Rutland County Economic Report: Loss of colleges not the only transition for Rutland region

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Rutland County Economic Report: Loss of colleges not the only transition for Rutland region

Fri, 07/05/2019 - 3:55pm -- tim

Photo: The Paramount Theatre is considered Rutland’s entertainment anchor, drawing people downtown for concerts, plays and special events. Courtesy photo.

by Bruce Edwards, Vermont Business Magazine Education and higher education in particular isn’t just about education. It’s an industry in its own right and an economic driver. For Rutland County, economic development officials and business leaders are faced with a double-barreled loss: Green Mountain College and the College of Saint Joseph. Not unlike many small colleges around the country both GMC and CSJ fell victim to declining enrollments putting the schools in financial jeopardy and losing their accreditation. 

The Rutland Economic Development Corp has been working with state and federal partners to work through the transition.

“Obviously we don’t have a silver bullet but we are a part of a group pf people who are actively trying to support this transition,” said REDC Executive Director Tyler Richardson.

Although the future of the CSJ campus rests with college officials, Richardson said REDC stands ready to take a more active role if needed.

“We have complete faith that the leadership there is working diligently to examine all options available,” he said.

The Rutland Redevelopment Authority is also ready to become involved.

“I think at some point if there is a final decision that there is not going to be a future college there in any form then I think the city and the Redevelopment Authority would play a major role in trying to repurpose that campus for another use,” said RRA Executive Director Brennan Duffy.

Founded in 1833, GMC has been an anchor of the Poultney economy for decades. But like CSJ and other small colleges around the country, GMC could not survive a declining enrollment.

A year ago, GMC’s undergraduate enrollment stood at 430 students. In an interview last year, President Robert Allen said ideally the goal was to have between 800 and 1,000 students. At the time, the college had 40 full-time faculty, 36 adjunct faculty and a staff of 88.

Allen said annual payroll was in the neighborhood of $7 million. 

For 63-year-old College of Saint Joseph, the enrollment numbers were also a problem. In the spring of last year, there were 184 full-time undergraduate students and another 100 graduate students. The approximate breakeven point was 235 undergraduate students, a college spokesman said at the time.

Most colleges rely heavily on tuition to survive. In CSJ’s case its financial woes were compounded when it spent most of its $5 million endowment pursuing a physician’s assistant program that failed to win accreditation.

Filling the void

With the closing of Green Mountain College and College of Saint Joseph, the role of Castleton University and Community College of Vermont takes on added significance.

“We’ve developed some new programs to accommodate Green Mountain College students and College of Saint Joseph students,” said Castleton University President Karen Scolforo.

Photo: Castleton University is adding new programs to fill the void created by the closing of Green Mountain College and the College of Saint Joseph. Courtesy photo.

Earlier this year Castleton took over the GMC resort and hospitality management program at Killington. 

GMC also made a name for itself offering courses in environmental studies. Castleton is hoping to fill that void by offering a bachelor’s degree in wildlife and forest conservation.

“That is a direct match to a program that is currently offered at Green Mountain College,” Scolforo said, adding that Castleton already offers a number of sustainability programs.

Scolforo said both the university’s board of trustees and the Vermont State Colleges trustees are “doing everything we can to fill those voids.”

She said the trustees approved new bachelor’s and master’s degree programs to be offered in the fall.

The bachelor’s degree programs are resort and hospitality management (at Killington), wildlife and forest conservation, early childhood and special education, and archeology.

Castleton will also offer a master’s degree in business administration mirroring a program offered by both GMC and CSJ, Scolforo said.

Another college that is closing its doors is Southern Vermont College in Bennington. Castleton plans to offer a nursing program in Bennington now offered by SVC. The plan is contingent on receiving approval from the New England Higher Education Commission. 

Castleton faced its own bump on the financial road two years ago with the school forced to make a small reduction in its workforce.

With a budget of $51 million, 2,300 students and 400 employees, Castleton is a significant economic driver in the county.

Today, the liberal arts college is back on solid ground.

“Last year we closed the year, the fiscal year, with a surplus and this year we’re anticipating closing the year balanced,” Scolforo said. “Our budget for next year is looking like it will also be balanced.” 

She gave much of the credit to the faculty who came up with ideas for the school to operate more efficiently along with new programs, new revenue sources, and delivery methods to serve non-traditional students through online programming.

“With all that, the faculty was able to identify just under $1 million in savings,” said Scolforo, who credited former President David Wolk with putting in place a talented and dedicated faculty and staff.

As the result of several new initiatives, the school has experienced an uptick in enrollment.

“So we’ve had three semesters back to back to back of growth,” she said.

Enrollment at Castleton stands at 2,300 students which translates into full-time equivalents of 1,980. 

