Two prime city lots remain vacant during Vermont's housing crisis. Will that change soon?
In two Vermont cities, there’s prime downtown real estate that could become much needed housing in midst of an historic shortage: State economists predict home prices could rise another 10% this year, and the statewide rental vacancy rate is less than 3%.
But these vacant lots in Burlington and Newport have languished for years, and it’s unclear if anything will change in the near future.
Nearly four years ago in Burlington, developer Don Sinex knocked down the Queen City’s downtown mall. The initial plan was to build a 14-story mixed-use development with retail, office and residential space. But the project stalled, and the hole in the middle of Vermont’s largest city remains.
In early February, Sinex and Dave Farrington, one of Sinex’s newest partners on the project, gave yet another update to residents during a virtual community meeting.
The proposed redevelopment has been scaled back and tops out at 10 stories. The new plan also eliminates most of the retail and office space and focuses on housing: the project will now have 426 units, including 84 affordable ones.
“After the frost is gone, and the land is more malleable … we hope to start construction in the spring,” Sinex said.
"After the frost is gone, and the land is more malleable … we hope to start construction in the spring."
Sinex, who did not respond to requests for comment, has repeatedly pledged over the years that construction would soon start. But deadlines have come and gone, and the pit has remained. Sinex said in February that the developers were now waiting to get a $130 million construction loan.
“I don't see anything that could disrupt that schedule at this point,” he said. “But one never knows, of course, this project has had its ups and downs over the years.”
The project still faces a legal challenge from a group of citizens who say Sinex violated the terms of a prior settlement agreement to add more parking.
Attorney John Franco, who represents the residents bringing the case, said they don’t want their lawsuit to hold up the project and are in talks with the developers.
“One alternative is to, rather than do parking, to do some more affordable housing,” Franco said. “That was one of the things that we had broached with them.”
Burlington is in dire need of more housing. The rental vacancy rate is below 1% percent, according to a February market report. City leaders are wary of making predictions after years of broken promises and delays.
When asked if he was confident that the development would be built, Mayor Miro Weinberger didn’t directly answer.
“Whether they will actually be able to take the next step is something that really only they can answer,” Weinberger said. “And again, the city will continue to play as supportive a role as we appropriately can in that.”
"Whether they will actually be able to take the next step is something that really only they can answer."
Some 80 miles northeast, the city of Newport is also struggling with a vacant lot in the center of its downtown.
The block on Main Street was razed in 2015 to make way for a mixed-use development, but shortly after demolishing the buildings the developers, Ariel Quiros and Bill Stenger, were accused of misappropriating millions of dollars raised from foreign investors. Both men have since pleaded guilty to federal fraud charges related to a separate project.
“I haven't heard of much over the past several months, so I'm kind of in the dark,” said Newport City Manager Laura Dolgin.
The city has no plans to buy the property, Dolgin said, but has worked to make Newport attractive to developers.
“Our strategy has been to adopt the outdoor recreation economy, to have a city beautification plan, to emphasize our restaurants and events on Main Street,” she said.
The city is also revising its zoning rules to allow more housing development in the city, which, Dolgin said, could help a future developer who buys the empty block on Main Street.
Rural Edge, an affordable housing development agency in the Northeast Kingdom, would be open to building housing at the site, said executive director Patrick Shattuck. But Rural Edge would need additional partners.
“I think anytime you have a building that large, there needs to be a solid commercial program and commitment to what is going to happen on the ground floor in a building that is … really at the heart of a downtown,” Shattuck said.
The biggest hurdle to developing the Main Street block is the price. Recently the state of Vermont considered building a new courthouse at the site, said Jennifer Fitch, the Commissioner of the Department of Buildings and General Services. The state offered $1.1 million for the property, but the receiver wanted $2.5 million.
“The asking price was above the appraised value,” Fitch said. “And the state of Vermont is, in statute, supposed to pay market value for things.”
Michael Goldberg, the receiver, did not respond to requests for comment.
"People that know the area realize that you can't spend a couple million dollars on a vacant property then have to improve it and spend another $10 or $15 [million] to build it out, because your return just isn't there."
The state isn’t the only buyer to be scared off by the price. About a year ago, some potential buyers reached out to Jim Campbell, who owns a real estate company in the area. But the prospective buyers, who Campbell declined to name, couldn’t afford what the receiver was asking.
There’s a big difference in the development opportunities offered in Burlington — a city of nearly 45,000 — and Newport, which has a population just over 4,400, Campbell said.
“People that know the area realize that you can't spend a couple million dollars on a vacant property then have to improve it and spend another $10 or $15 [million] to build it out, because your return just isn't there,” he said.
And even though Newport is on the upswing, Campbell said the buyer of the Main Street site will need to be patient.