What's Happening?
Submarine builder General Dynamics Electric Boat is set to receive up to $25 million in state funding from Connecticut to support its redevelopment of the Crystal Mall in Waterford. This funding package includes up to $20 million in tax credits for urban
and industrial re-investment from the state Department of Economic and Community Development (DECD) and a potential $5 million sales-tax exemption from Connecticut Innovations. Electric Boat acquired the largely vacant mall last year and plans to transform it into a company campus, with training and testing areas, as well as offices. The company estimates that 4,000 to 5,000 employees will work at this new hub by mid-next year. Governor Ned Lamont, a Democrat, supports this funding, with his spokesperson Cathryn Vaulman stating that the project is a significant adaptive re-use that will create jobs and investments. State Sen. Ryan Fazio, a Republican, expressed a more cautious view, questioning the effectiveness of one-off deals for companies.
Why It's Important?
This state funding is crucial for Electric Boat's expansion and its ability to meet the U.S. Navy's growing demand for new submarines. The company recently secured record-breaking federal contracts totaling approximately $77 billion for 14 new ships, including Virginia-class and Columbia-class submarines. The redevelopment of Crystal Mall into a company campus will facilitate Electric Boat's 'decompression plan' to reduce congestion at its Groton shipyard, enabling faster and more efficient shipbuilding. This initiative is particularly important as the company aims to hire about 8,000 people this year across its facilities. The project is expected to create thousands of jobs in Connecticut and revitalize a struggling commercial property, returning it to the town's tax rolls. However, the use of public funds for a private company's expansion has drawn scrutiny, with some questioning whether such 'special deals' are the most effective economic policy compared to broader tax reductions.
What's Next?
To receive the full $20 million in tax credits from DECD, Electric Boat must invest $255 million in the Crystal Mall redevelopment by the end of 2028 and meet specific job retention and creation targets. This includes maintaining at least 16,646 positions in Connecticut through 2035. The company could also receive the full $5 million sales-tax exemption from Connecticut Innovations if it reaches 16,625 jobs in the state by 2031. The new campus is expected to be operational, with most employees on site, by the middle of next year. The success of this project will likely influence future state decisions regarding public funding for corporate expansions and adaptive re-use projects. The debate over the efficacy of targeted incentives versus broader economic policies is also expected to continue, particularly as State Sen. Ryan Fazio, a Republican, has voiced concerns about such deals.
Beyond the Headlines
The redevelopment of Crystal Mall by Electric Boat represents a significant shift in how struggling retail spaces are being repurposed in the U.S. This trend of converting defunct malls into industrial or corporate campuses highlights the evolving economic landscape and the challenges faced by traditional retail. The project also underscores the critical role of defense contractors like Electric Boat in regional economies and national security. The substantial state investment reflects a strategic decision to support a key industry and address local economic revitalization simultaneously. However, it also raises broader questions about the balance between public and private sector responsibilities in economic development and the potential for 'corporate welfare.' The long-term success of this model could set a precedent for other states grappling with similar issues of declining retail infrastructure and the need for job creation in specialized industries.