In addition to its main campus, the university offers courses at the Community College of Vermont campuses in Rutland and Winooski.

The college also has student housing in downtown Rutland.

Inside job

Not many years ago economic development officials would cast a wide net in search of out-of-state companies, hoping to entice them to relocate or expand. 

That’s still true for Rutland and for many other communities across the country looking to grow their tax and employment base. 

However, the emphasis in recent years has turned to nurturing business from within.

“The old approach of attracting and retaining the buffaloes, the big fish, that still occurs,” Richardson said. “The problem is that there’s less of that in post-industrial rural America and we’re all competing for the same smaller pool of larger employers.”

He said growing the economy from the inside offers “the best bang for the buck.”

“We’ve been working really hard over the last couple of years to develop assets that connect a lot of the entrepreneurial support programming in the area, whether it’s statewide or regional,” Richardson said. “From our perspective we’re seeing that sort of bear fruit. We’re seeing a lot of new startup development support.”

He said organizations like the Center for Women in Enterprise offer technical training for emerging entrepreneurs with classes filling up quickly.

Rutland

Rutland City has a few potential business projects percolating. The most significant of which is a long talked about hotel in the downtown at the site of the former Rutland Herald building at the corner of Wales and Center streets.

Photo: The former Rutland Herald building is being eyed as a site for a downtown hotel. Courtesy photo.

Duffy said the developer, DEW Construction, is hoping to obtain New Market tax credits that would allow the project to move forward.

He said there are indications that the tax credit funding mechanism is moving forward with investors eyeing the project.

The tax credits in this case require a public benefit. Duffy said the idea being put forward is that the hotel would employ people making a transition back into the job market. 

“If we had ability to place those who were ready to come back into the workforce into a job created by this new development, this new hotel, that would be a win-win,” he said. “I think the developer and the operator of the hotel were interested in that as well.”

Duffy said several organizations are onboard with the plan including Project Vision, Dismas House and the local Workforce Investment Board. 

Duffy said the idea is that the cost of the environmental contamination cleanup at the site would be rolled into the overall cost of the project.

“We’re envisioning that won’t be a major hurdle there,” he said.

On North Main Street, the former Royal’s Hearthside restaurant property is still being eyed as a retail location with Starbucks as the anchor.

Duffy said the former restaurant will be razed in the coming weeks. He said the owners of the property are negotiating a lease agreement with Starbucks as the key tenant.

He said property is owned by the same company that owns the adjacent CVS plaza. 

Earlier this year, the former Mobil station on North Main Street became a Five Guys hamburger restaurant.

On South Main Street, Hobby Lobby closed its doors in March. But the store won’t stay vacant for long. Ocean State Job Lots has announced plans to open there in the near future, Duffy said.

There’s also positive news on the housing front. He said local Realtors are reporting an uptick in business. “We’re feeling like we have a much stronger housing market right now in the city than we have in previous years,” Duffy said.

For the county, the Vermont Association of Realtors online report for February shows a median sales price year-to-date of $142,506 compared to $131,677 a year earlier. Through February there were 79 closed sales year-to-date compared to 62 the previous year.

The median listing price is also on the rise increasing to $228,678 from $177,490.

The county’s median household income of $52,635 remains below the statewide median income of $57,808, according to the U.S. Census Bureau.

Downtown

The heart of the downtown Rutland retail district encompasses the area along Merchants Row and Center Street. It includes the Rutland Shopping Plaza which is anchored on one end by Walmart and Price Chopper on the other.

Like most downtowns of its size there is no shortage of places to eat and drink. Two well established retailers on Merchants Row are McNeil & Reedy, a men’s clothier, and Fruition for women. 

For entertainment, several art galleries, Phoenix Books, Wonderfeet Museum and the Paramount Theatre dot Center Street. In the shopping plaza there’s a multiplex movie theater. 

Steve Peters, executive director of the Downtown Rutland Partnership, said the downtown remains an ebb and flow of business openings and closings. 

Peters said the feedback from businesses fluctuates as well but overall the outlook is positive.

There are, however, a number of retail vacancies, including spaces available to lease on the ground floor of the Mead Building, which wraps around one end of Merchants Row and Center Street.

Overall, according to Peters, the ground floor vacancy downtown hovers around 30 percent.

“The thing that’s a little tricky when we try to count that is that not all property owners are actively trying to fill their spaces,” he said. 

Peters agreed the Mead Building is a prime location and that means those spaces command a higher rent.

He said one problem is that a small business just starting out needs a smaller space and at a lower rent.

“I would like to say those kind of spaces would be filled by businesses already established somewhere else and might be coming to Rutland for another branch of their business,” Peters said. 

The DRP is working on funding for a new market study that would show what’s lacking for retail.

