Washington County Economic Report: Downtowns garner much of the economic development focus

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Washington County Economic Report: Downtowns garner much of the economic development focus

Mon, 11/11/2019 - 3:07pm -- katie

Photo: Susan Clark stands behind the counter waiting to serve customers at Rabble-Rouser on Main Street in Montpelier. The store not only specializes in chocolate goodies but also doubles as a bar and lounge serving a variety of drinks. Ben Carpenter photo.

by Bruce Edwards Vermont Business Magazine Downtowns are the heart and soul of nearly every community – the political, commercial and cultural hub of cities and towns.

The economic viability of a downtown and its positive image can feed on itself and help attract new business, even beyond the central business district.

In central Vermont, Barre, Montpelier and Waterbury are clustered together in the Capital Region and benefit from the employment base of several thousand state workers as well as private sector employment anchored by insurance, financial services, health care, retail and manufacturing.

The Barre-Montpelier unemployment rate for September was 1.9 percent (not seasonally adjusted) was tied for the second lowest unemployment rate in the state with Burlington-South Burlington. White River Junction had the lowest rate at 1.8 percent. 

For all of Washington County, the September unemployment rate stood at 2 percent. 

The state’s unemployment rate for the month was 2.2 percent, up one-tenth of a percent from August.

Median household income for Washington County was $60,602 in 2017 compared to a statewide median of $57,808.

 

Montpelier

Dan Groberg of Montpelier Alive said the state’s capital is riding a wave of positive developments that have given downtown Montpelier a major lift.

“There’s been a lot of strong activity over the course of the last year,” said Groberg, executive director of the downtown group. “In the last 12 months, we’ve seen the opening of the French Block, which brought affordable housing to a space that had been vacant for 80 years.”

He said the downtown also received a major boost with the opening of the Caledonia Spirits distillery, retail shop and tasting room. “It’s really brought a lot of energy down Barre Street,” Groberg said.

Nearing completion is a new transit center with housing on the upper level.

Groberg said several retail stores have opened within the last year: Rabble-Rouser, Hippy Chickpea, Notion Fabric & Craft, Rebel Heart, and Shippee Family Eyecare.

Rabble Rouser (formerly Nutty Steph’s) on Main Street is a chocolate lover’s delight. According to Groberg, it’s not only a chocolate factory and retail store but also combines a bar and lounge serving beer, wine, CBD drinks and food. It’s located in the former One More Time retail space that’s been vacant for several years, he said.

Also co-located in the space is a florist shop (Regal Floral Design) and Jamaican food offerings from Kool Runninz.

Hippy Chickpea on Elm Street offers a Mediterranean menu. 

“So it’s really been an exciting, positive year in Montpelier,” Groberg said. “We essentially have very little commercial vacancy and very little residential vacancy at this point.”

He said Stonecliff Veterinary Surgical Center and The Garage Cultural Center have moved into The Garage building at 58 State St., which was vacant for nearly a decade. 

Groberg said the downtown could use another hotel and more parking. Construction of an 80-room Hampton Inn and adjacent 350-space parking garage remains on hold pending a court appeal by a dozen or so residents, he said.

The scarcity of commercial vacancies is a challenge.

“I’ve been interacting with businesses that have been looking to expand or move into Montpelier who have had trouble finding space to do it,” Groberg said.

He said new zoning regulations will open up options for developers. In addition, the city recently received a $300,000 grant to develop a pilot program to create new housing units by converting large single-family homes into one or more apartments.

 

Barre

Ask Joel Schwartz about economic investment in Barre and he’ll point to Vermont Creamery and the big investment its parent company is making.

Photo: Vermont Creamery in the Wilson Industrial Park in Barre is in the midst of a $30 million expansion. Courtesy photo.

Land O’ Lakes, which acquired Vermont Creamery in 2017, will invest approximately $30 million in its facility in the Wilson Industrial Park in Barre Town, according to Schwartz, executive director of the Barre Area Development Corp.

He said that will allow Vermont Creamery to expand production, add a visitor center and provide additional amenities for its 125 employees.

