Downtown Barre would see a significant boost if Thom Lauzon is successful in getting his $30-$40 million Park Center project off the ground. Courtesy photo
by Bruce Edwards, Vermont Business Magazine With Montpelier as the state capital and a rebuilt state office complex in Waterbury, Washington County is anchored by a contingent of thousands of state workers that help drive the economy. After the great flood from Tropical Storm Irene decimated the state complex and many other places in central Vermont, the rebuilding and resurgence is evident everywhere. Montpelier is even getting a new hotel and, perhaps more importantly to the many day-travelers to the state capital, a parking garage.
The regional economy, of course, also relies on much more than government workers, as a mix of health care, education, commercial and industrial companies, as well as nonprofits, reveals: National Life Group, SBE, Keurig, Darn Tough, Cabot Creamery, Sugarbush Resort, Central Vermont Medical Center, and Norwich University to name a few.
The strength of that diversity is reflected in an unemployment rate that beats the state average.
The county posted a September unemployment rate of 2.6 percent compared to a statewide average of 2.9 percent. It tied for the second lowest unemployment rate in the state with Windsor County. Only Chittenden County had a lower rate at 2.4 percent, according to the state Department of Labor.
The median household income of $58,788 (2015) also fares better than the state’s median of $55,176, according to the US Census Bureau.
Despite some challenges, the general consensus among business leaders is that the economy of central Vermont is improving and heading in the right direction.
“From what we’re seeing, there’s a lot of stability to what we’ve got going now,” said Jamie Stewart, executive director of the Central Vermont Economic Development Corp. “We see steady growth, recovery in a number of businesses.”
As one example, Stewart cited one business is back to its 2008 pre-recession employment levels.
Stewart said his impression is that the manufacturing sector is doing well and growing.
“Probably one of the biggest moves that has happened in the last year has been the growth and expansion of Darn Tough socks,” Stewart said.
Capitalizing on a niche market, he said Darn Tough in Northfield has added shifts and “significantly expanded their workforce” in the past year.
An up-and-coming sector is the craft beer and spirits industry. In Waitsfield, Stewart said Lawson’s Finest broke ground on a new brewery while Caledonia Spirits is building a new distillery and tasting room in Montpelier.
One of the area’s oldest companies is Rock of Ages. Stewart said the granite company is holding steady, maintaining employment levels, and making upgrades to its Barre quarry operation.
As executive director of the Central Vermont Chamber of Commerce, Bill Moore has a pretty good handle on the business climate. For now, he said most indicators continue to move in a positive direction.
“There’s a little bit of building going on, a lot of infrastructure work going on,” Moore said. “People are starting to spend money. We’re seeing tax receipts on the upswing.”
By all accounts summer tourism was strong with most lodging establishments at or near capacity, he said.
Central Vermont has a diverse economy but there’s little question state government plays an outsized role with 4,618 state workers employed throughout the county.
Moore said those workers are spending money on a daily basis which “helps to churn the local economy.”
A project that has the potential to transform downtown Barre and give it an economic lift is the Park Center project - a $30 million to $40 million mixed-use development.
Still in its infancy, developer Thom Lauzon envisions a project that would be similar to the Brooks House in Brattleboro and the soon-to-begin Hotel Putnam revitalization project in downtown Bennington.
Lauzon, who also wears another hat as Barre’s mayor, said the project places a heavy emphasis on “affordable market rate housing.”
“The future of Vermont’s downtowns, if they’re going to survive, is going to be housing,” Lauzon said.
Because of the changing face of retail and the Amazon effect, Lauzon said the key to the survival of retail is having more people live within walking distance of shops, restaurants and other services.
“So you’ve got a changing demographic and I’ve always believed that our downtowns better be ready for it,” he said. “I think there is a place for retail in a downtown where you have hundreds of people living and working.”
Lauzon said the project would encompass an area from Pearl Street to Keith Avenue (and possibly beyond) currently totaling between 300,000 to 400,000 square feet. The project would be a combination of rehabilitating existing buildings and new construction
Lauzon, who has secured options on several properties, is working with M&S Development on the project. M&S is a consulting firm that specializes in putting together projects in economically distressed communities.
“We have a huge opportunity in Barre because we are historic tax credit eligible; we are Vermont downtown tax credit eligible and most importantly we are New Market Tax Credit eligible,” he said.
The New Market Tax Credit program encourages private investment in low income communities through federal tax credits.