Anecdotally, the downtown is missing a gift shop and an outdoor gear shop, he said. 

The Partnership recently launched an interactive website that highlights downtown properties that are available for rent along with a description and contact information. 

Employers

The Rutland region has a foundation of well-established businesses: GE Aviation, Rutland Regional Medical Center, Killington/Pico ski areas, The Vermont Country Store, Omya, Carris Reels, and Castleton University.

There are also industrial parks in West Rutland and North Clarendon and Howe Center on the fringe of the downtown.

Reviewing the county’s legacy employers, Richardson said they appear to be doing “really well,” including GE Aviation and its local subcontractor Ellison Surface Technologies.

For entrepreneurs, he said the local maker space known as The Mint is busy with a growing membership. Members have access to technical expertise and share the use of equipment. Richardson said The Mint dovetails nicely with programs that are focused on startup businesses. 

The hospital

With 1,700 employees, Rutland Regional Medical Center is the largest employer in the county. 

In April, the hospital broke ground on the $24 million, 3,700-square-foot, two-story Thomas W. Huebner Medical Office Building. It will be the home of the ears, nose and throat practice and audiology clinic; the medical staff for physical medicine and rehabilitation; and the Vermont Orthopedic Clinic.

With a budget of $268.2 million, RRMC President Claudio Forte said financially the hospital is “doing OK.”

Artist rendering: Thomas W. Huebner Medical Office Building. Courtesy photo.

Halfway through the fiscal year Forte said the hospital is a bit behind its net operating income target.

The Green Mountain Care Board approved a budget with operating income of 2.5 percent. Although RRMC is tracking net income of 1.5 percent, Forte said he expects the hospital will end its fiscal year in the black.

Last year, he said Rutland managed a small profit, one of only five hospitals to do so. He said the other eight hospitals lost money. 

“We’re really focused on cost reduction and that’s having some positive impact,” he said.

Forte said two of the biggest cost drivers are labor and pharmaceuticals. Because of an ongoing nursing shortage, Rutland and other hospitals have had to pay more for contract labor.

Forte said the hospital maintains a close relationship with Castleton University and its nursing program. He said that’s allowed the hospital to hire 30 new graduates in the last year.

He also said RRMC is collaborating with business groups and employers in the area on workforce recruiting.  

The medical office building was named after the hospital’s former president, Thomas Huebner, who retired last year.

Forte said at a cost of $24 million the project will add a nice injection of local jobs for 18 months.

He said an obvious question given the struggles many hospitals in the state are facing is how can RRMC afford to undertake a project with a price tag in the millions of dollars.

“My response to that is we’re taking care of people with orthopedic issues, hearing and sinus issues and those type of things,” he said. “These people are going to get care and if they can’t get care … because we don’t have the facilities and we don’t have the skilled staff to do that, they’re going to go to New Hampshire or to Massachusetts or to New York.”

He said sending patients out of state for care is more expensive and doesn’t make sense when it can be done locally.

“So that’s why we think it’s a prudent investment and that it’s really a kind of win-win type of thing to be able to accommodate and keep those specialists here and those patients here,” Forte said.

He also said one of the conditions when the Green Mountain Care Board issued its certificate of need is that the hospital will not increase its commercial rates to pay for the project.

Forte added that vacating and relocating the existing services once the building is completed will result in $566,119 in savings by 2023. 

GE

It would be fair to say that the two GE Aviation plants are the anchor of the county’s manufacturing industry.

The plants in Rutland City and Rutland Town employ 1,200 workers making GE the second largest employer in the county next to the hospital.

Photo: Jenna Leanza, an employee of GE Aviation Rutland, works on a fixture for the toolroom at the company’s Windcrest Road facility. Courtesy photo.

The plants manufacture compressor airfoils and low pressure turbine blades for more than 50 different GE engine programs.

“Our two Rutland plants they both produce commercial, which is about 75 percent of our business, and then military which is about 25 percent of our business,” said Plant Leader Kyle Griffiths. “Both of those markets have been and continue to experience significant growth.”

He said the plants are producing parts both for the next generation of engines, including the fuel-efficient LEAP and GE9X, while also continuing “to produce a large number of components for legacy aviation engines” that are decades old.

GE Rutland produces parts for a variety of Boeing aircraft including the 737 Max. Two recent crashes have forced the Federal Aviation Authority and other countries to ground the aircraft pending a fix. The crashes are being blamed on the aircraft’s flight control system. 

Griffiths said Rutland continues to make parts for the 737 Max.

“At this point there are no plans to decrease the production rate for the LEAP 1-B engine that powers the 737 MAX,” he said. 

Killington/Pico

Killington and Pico resorts continue to be the economic drivers behind the Rutland region’s recreation and tourism industry.