“It’s a three-phase project and they’re starting on Phase II and they’re going out to bid for Phase III and they’re just waiting for corporate approval on that,” Schwartz said.

Also located in the industrial park is the former Northern Power building. Owned by Malone Properties, it was formerly called the Bombardier building, which made rail cars.

Northern Power Systems, a maker of wind power and energy storage systems, has closed its doors attributing its problems on a loss of foreign contracts.

Schwartz said Malone Properties is carving up the 127,320-square-foot building into smaller spaces for use by other companies. Tenants include Vacutherm, a maker of wood drying kilns; Tenco Industries of New England, a distributor of heavy equipment; and AllEarth Rail Vermont, which refurbishes Budd passenger rail cars.

Schwartz said Malone Properties has converted 20,000 square feet into refrigerated and dry storage space for Vermont Creamery which sets the stage for the company’s expansion.

Other companies in the industrial park include Old Route Two Spirits, Adams Granite, Vermont Wholesale Granite, Highland Sugarworks, New England Excess Exchange, RH Associates and Co, SB Electronics, Spruce Mountain Granites and Custom Sandblast, Trono Fuels, and Vermont Foodbank.

Schwartz said Vermont Foodbank is investing $1.5 million in a refrigerated addition.

Photo: Vermont Foodbank has completed a $1.5 million expansion at the Wilson Industrial Park in Barre. Courtesy photo.

Also in Barre Town, a $3 million project at the corner of Bridge Street and Route 14 south includes an office building and rental storage units.

In Barre City, Schwartz said there has been approximately $3 million in private investment including fit-up costs in the Blanchard Block and City Place and another $600,000 for St. Monica’s Church and at least $350,000 for Members Advantage Credit Union.

Although it’s a hard number to pin down, Schwartz said the overall investment in the Barre area is significant.

“When I try to figure out what the total investment is in the area, the real estate developers and the investors really don’t tell you so you’re making estimates but I have a pretty good idea what the costs are,” he said. “But in Barre City and Barre Town the total investments public and private over the last 10 years has been over $100 million, could be high as $120 million.” 

 

Downtown

Tracie Lewis of the Barre Partnership said there is a positive vibe downtown with new businesses and events keeping everyone engaged.

“We’re getting merchants ready for the fourth quarter events and happenings for downtown,” said Lewis, the Partnership’s executive director. “We definitely have a lot going on.”

Schwartz said the retailers in general have done well over the last couple of years while the restaurants are also doing well.

He said in Barre City along both ends of Main Street the area is bustling. “The issue that we face is in the middle of our downtown is the sort of vacant, blighted building of 16,000 square feet,” he said.

The former J.J. Newbury building has been vacant for at least a dozen years. Schwartz said it’s been difficult working with the owner on getting something done to repurpose the property.

“A 16,000-square-foot building on one floor is a tough space to fill in the middle of your downtown,” he said. “If it was broken up into smaller spaces maybe something would happen.” 

For new businesses, Vermont Salumi in the former Homer Fitts building on North Main Street is scheduled to open in November, Lewis said. Vermont Salumi makes and sells cured meats – sausage and salami. The back of the store will be the production area for curing and aging.

In the last year, a new, expanded Jiffy Mart and Dunkin’ Donuts on Route 63 and North Main Street opened.

One project that did not take off was Park Center, a 300,000 to 400,000-square-foot, mixed-use project. The project would have spanned an area from Pearl Street to Keith Avenue.

Schwartz said the project failed to go forward because the required New Market Tax Credits were no longer available. The other side of North Main Street is eligible for tax credits as a designated Opportunity Zone. Schwartz said several commercial properties have been identified that could be eligible. But he also said the area is largely made up of industrial properties which means the use of the tax credits for real estate development there is limited.

A significant boost to Barre is the relocation of the Agency of Transportation employees from Montpelier to City Place in the downtown.

“The Department of Education is moving out but the net gain in employees working in Barre should be at least 80 and will be probably closer to 100 additional employees working in downtown Barre,” Schwartz said. 

The total number of AOT employee relocating to City Place is in the neighborhood of 340, he said.

In the past, the city has used Tax Increment Financing or TIF to encourage private sector development tied to public infrastructure. 