For Barre City Manager Steven Mackenzie the Park Center redevelopment provides a ray of hope for a longtime problem area of the city. But Mackenzie also realizes that a project that Lauzon is working on “is extremely challenging” requiring a highly complex funding mechanism of private investment and tax credits.
“It’s an extremely ambitious project,” Mackenzie said.
The city helped itself several years ago by creating a tax increment financing district or TIF to fund infrastructure improvements.
The city has a $10 million TIF authorization with voters having approved $2.2 million for various initiatives.
Of the $2.2 million, Mackenzie said there is $500,000 remaining which is earmarked for two downtown projects - a Pearl Street pedestrian walkway and completion of the Keith Avenue parking lot.
There have been other significant infrastructure improvements over the years, the largest of which was Barre’s own version of what Mackenzie calls the Big Dig. Five years ago the state Agency of Transportation completed a $15 million, 1.5 mile reconstruction of North Main Street, along with infrastructure, utilities, and streetscape.
Overall, Mackenzie said the Barre economy is improving just not as quickly as he’d like to see.
In the recent past, there’s been private investment as well. Mackenzie said DEW Construction Corp. built a $15 million, five-story, mixed-use office building across from Depot Square.
This year Champlain Oil Company demolished and rebuilt its convenience at the north end of Main Street.
The Aubuchon hardware store at the corner of Depot Square and Main Street relocated to a larger building on the south end of town.
“In the short term it creates a void if you will,” Mackenzie said. “It creates more vacant retail space downtown but it’s not like they went out of business and left town.”
He said the city also created more parking thanks to a $3 million remediation of the Enterprise Alley brownfield site.
Lauzon also has other projects percolating. “As a private developer I’m seeing a ton of activity here in Barre and central Vermont,” he said.
Ceres Greens, a hydroponic farm-to-table business, will lease 12,500 square feet of space in one of Lauzon’s buildings. The company already operates a prototype facility in Chittenden County. But Lauzon said Barre has the advantage because the cost to rent here is so much cheaper.
“We beat the best price they could get in Burlington, in Chittenden County,” he said. “We beat it by over $2 a square foot.”
He also said he’s working on a deal to bring a Massachusetts brewer to central Vermont.
One of the industrial hubs of the county is the Wilson Industrial Park where Vermont Creamery’s new owner is on the cusp of a major expansion, according to Joel Schwartz, executive director of the Barre Area Development Corp.
Vermont Creamery co-founders Allison Hooper and Bob Reese sold the business in March to Minnesota-based Land O’Lakes for an undisclosed sum.
Vermont Creamery is located in two buildings in the industrial park. There is an office and dry storage facility and the other a manufacturing plant for its specialty cheeses.
Schwartz said under Land O’Lakes it appears Vermont Creamery is looking to double capacity.
“From what we know, or what they say, is that they’re looking for a significant expansion in the park or at least in their current operation up there,” Schwartz said. “It looks to be a two-phased plan. Phase one to get them through the next three years and then a longer term plan.”
The company has 95 employees and Schwartz estimated Vermont Creamery has the potential to add another 50 to 75 workers over time.
Asked to comment on their future plans, Vermont Creamery President Adeline Druart issued the following statement:
“Vermont Creamery has achieved success by staying true to our core values, Land O’Lakes’ values align with our own. By harnessing their dairy business expertise and resources, Vermont Creamery will be able to grow at an accelerated pace while staying true to our founding principles and B Corp Certification.”
The statement continued that “growth means more good-paying jobs in Central Vermont, increased demand for locally produced milk and the ability to innovate on a larger scale. Vermont Creamery and Land O’Lakes share a belief that success is built on a foundation of talent and genuinely good people; as we prepare for growth, we’ll be looking to build a core community of dedicated employees who are eager to take this journey with us.”
There are a dozen or so businesses located in the industrial park with another 30 or 40 acres for sale.
Among the other occupants: SBE, Tenco Industries, Vacutherm, Northern Power Systems; New England Excess Exchange, Highland Sugarworks and Old Route Two Spirits, Vermont Foodbank, Trono Fuels, Adam’s Granite, Hillside Solid Surfaces, Spruce Mountain Granites and Custom Sandblast, and Vermont Wholesale Granite.
Schwartz said local developer Pat Malone last year purchased the Northern Power Systems’ 130,000-square-foot building. He said Northern Power remains as a tenant but didn’t need all the space. Malone brought in additional tenants including Tenco, a company that specializes in snow and ice removal equipment for municipalities.
