Sacred Heart University announced Monday that it will purchase the former General Electric headquarters in Fairfield for $31.5 million.
“This is a transformational moment in the history of Sacred Heart University,” Sacred Heart President John J. Petillo said in a statement.
After a national search, General Electric moved earlier this year from the 66-acre suburban Fairfield location to downtown Boston. Sacred Heart’s campus is located in Fairfield.
“With this property, SHU has a unique opportunity to contribute to education, research, health care and the community. It’s a once-in-a-lifetime opportunity for us, and it also reflects our long-standing relationship with GE that includes former GE CEO Jack Welch, for whom our College of Business is named,” Petillo said.
Mike Tetreau, Fairfield’s first selectman, said he understands the benefits of the purchase to Sacred Heart: “I know in the long run that it’s good for the university and our community.”
However, he said, in the short run, “I am very concerned about the tax revenue loss to the town and the challenge we have to make that up.”
Tetreau said the property was appraised at $70 million to $80 million and General Electric paid $1.6 million annually in property tax.
The property value of the campus will likely now be reduced significantly, Tetreau said. He expects the town will be out more than $1 million a year in taxes even with the state’s Payment in Lieu of Taxes Program, which offers state reimbursement on tax-exempt properties like universities.
Tetreau said the town was hoping the property would go to “a business entity” and “had clearly expressed an interest [to GE] that we wanted to see the tax revenue protected and we hoped they would do everything they could to protect the sale to a private sector company.”
Sacred Heart plans to use the property as an “innovation campus,” to expand its new School of Computing, which is focused on computer engineering, computer gaming and cybersecurity, and to develop programs in STEM fields such as health and life sciences, science and technology.
The university also plans to move certain elements of its Jack Welch College of Business to the new campus, including its new hospitality management program that will make use of facilities both at the GE site and Sacred Heart’s recently acquired Great River Golf Club in Milford, Conn.
Petillo said the purchase will “support our desire to offer new and innovative programming and expand our graduate offerings. Most importantly, it will serve to further enhance Sacred Heart University’s overall standing and competitiveness among national universities.”
Michael Kinney, senior vice president for Finance & Administration for the university, said the the purchase was a good deal for the college – increasing the campus size to 200 acres, not including the golf course. He noted that the university had been considering building a 70,000 square-foot new academic facility at a cost estimated at $35 million to $40 million.
“Now we are purchasing a facility that’s less than two tenths of a mile from campus, getting about nine times the space, 800 parking spaces on 66 acres for less,” than the cost of a new academic facility, he said.
He said the university has been tight for space and had moved some of its departments – including the business office – into leased space off campus. He expects that within three to six months, the business office will be moved to the new campus.
“This gives us the ability to go further,” Kinney said. “It lessons the tightness that we have. We have been trying to at times put that old ten pounds of baloney into a five pound bag … This actually gives us the opportunity to move things into a better situation.”
Kinney said the surrounding community will also benefit from the purchase. “The growth we will experience as a result of this purchase will increase consumer spending in the community by Sacred Heart students and parents—a number that already stands at close to $56M in the state,” said Kinney.
He said that “new direct and indirect spending driven by operational and capital spending by the University, its employees, new students and their families and visitors would be a minimum of $27-33 million annually.”
Tetreau said the town will be looking at four strategies to cover the loss in tax revenues, including adjusting town expenditures downward; expanding the grand list through economic development; raising taxes; and meeting with Petillo to discuss ways the university can work with the town to mitigate the tax impact.
“In the long run, I think it helps our community,” Tetreau said. “In the long run, it will help commercial growth. It will attract new business entities and projects to our town… As with all these things, you have to survive the short run.”
Susan Bishop, spokeswoman for GE, said the university heavily marketed the property and set out “to find the best buyer for the property.”
She said the more than 25 interested parties toured the site and that the corporation negotiated with “a lot of different entities,” but “ultimately Sacred Heart was the best buyer.”
She also said that GE’s property taxes amounted to less than 1 percent of the town’s real estate revenue.
A statement from Harri Singh, GE Global properties leader said, “We are pleased to sell our property to a world-class local university and are happy that the campus will continue to be used for learning and innovation, two hallmarks of both GE and Sacred Heart.”