But Schwartz said a municipality needs “an anchor tenant” to justify TIF to fund a project with a public good like a parking garage.

He said the incremental grand list gain from the private development underwrites the bond payments for the infrastructure improvements. 

Schwartz said TIF was used to help develop City Place and the parking facilities between Keith Avenue and Pearl Street, which includes a pedestrian walkway under construction.

 

Waterbury

For Waterbury, a large state government workforce helps to anchor the economy.

It’s also served as a magnet, attracting new businesses to town.

“We’re fortunate it supports the restaurants and the retail year round,” said Alyssa Johnson, the town’s economic development director. 

“It’s proved to be a really consistent and important part of our economic picture,” she said. 

Johnson didn’t have any trouble ticking off a list of new businesses including McGillicuddy’s Irish Pub; Woodstock Farmer’s Market (the former Pete’s Greens location); Image Outfitters, an advertising specialty company selling promotional items; Pearson & Associates, engineers; The Wine Vault, carries wines from around the world along with chocolates and cigars; Yarn, a yarn boutique on Main Street; Proud Flower Studio; and Launch Loft Coworking and SpaceMakerSphere Creative Studios. – 30 Foundry Street 

There are any number of established commercial and industrial businesses in town.

Keurig Dr Pepper still has a presence in town but has scaled back, relocating production to other locations, according to Johnson. 

The company was founded in 1981 by Bob Stiller in Waitsfield. 

Keurig Dr. Pepper did not reply to an email seeking comment on the company’s future in Waterbury.

Other established businesses are: Ivy Computer, a technology company recognized with a Vermont Business Growth Award as the fastest growing tech company in the state; solar energy company Sun Common; Ursa Major, a maker of natural skin care products, recently raised $5 million in growth equity funding; and Northern Reliability, an energy storage company.

There are two major projects in the works in Waterbury, one private, the other public.

The former TD Bank branch on 14 South Main Street has been acquired by a private developer. Johnson said the developer is gutting and rehabbing the building.

“It will have some office space as well as mixed use, restaurant or retail,” she said. “So it’s not all confirmed but they’re putting over $2 million into the building.”

Johnson said the project received a boost with $132,000 in Designated Downtown tax credits.

Photo: Waterbury is undergoing a $20 million reconstruction of Main Street. The two-year project involves new water, sewer and storm water infrastructure and relocating utility lines underground. Courtesy photo.

The public sector project is a two-year, $20 million reconstruction of Main Street that includes new water, sewer and storm water infrastructure, relocation of utility lines underground in the core downtown, new sidewalks and streetscape improvements, Johnson said.

“This first year of the project has been mostly on South Main Street in the more residential area and next year will be more in the heart of the downtown,” she said.

The $20 million project is 95 percent funded by the federal government. “So the town is getting an incredible value in upgrading all of the water and sewer infrastructure much of which is over 100 years old,” Johnson said.

JA McDonald is the general contractor.

 

Berlin

The town’s master plan has designated the area surrounding the Berlin Mall as a future city center or downtown.

While that undertaking is still in its formative stages, one developer is proposing to build a 98-unit senior living complex with an estimated cost of $10 million.

The project, Berlin Enhanced Senior Living, would be built adjacent to the Berlin Mall.

“The project is an integral piece to the creation of the Mall area of Berlin as a `Town Center’ to Berlin by offering needed senior housing to the area,” Brad Dousevicz of Dousevicz In., wrote in his Aug. 29 letter to the town. “The creation of a new Town Center will improve the aesthetics in the immediate area as well as preserving the existing mall by offering residential occupants and employees that will shop at the adjoining shops.”

Dousevicz said the development would create more than 30 jobs. 

Dousevicz Inc., has already received several necessary approvals and is now seeking a tax stabilization agreement from the town, according to information posted on the town’s website. 

 

Beyond Montpelier

The positive economic assessments extend beyond the greater Capital District.

As a 30-year-plus resident of the Mad River Valley, Eric Friedman has a handle on the pulse of the economy. Today, Friedman serves as executive director of the Mad River Valley Chamber of Commerce.