The park has plenty of room to accommodate new or expanding businesses but Schwartz said cost is a factor.
“The cost of construction exceeds the market value by the time you’re done so that creates a financial hole that has to be filled,” he said.
In Waterbury, Alyssa Johnson, the town’s economic development director, said there is a sense of optimism and positive growth.
Johnson said the state office complex, rebuilt after Tropical Storm Irene, continues to have an enormous impact on the town’s economy and the downtown.
The state of Vermont is the county’s largest employer with 4,618 workers. Of that number, 2,677 are employed in Montpelier and 1,029 in Waterbury. The rest are scattered around several other towns including Berlin, which together total 779 workers, according to the state Agency of Human Resources.
But that’s not all. Keurig, which got its start in Waterbury, employs a large number of workers at its research and development center and processing plant.
Keurig is owned by an investment group led by JAB Holding Co., which purchased the company in December 2015 for a reported $13.9 billion.
Waterbury is also attracting new business.
“We just had Northern Reliability come here from Waitsfield with 50 new employees,” Johnson said.
In announcing its plans, Northern Reliability said its move to relocate its headquarters and manufacturing operation from Waitsfield to a 10,000-square-foot facility in Waterbury would accommodate future growth and is large enough for a separate research and development area.
In her four months on the job as the town’s economic development director, Johnson has reached out to residents to get their thoughts on the future.
“We’re in the middle of a zoning rewrite right now,” she said. “So a lot of my work has been just on trying to engage residents and business owners in town and say this is where we’re at now but what do we want to see the future look like.”
One of the mainstays of the economy in central Vermont is health care and financial services.
There’s Blue Cross and Blue Shield of Vermont, Vermont Mutual Insurance Group, Central Vermont Regional Medical Center, Washington County Mental Health Services, Union Mutual and National Life Group.
National Life Group is a 168-year-old insurance company with 1,100 employees, 800 in Vermont and 235 in Texas.
CFO Bob Cotton said the company is enjoying another solid year of “extraordinary growth” that began five years ago.
“We’ve hit record levels of sales,” he said. “At the same time, we’ve seen significant growth in our earnings.”
In the insurance business, Cotton said it’s a challenge to enjoy both record sales and profits and maintain a strong capital position. He said that’s difficult to achieve because of the high cost of “getting business on the books” before those policies turn a profit.
National Life sells both life insurance and annuities. The company has 750,000 policies in force with a value of $100 billion. The company’s goal is to reach 1 million policies by 2020.
Cotton said National Life is “far outpacing the industry in terms of the ability to grow our business.”
He said the industry as a whole has been flat to a couple percent growth year-over-year over the last decade.
“So we’re definitely bucking the trends,” he said.
The company’s strategy has been to focus its insurance and annuity products, providing financial solutions to Middle America. By Middle America, Cotton said the company concentrates on individuals, families and businesses with an income between $75,000 and $150,000.
Central Vermont Medical Center is another large employer with 1,700 full- and part-time workers, including 120 doctors and 60 associate providers.
The 122-bed Berlin hospital serves 66,000 people in central Vermont. The hospital also maintains 23 community-based physician practices and medical clinics throughout the county.
Agri-Mark continues to invest in its Cabot Creamery operations throughout the state, including its plant in Cabot.
“We’re investing heavily in our plant facilities to handle more milk that our members are producing,” said Agri-Mark spokesman Doug Dimento. “We’re expanding production but more than that it’s a replacement and upgrade to our existing cheesemaking equipment.”
Agri-Mark has 450 people working at its Cabot Cheese plant and processing center in Cabot. The co-op has 90 employees at its Waitsfield office, which houses the marketing and senior management staff, Dimento said.
The company also operates a cheese and whey plant in Middlebury.
Dimento said the price farmers receive for their milk remains “challenging.” The September price was $18.01 per hundredweight but Dimento said based on the distance from the Boston market Vermont farmers will receive about 75 cents less per hundredweight or $17.25.
Agri-Mark has 1,050 member farms, including 225 in Vermont.
Like the rest of the state, recreation is no small part of the county’s economy. At the top of that list is Sugarbush Resort. With 111 trails and 16 lifts, the Warren resort is one of the state’s largest ski areas. But like other ski areas over the years Sugarbush has become a year round resort with a heavy emphasis on mountain biking, golf and other activities during the summer and fall.
