McDonald On McPlaza Overhaul
State Senator Andrew McDonald has questions about the recent Rell announcment that Connecticut interstate service plazas have been awarded to a Subway restaurant franchiser in a 35 year contract deal that starts December 7th, 2009. These service plazas are located along I-95, the Merritt and Wilbur Cross Parkways and I-395. The dealmakers are preferred developer Doctors Associates/Paul Landino (DAI), which represents Subway, and global private equity firm The Carlyle Group.
Peter Lattman of The WSJ opined:
The so-called public-private partnership calls for Carlyle and its partners to invest $178 million in the service areas. Carlyle-owned Dunkin’ Donuts restaurants will be added to the rest stops. They will also house Subway sandwich shops, whose parent company is joining Carlyle in the investment.
Though a relatively small deal, the transaction could serve as a harbinger of bigger things to come, as state and municipal officials are looking to private capital to meet their infrastructure needs amid deep budget shortfalls.
Rells’ presser explained the whole job generation thing:
About 750 people are currently employed at the various service plazas. It is expected that 100 construction jobs will be created during the first five years, and that once all the service plazas have undergone transition approximately 1,000 people are expected to be employed. Equally as important, the majority of the companies involved are Connecticut-based.
Note that Rell did not explain the deal struck with SEIU, Service Employees International Union, who will provide the custodial jobs for the plazas on I-95.
The goal apparently is to transform the state’s 23 service plazas along the major highways by adding more types of restaurants and upgrading facilities. Two will be rebuilt, the others transformed. Sounds nobel right? Here’s what’s going to happen–8 service stations get to keep their McDonald’s but Subway, Dunkin’ Donuts, and a convenience store, will be added according to a Rell Press release. The fuel component, which had been serviced by Exxon for over 20 years is now Alliance Energy, a New England petroleum-marketing distributor, who will run the fuel and convenience stores.
Aside from the incredible lame choices presented, the real issue should be on what the financial deal for arguably the most valuable commercial realestate in the country.
Christine Stuart of CT NEws Junkie reports:
Upon learning of the new contract, Sen. Andrew McDonald, D-Stamford, said he wants the nonpartisan Office of Fiscal Analysis to analyze the contract and the revenue sharing agreement with the state.
“We need to figure out what this means to the state in terms of revenue on an ongoing basis,” McDonald said Thursday in a phone interview. He said the agreement doesn’t require legislative approval, but “we need to understand what it means for the state.”
According to Department of Transportation officials the new contract is expected to bring in at least $248 million in revenues to the state over the next 35 years.
“This is extraordinarily valuable real estate that Connecticut is putting in the hands of these operators, and the people of Connecticut need to know what, if any, real revenue gains they are going to see over the next three decades,” McDonald said.
“We would welcome any review by anybody including OFA,” Judd Everhart, a Transportation Department spokesman, said Friday.
Everhart said revenue wasn’t the primary consideration.
“We were focused on getting the best possible services,” he said.
Under the former contract, Connecticut received “too small a portion of the hundreds of millions in revenue, and the plazas had not received significant improvements in 25 years,” McDonald said.