“One of the things I really see there is really a great sense of momentum here,” said Friedman, who spent 24 years as marketing director at the Mad River Glen ski area.

He said the expansion of Lawson’s Finest brewery “is the most obvious one but you see it in a lot of different ways across various, different sectors people are investing in this community.”

Friedman said one example is a new brewery, Collaborative Brewing Company.

He also said there are new restaurants and retail shops.

One is called Blockhouse Studios, a co-op where members have access to pottery equipment and lessons.

Photo: Mimi Bain and Colby Miller are the owners of the Stoke Ramen restaurant in Waitsfield. It’s one of several new businesses in Waitsfield including Blockhouse Studio, a community pottery studio and artisan shop. Courtesy photo.

“What’s interesting about that one is it’s aimed at locals, it’s not really aimed at tourists and visitors,” he said.

Tourism is a major economic driver and Friedman said the number of tourists coming through the visitors center each day indicates it was a strong foliage season. He also said the ski season is shaping up nicely as well.

“Reservations are looking terrific for this holiday season and the ski season here tends to take care of itself,” Friedman said. “If we have decent snow, we do quite well.”

Mad River Glen and Sugarbush Resort offer a diverse ski experience then is available in most other places, he said.

Friedman said the two ski areas represent “one of the last bastions of non-corporate skiing in Vermont.”

Ed Larson, interim president of the Central Vermont Chamber of Commerce, said other than the issue of a tight labor market the central Vermont economy is doing well.

“Our outlook is pretty bullish on the future at least for the immediate future, the next year or so,” said Larson, president of Larson Forestry & Legislative Consulting.

Businesses engaged in travel and tourism reported a brisk foliage season, helped along by Norwich University’s 200th anniversary and homecoming celebration, Larson said.

Like Friedman, he’s optimistic about the upcoming ski season.  

“I know some of the inns and hotels have some good advance bookings into winter and are feeling pretty good,” Larson said.

 

Manufacturing

Jamie Stewart of the Central Vermont Economic Development Corp pointed to a number of expansions as evidence the economy of the region is moving ahead at a nice clip.

“You have companies like Darn Tough that have expanded in a big way … adding a significant amount of square footage in the Nantanna Mill,” Stewart said, referring to the Northfield maker of socks.

Over the years, the county has also seen its share of microbrewery and distillery startups that have matured.

Stewart noted the growth of Lawson’s Finest Liquids and its commitment to pay a livable wage and fringe benefits.

He said every two weeks the Waitsfield brewer donates all tips left in the tasting room to various nonprofits.

According to Lawson’s website, “There is no tip obligation in the taproom. However, if guests choose to leave a donation, 100 percent will be given to local charitable endeavors.”

For October, Lawson’s donated tips to Mad River Path and Family Center of Washington County.

Stewart said Caledonia Spirits has done something similar. 

The Caledonia Spirits website highlights its effort to raise awareness of the honeybee. The Montpelier distillery has been raising money through sales and donations for The Bee Cause Project, which connects children with the environment by learning about honeybees.

 

Granite

If there is an industry that’s synonymous with the greater Barre-Montpelier area it’s the granite industry.

Although the industry is well past its historic employment levels, the industry today still has a formidable workforce of 600 employed by Barre Granite Association member firms.

According to Executive Director Doug Grahn the industry continues to enjoy a resurgence because of increased demand and the industry’s reputation for superior quality and durability.

Barre granite is well known for its memorials, most of which are produced for the U.S. market. 

Photo: The Barre granite industry continues to enjoy a resurgence. The industry employs 600 people. A craftsman works on a memorial. Barre Granite Industry photo.

Granite is also used in architectural and landscape products – steps, walkways, patios and curbing.

“Business is very strong … as more and more choose our Woodbury and Barre Gray granite in place of less aesthetic and durable materials,” Grahn said in an email reply to a series of questions.

Also, Bethel White granite has become a popular option for architects in the U.S. and worldwide. 

To remain competitive, Grahn said the industry continues to make capital investments “with $5 million spent in recent years on the latest technology and equipment.”

 

National Life Group

With 900 employees in Vermont, another mainstay of the county’s economy is National Life Group.

