capital region development authority
Freimuth adds: "But my gut tells me there's probably something there."
Freimuth's cautious optimism is backed up by at least two potential investors approaching the authority to talk informally about such a project, he said.
Now, the XL Center loses about $2 million a year, an amount subsidized by the state. The authority estimates that the arena will reap about $2 million a year after renovations. But Freimuth said that does not include all the taxes, including sales and parking, that are produced by the arena's operations. They are not counted and go directly into state coffers, he said.
Carl S. Hirsh, managing partner at Stafford Sports in New Jersey, a sports venue consultant working with the authority, said the city will have to demonstrate it has something to offer private investors evaluating the XL's Veterans Memorial Coliseum.
"Maybe it's a bet on real estate in downtown, " Hirsh said. "You're not betting on getting the Whalers back in 10 years and you're not getting a [major league] professional team. The concert business has been hit because of the casinos."
Traditionally, private money flowed into public projects through sponsorships and naming rights, funding that could be significant. But in recent years, public-private partnerships — their parameters written in state law — have grown in popularity nationally with cash-strapped states looking to fund public projects.
Connecticut enacted such as law in 2011 but it went nowhere. State officials say it was too restrictive, requiring 75 percent of financing to come from private investors. It also forced private investors to follow state requirements for bidding, which force up costs and dig into investment returns.
Freimuth said he is pushing to relax those standards and to allow the split of investment to vary from project to project, as part of efforts to revive the statute in this session of the General Assembly.
The downtown area has attracted private funding in recent years, chiefly for the conversion of vacant properties into apartments, but those were projects pursued by private developers with the help of public funding. Office buildings in the central business district also have been purchased by investors in increasing numbers.
The authority's move — prompted by calls from lawmakers and support from Gov. Dannel P. Malloy — comes as funding for an XL Center renovation faces an uncertain future in the legislature.
Last month, the General Assembly's finance, revenue and bonding committee approved $75 million over the next two fiscal years, as part of a much larger bonding package. The amount fell far short of the $125 million sought by Malloy and still must clear votes in the House and Senate.
Meanwhile, Republican legislative leaders promised to fight funding, arguing it should come exclusively from private investors, especially with the state's deepening budget troubles.
The authority sees the renovations as critical to the long-term survival of a 40-year-old arena that is well past its prime. The arena still has its marquee tenants, including the University of Connecticut men and women basketball teams, UConn East ice hockey and the minor league Wolf Pack hockey team.
But the venue has lost concert business to the state's casinos and will find more competition for events when MGM opens its $950 million casino and entertainment complex in Springfield next year.
As legislators wrestle with budget plans for the next two years, some said the prospect of private money could help make the renovation to be stretched over three or four fiscal years more acceptable to legislators.
"For the state to foot the whole cost of this renovation, it is a very large number, " House Speaker Joe Aresimowicz, D-Berlin, said. "If the managing folks at the XL Center and the organization in charge of running it can find other funding, it helps us a great deal."
Sen. John W. Fonfara, D-Hartford and co-chairman of the finance committee, has suggested the Mashantucket Pequots and Mohegans invest in the renovations as part of their proposal to establish a third casino in East Windsor. Such an investment, Fonfara said, would help support a venue that has lost concert business to Foxwoods Resort Casino and Mohegan Sun.
Rep. Christopher Davis, R-Ellington and ranking member of the legislature's finance committee, has been critical of upgrades at the XL Center in recent years when other programs and projects are getting cut.
"I certainly wish they had started this process a long time ago, but it is certainly encouraging to hear they are interested in going down that road because I think, quite frankly, that is the only true, viable option that the XL Center really has, " Davis said.