“It was a good summer for the resort and would have been better if not for the rainy and somewhat chilly weather, said Win Smith, who purchased the resort in 2001 from American Skiing Company.
Smith said there is good momentum heading into the ski season with season pass sales “up a bit from last year.”
“It’s obviously a lot about the winter and how the snow comes in but at this point in time we’re feeling pretty good,” Smith said.
Since 2001, the resort has invested $65 million in improvements with additional bricks and mortar this summer.
“We’ve done well over $5 million in capital expenditures over the summer and it includes two new lifts, one at Lincoln Peak and one at Mount Ellen,” he said.
The capital investment includes $600,000 in a new energy-efficient compressor and low-energy snow guns. Another $600,000 was spent on two groomers.
Skiers will also have an easier time accessing lifts thanks to an easy pass-type system, which automatically scans the lift ticket or pass.
“We think that’s going to be a little bit of a labor saving for us,” Smith said. “That’s part of the reason we’re doing it because the labor shortage is really getting acute.”
The resort’s 155 year round employees mushrooms to nearly 1,000 during the winter.
Smith said the resort goes out of its way to hire locally with more job fairs, a van service from Barre and Montpelier, and more employee housing.
But even with those measures, there aren’t enough workers to fill its seasonal needs. That’s lead Sugarbush to turn to the J-1 visa program for foreign workers. Last season, Smith said the resort employed 17 foreign workers through the J-1 program. This year Smith said that number will likely jump to 35.
“Stable and relatively healthy,” is how Northfield Savings Bank President Thomas Leavitt sums up the state of the economy in Washington County.
Leavitt said the bank remains “bullish on central Vermont.”
On the commercial lending side, he said that sector is doing “fairly well” reflecting a growing economy in Washington and Chittenden counties where the bank does business.
The home mortgage market remains busy with lending moving away from refinancing to home buying. “The last two years have shifted to more purchase activity,” Leavitt said. “Here in central Vermont that’s still relatively healthy.
He said one concern is the pinch on the housing inventory in certain price categories.
For its 150th anniversary, Northfield Savings Bank’s historic headquarters building at 33 South Main St., is undergoing a multi-million dollar renovation both inside and out.
One of the improvements is adding a drive-up teller window which the bank had lacked.
Leavitt said the project is expected to be completed in the mid to late spring.
The bank has 165 employees, 13 branches, and an operations center in Berlin.
Like other business leaders around the state, Leavitt cited several challenges facing the state not the least of which is coping with an aging population and the migration of younger workers to other states for employment opportunities.
Related to that is the need to step up workforce training.
“We want to see a new generation of Vermonters rising, matriculating from high school to and through college,” Leavitt said, “and then staying around the state to the degree that’s tenable.”
Workforce is an issue for Washington County Mental Health Services which has 758 employees, including 580 full-time workers.
“We’ve got 54 full-time vacancies right now and about 12 part-time hourly openings,” said Kirk Postlewaite, the agency’s communications and development director.
Not only is it a tight labor market but the agency is also constrained by its financial ability to compete for workers, he said.
Because Washington County Mental Health Services receives the bulk of it funding from the state, Postlewaite said funding hasn’t kept up with inflation over the past 10 years.
At the same time, he said the need for services has increased whether it’s in connection with the opioid crisis, the number of autism cases or other mental health issues that require counseling.
Postlewaite said the caseload has grown from 3,067 clients in fiscal 2014 to 3,892 in fiscal 2016.
Stewart, the county’s industrial development director, also chimed in on the struggle employers are having in hiring, which he said is the one area “that is inhibiting growth the most right now.”
To address the issue, Stewart said there are ongoing efforts to solve or at least mitigate the problem.
“I’m doing a lot of work with HR managers within the region to help build collaboratives so we can provide the training programs,” he said.
Moore of the Central Vermont Chamber of Commerce agreed that the persistent problem for employers is filling their workforce needs.
“Workforce is a huge issue and it’s split into two areas,” Moore said. “One is hiring the right people, getting the right people for the positions and the other side is concern about the opioid crisis that’s going on and the impact that’s having on businesses.”
In A Corner
Another area of concern is the availability of space for new and existing businesses.
“I’d love to have some open manufacturing space to accommodate growing businesses,” Stewart said. “We are relatively limited in available space. There is pretty full occupancy for anything of a larger scale certainly.”