National Life CFO Sarah VanBeck said even in a low interest rate environment and economic uncertainty the company’s growth has outpaced the industry.

“In 2018, we grew our life sales 28 percent and that’s compared to industry growth that’s more around 2 percent,” VanBeck said.

She attributed that growth, which has continued into this year, to the variety of life and annuity products that meet the needs of Middle America and teachers. 

VanBeck also said the company’s distribution partners are growing and diversifying.

Over the last 10 years, she said National Life has doubled its sales and earnings.

“We’re a mutual holding company, that means we’re owned by our policyholders, so we’re focused on long-term sustainable growth,” she said. “You know in this economic environment we’ve been very focused on kind of responsible pricing, effective risk management and being disciplined how we grow our expenses.” 

Two of the financial rating agencies, Moody’s and A.M. Best rate the company’s outlook positive for potential upgrades over the next 12 to 18 months.

VanBeck said the agencies singled out the company’s market position, moving from No. 32 in 2011 to No. 12 in 2018. She said this year that company has risen to No. 8 in terms of life insurance sales.

The low interest rate environment remains a challenge as consumers remain averse to tying up their savings in investments with a low rate of return.

For National Life, however, VanBeck the company’s life products and annuities are more resilient and have greater appeal.

 

Mental health

The medical field is usually one of the largest employers in any given county. In Washington County, Central Vermont Medical Center is the leading employer in its field. But there are others as well including Washington County Mental Health Services.

Photo: Washington County Mental Health Services serves more than 4,000 clients, has a budget of $54 million and employs 714 people. Courtesy photo.

At the end of fiscal 2019, with a budget of $54 million, the agency served 4,052 clients, providing 300,000 individual services.

“That’s definitely right up there with as high as we’ve provided in previous years if not higher,” said Kirk Postelwaite, communications and development director for Washington County Mental Health Services (WCMHS).

He said demand for services remains high especially with substance abuse issues. 

“We also have been more active in kind of outreach and collaboration and through that I think we’ve kind of been able to connect with more people who otherwise may not have known that the services were here,” Postelwaite said.

WCMHS has five main divisions: children, community developmental services, community support program, outpatient counseling, intensive care (emergency services). The agency has a nursing and psychiatry component that works across all divisions.

WCMHS has a network of more than 30 buildings across the county, including group homes.

Postelwaite said of the agency’s 714 employees, 549 are full time. The annual payroll is $28 million. 

He said 90 percent of the agency’s funding is Medicaid.

 

Workforce 

The state’s workforce shortage is well documented, prompting employers to take aggressive action.

“What I do see that’s happening is that both employers are being more creative in how they develop people for the jobs that they have,” Stewart of CVEDC said, “and types of compensation programs and packaging they’re putting together and also a better connection being made between the schools and businesses.”

With 1,700 employees, filling openings at Central Vermont Medical Center is “a huge problem,” said Robert Patterson, vice president of human resources and clinical operations.

Patterson said it’s not only difficult to fill entry level jobs but also nursing positions.

“Really it’s a huge issue in regards to attracting LNAs, RNs, specifically LPNs to work here which is so key to us taking care of our population in our community,” he said. 

Patterson said the need for nurses will become more acute with the state needing to fill an estimated 3,900 nursing positions over the next four to five years.

To attract more workers, the hospital has taken steps to improve pay.

He said clinical care associates (CCA) earn approximately $14 an hour to start and can earn more after one year as an advanced clinical care associate (CCA2). CCAs perform basic patient duties which frees up nurses for other duties. 

The hospital has also taken steps to attract LNAs, licensed nursing assistants, with pay starting at $14.60 an hour. 

To meet the demand for more advanced nursing, CVMC has launched an LNA to LPN program.

Patterson said the hospital is partnering on a 2020 pilot program with Community College of Vermont and Vermont Technical College to train 18 LNAs to become LPNs.

He said the hospital is paying for all the training which begins in September of next year.

“So these folks will graduate from LNAs to LPNs and LPNs are truly a nursing degree,” he said. 

The starting wage for an LPN is approximately $21 an hour.

