies of “home rule” service requirements (e.g. 911 systems, schools, information technology).

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Bipartisan.

Legislatively-driven.

Deals with today and a bit of tomorrow.

800 lb gorilla still alive and well (post retirement liabilities for public sector workers)

No rolling back of sales tax exemptions. No income tax increases. Major structural budget reforms, including placing under

the spending cap: pension payments (in 2023) and teachers’ pensions (in 2027) and federal grants.

Bond cap of $2 billion annually. Phase-in of a revenue cap that would specify the

percentage of revenues that must go toward expenditures, debt and Rainy Day Fund.

Phase-in of estate tax alignment with federal level. Towns will not have to cover teachers’ pension costs, but

teachers would be required to contribute an additional 1% toward to their pensions.

Sweeps of various energy funds into the General Fund.

Reduction of the car tax from 37-39 mills in 2018 and elimination in 2019. (Note: towns and state will work together to find a means to recoup or replace this revenue over the next two years.)

Cuts in each year of the biennium to UConn totaling $65 million, and $14 million to the state university system.

Mandate relief for towns in the form of minimum budget reserve requirements, arbitration, prevailing wage adjustments for new construction, and Board of Education contracts.

Increases in tobacco-product taxes. Cuts to Earned Income Tax Credit. Hospital tax deal - but not clear that hospitals drop

lawsuits which Malloy insisted had to be part of the deal

Formula-driven reductions in matching federal funds as state expenditures are reduced.

Potential cascade effect of service reductions.

Greater citizen dissatisfaction with municipal and state government. ◦ CT Republicans likely to continue to increase their presence

in General Assembly and to capture governorship.

Some longer-term improvement in state and municipal structural finances as a result of spending cap, bond cap and binding arbitration reforms.

2018 Connecticut elections will be driven by consequences of financial condition and fiscal decisions.

Connecticut didn’t get rich by being dumb. (Action will be taken.)

Connecticut won’t get well without effort. (Actions will be unpleasant.)

State will embrace: ◦ Regional service delivery ◦ “Gene pool as talent pool” ◦ Cities as appealing engines, rather than unattractive dependencies

State legislature will (after the gubernatorial election): ◦ Reopen state worker labor agreement. ◦ Continue the process of returning responsibilities to the towns.

(Home rule will include greater level of home responsibility.) ◦ Modify and increase the sales tax ◦ Adopt electronic fare collection ◦ Use public private partnerships for major infrastructure

investments

Metro NY region has about 10 million jobs now.

2 million new jobs possible over next 20 years

NYC Planning, NYMTC and RPA project future growth (today to 2050) to be outside of the City.

North New Jersey effectively cut off from NYC overflow by river crossing congestion and rail tunnel repair.

Bronx will become the next Brooklyn – but will take time and can’t absorb all growth.

Westchester and Fairfield Counties are positioned for near term absorption and long term expansion.

Ecosystem of technology, capital, universities, urban lifestyle options, diversity. ◦ Entrepreneurial and reinvention activity. ◦ Third largest concentration of hedge funds in world. ◦ 31K undergraduates; 5.6K graduate students. Multiple new

degrees. ◦ Growing cities. South Stamford hot. ◦ Uber, breweries, co-working spaces, farm to table, etc.

Tech industry growth offsetting right sizing of financial sector. ◦ Priceline, Datto, Indeed, Kayak, Gartner, Sema4.

Health care as industry, in addition to human service. ◦ 5 of Fairfield County’s 10 largest private sector employers are

hospitals.

Food & beverage entrepreneurship and investment ◦ Nestle Waters, Diageo, TastyBite, Bigelow Tea…and much, much

more.

Digitization of entertainment and published products and distribution. ◦ NBC Sports and Media, Blue Sky Studios, WWE.

Population growth driven by immigrants. ◦ International: 20% foreign born, including 1/3 of

Stamford college degree holders. 50+% of babies in Stamford Hospital – state’s highest educated, safest, most economically vibrant city -born to immigrant mothers.

Millennials seeking urban lives: 8,000 single individuals in downtown Stamford. $108K average per capital income 1/3 don’t own cars. 28 % don’t have driver’s licenses Stamford in Top 10 nationally for restaurants per capita Two craft breweries have opened.

Fairfield County’s strengths (wealth, skills, proximity to NYC, enterprise and cultural connectivity) will outweigh/neutralize Connecticut’s drag effect.

Connecticut’s economic growth will require fiscal discipline and investment in fundamentals (infrastructure, workforce, marketing.)

Rebalancing of investments (not incentives) toward areas most likely to grow is required in order to generate sustainable resources to invest in areas least likely to grow.

Most Connecticut cities and all communities on the New Haven Line are capable of near term (1-3 years) growth.

Connecticut is in a ditch.

Fairfield County is in the slow lane.

New York City, our engine for growth, is reaching physical capacity constraints.

NYC solutions to NYC issues will benefit contiguous regions, east of the Hudson River, with ease of entry and compatible cultures. (That’s us.)

Our growth will stabilize Connecticut while it takes necessary action.

Next 3-5 years will be painful statewide, mildly irritating in Fairfield County.

The future, which comes to Fairfield County first, is bright.

Thank you!