Leavitt of Northfield Savings Bank said because of “the various costs associated with approvals, permitting, engineering and all the site considerations” the cost to build in Vermont can sometimes exceed the appraised value making financing a challenge.
Bonnie Waninger of the Central Vermont Regional Planning Commission said with a shortage of available space for development, the county’s brownfield program offers some relief.
There are two sites in Montpelier and several in Barre that have caught the interest of developers, according to Waninger, the regional commission’s executive director.
“Often times people think of brownfields as a negative but when I look at Barre it means people are ready to address what’s there because it works within the scope of their business expansion,” she said.
She said the commission along with property owners are undertaking an assessment of the sites to determine what corrective action, if any, is needed.
In Barre, one property on the Barre-Montpelier Road is the site of a former auto repair shop, Waninger said. She said another site is in downtown Barre which would serve as additional parking for the redeveloped Blanchard Block property.
She said a third site is the Bonacorsi property, the location of a former dry cleaning business. An existing business would like to purchase the property for an expansion, she said.
As Waterbury’s economic development director, one of Johnson’s responsibilities is finding available space for businesses looking to expand or start up which often means finding room within existing buildings.
“Waterbury is at the point where I don’t have an enormous inventory of space that I can tell folks about,” Johnson said.
With space at a premium, Johnson will try to come up with a creative solution for a prospective business. If that doesn’t work, she’ll look to a neighboring town to see what’s available.
Housing is still another issue.
Stewart said the housing shortage and affordability for working Vermonters is a conversation the state has been having for 20 years.
Moore said efforts are ongoing in Barre and Montpelier to create more affordable housing.
Related to that, Moore said more people who work in Chittenden County are moving to Washington County “because of affordability, availability.”
“It’s not that far a commute to Chittenden County,” he said.
Bashara family plans for new hotel, $17M investment for downtown Montpelier
Joined by Governor Phil Scott and Montpelier Mayor John Hollar on November 14, the Bashara Family announced plans to build a new 89-room hotel on their existing 3-acre property in downtown Montpelier. The hotel, a new, four-level parking structure, and a revitalization of the existing Capitol Plaza lot, is expected to bring over $17 million in new investment to Montpelier. The project will create 50-60 construction jobs during the year-long construction phase, and the Bashara Family estimates they will create 30-50 new jobs at the hotel.
“This project is an exciting step forward for our city as we work with other business leaders and our elected officials to revitalize and create a more vibrant downtown,” said Fred Bashara. “When complete, the new hotel and renovations to our existing Capitol Plaza, will be a new and modern gathering place for visitors to Montpelier.”
Governor Scott said, “This project is an important economic investment for downtown Montpelier. I’m pleased to join the Bashara family in celebrating this new venture, which will generate valuable economic activity in Vermont.”
Vermont-based DEW Construction Corporation has been selected to build the new Hampton Inn and Suites – a Hilton brand hotel. It will be located behind the Capitol Plaza adjacent to the train tracks.
“I am happy to be here today to help announce this important new economic development project in Montpelier,” said Mayor Hollar. “Together with other city leaders, we’re working hard to grow jobs and attract new residents to our great capital city, and this development is an important part of that effort.”
Bashara added, “The hotel will be run by our family and built by Vermonters, which will create added economic opportunity for our area. We’ve heard from some of our Capitol Plaza guests that they want access to broader loyalty programs, mobile apps and digital platforms like those offered by Hilton. We think the Hampton Inn and Suites, adjacent to our existing, award-winning Capitol Plaza Hotel and Conference Center is a great combination.”
The new hotel will include an attractive parking structure, green space, and a pool and fitness center. The Bashara family will be working closely with city leaders to address parking needs and traffic flow. The family estimates that revenue from the hotel will generate an additional $300,000 annually in rooms and meals taxes for the state. And the Hilton brand brings access to over 60 million Hilton Honors members and modern travelers who could visit Montpelier, eat at downtown restaurants, and visit Montpelier’s entertainment options and retail stores.
Fred added, “We hope to move forward in partnership with the city, perhaps using Tax Increment Financing, to fund a parking garage that will serve multiple parties and to improve the streetscape in the vicinity. We will continue to work on our plans and permits, and hopefully work as a team with the City to get under construction in 2018.”
Bruce Edwards is a freelance writer from Southern Vermont. This article first appeared in the November issue of Vermont Business Magazine.