The granite industry has been working closely with the Vermont Departments of Labor and Economic Development, as well as the Central Vermont Economic Development Corp., on workforce training and apprenticeship programs,” said Grahn, the industry spokesman. “We have also made a concerted effort to get the word out about our high-paying employment opportunities, which also include comprehensive benefit packages. Many of these positions are now technology related.”

(Job openings can be found at BarreGranite.org and BarreGray.com)  

National Life currently has 100 open positions that cover its offices in Vermont and Dallas.

Those open positions include call center workers, customer service, actuaries, and investment professionals.

Over the past year, the company has hired more than 275 people between the two locations.

VanBeck said National Life has stepped up its advertising and is making a concerted effort to hire veterans. The company also has an employee referral program. Employees receive a cash award when they refer someone who is hired.

For Northfield Savings Bank President Thomas Leavitt the most troubling challenge to the economy is demographics.

Vermont is not alone dealing with the challenge of finding workers in a time of low unemployment. But the state is also handicapped because it has one of the oldest demographics among the 50 states.

Leavitt said the long-term outlook is cause for concern.

“It’s been well documented some of the challenges Vermont faces that other northern New England states face, particularly Maine,” he said.

Relative to the workforce, he said the problem is most acute in the 25 to 44 age group which is compounded by a declining school population. 

Leavitt said that it in turn has resulted in fewer students enrolling in the state’s colleges and universities. 

“It’s really challenging (for) all but the most financially robust secondary education institutions in our state,” he said.

Even with an extremely low unemployment rate, Leavitt said the bank has been relatively fortunate in finding qualified people, though it takes a bit longer to find qualified job applicants.

Northfield Savings Bank, which has a significant presence in central Vermont, continues to experience loan growth in both its residential and commercial portfolios, Leavitt said. 

He said Washington County is fortunate in that it has a good mix of industry, commerce, government, finance and insurance.

“Though we’re in a moment of strong employment or a moment of overall solid economic activity,” Leavitt said, “I think the clouds are gathering if we don’t take a good, hard look at historic patterns of in-migration, up to and including international arrivals in our state.” 

He said Chittenden County in particular has a positive history “with refugee resettlement.”

 

Getting there

Often overlooked but closely related to the labor crunch is transportation or the lack thereof.

“We’re hearing a lot of conversation around transportation,” said Bonnie Waninger, executive director of the Central Vermont Regional Planning Commission. “Public transportation provides a trunk line of transportation but if you’re not located on that trunk line your options are pretty limited unless you own a vehicle.”

She said the regional commission, economic development officials, employers and social services agencies are working together to leverage their resources to come up with solutions.

“People without transportation and the workforce in general, the further you need to travel for a job the more of your income it takes,” she said.

Waninger said while it’s less expensive to live in a rural area it’s also more expensive in terms of transportation. 

“When we talk to people about location affordability, essentially your housing, plus transportation costs, should be no more than 45 percent of your income,” she said.

Green Mountain Transit is the main public bus system in the county. 

Waninger said public transit throughout Vermont has expanded quite a bit in the last 10 years. But with budget constraints at the state and federal level, she said the focus now is maintaining the existing networks.

“There simply isn’t a lot of money for expanding routes,” she said.

Waninger did say Rural Community Transportation is beginning a new route in November from Morrisville to Hardwick and Barre City. 

A creative approach to the problem is a private Worcester to Montpelier ride share program called the Hitching Post.

Waninger said one enterprising individual without a car came up with the idea of putting a post with a flag outside the general store in Worcester.

“If I want a ride, I go into the coffee shop pay $1 for a token, flip the flag up,” she said. “When the driver stops to pick me up I give them the coffee token that they can redeem at the coffee shop and they give me a ride into Montpelier.”

She said there’s a coffee shop in Montpelier that does the reverse. It’s simply a matter of someone who wants a ride and somebody who will offer the ride, she said.

Because Worcester is a very close-knit community, people usually know the drivers who come by, Waninger said.

She said there’s also a transportation discussion going on among employers in the Northfield area about adjusting the local bus schedule to accommodate workers on different shifts. 

 

Bruce Edwards is a freelance writer from Southern Vermont.