Killington is shooting for a ski season that could stretch into May, according to Rob Megnin, the resort’s director of marketing sales and reservations.

“There was a couple of hiccups with rain but for the most part it was really good, cold snow,” Megnin said. “Overall, we should probably see one of our better seasons we’ve had in a while.”

Killington’s sister resort, Pico, was off a little bit from last season, he said. “Overall, the two combined are doing well.”

Killington has a couple of major projects in the pipeline.

Photo: Architect’s rendition of the new K-1 base lodge at Killington. Killington Resort will spend several million dollars building the new base lodge. The facility is expected to be open in time for the start of the 2020-21 ski season. Courtesy photo.

Starting this spring, the K-1 base lodge is being rebuilt. The 18-month project is expected to be ready for the start of the 2020-21 season, Megnin said. 

Killington is still crunching numbers on a final cost but over the past two seasons alone the resort has spent close to $60 million, he said.

Another upcoming project is the Northridge triple lift, which is being replaced with a fixed-grip quad.

Megnin said there has also been a significant amount of ongoing snowmaking improvements both at Killington and Pico. 

Casella

One of the county’s best known employers is Casella Waste Systems. Companywide Casella has 2,600 employees with 260 employed in Rutland County, including 170 at its corporate headquarters.

Casella spokesman Joe Fusco said 2018 was one of the company’s best years. The continuing challenge is a global downturn in the recycling markets.

“China changing its import standards impacted the global recycling market significantly in 2017, 2018 and now into the current year,” Fusco said.

Photo: Casella Waste Systems operates one of its Zero-Sort recycling centers in Rutland. Casella enjoyed a good year in 2018 despite a tough global recycling market. Courtesy photo.

Although the company doesn’t sell a significant amount of recycling material to China, Fusco said the tightening of the Chinese market had a ripple effect on global prices. 

He said there are markets for recycling materials but “at what price.”

“You can always market the material, the question will be what is the demand for the material, what is the price you can get for the material,” Fusco said. “We’re still able to find markets. The issue for us is how do we fix long-term the economics of recycling so it becomes a sustainable activity.”

Solid waste is sometimes viewed as a lagging indicator of the economy: the more waste that is disposed of or recycled the better the economy.

“The economy is very strong just about everywhere,” he said.

In addition to the six states where Casella has operations, the company also provides consulting and management services in 40 states.  

Workforce

REDC’s Richardson said the problem for businesses large and small “is people.”

“We’re still in the face of a population decline,” he said. “We’re still is the face of an aging population and that is going to put significant strain on our businesses moving forward in terms of their available workforce.”

Richardson said the problem is being addressed in multiple ways with area partners.

Like every area of the state Rutland is faced with the double-edge sword of low unemployment. In March, the Department of Labor reported the county’s unemployment rate at 2.5 percent (not seasonally adjusted), a significant improvement over March 2017 when the unemployment rate stood at 3.4 percent. The statewide unemployment rate in March was 2.3 percent (seasonally adjusted).

At GE, the number of workers has steadily increased over the last several years. 

Griffiths said the plant has embarked on an aggressive hiring program over the last 18 months “where we’ve hired more than 200 people and that includes nearly 100 new employees year-to-date in 2019.”

To meet its employment needs, the plant is working with several recruiting agencies both for hourly and salaried,” he said.

Griffiths also said GE is working with local partners including city and town officials and the Rutland Region Chamber of Commerce. 

Terri Leichtnam, plant human resources leader, said GE continues to operate its high school apprentice program. 

For engineering-related jobs, Leichtnam said the plant has hired both locally and from the outside.

While hiring remains a challenge, Griffiths said the company has been able to hire locally thanks “to the support that we have from the local community.” 

During the peak ski season, Killington employs between 1,600 and 1,800 workers. Those jobs aren’t always easy to fill so Killington has brought in foreign workers to fill the gap. This season Megnin said the resort hired Mexican workers to serve as lift operators and in food and beverage.

Year round, the resort has 600 employees.

At Casella, “The big need is in both drivers and mechanics,” Fusco said. 

To cope with the challenge, Fusco said the company several years ago began working with veterans groups to attract job applicants. He also said Casella reached out to trade and vocational schools, driver and diesel mechanic schools. 

County roundup

With GMC closing, Poultney will bear the economic brunt. 

Judy Leech, president of the Poultney Area Chamber of Commerce, said the subject on everyone’s mind is the future of the campus.

“There are some people who are really worried and … there are other people who are looking at it as an opportunity,” Leech said. 

Some ideas being tossed around are turning the campus into a business park, a multi-use facility, technical school or some component with a focus on education.

“Of course at this particular point it isn’t up to the town, it’s up to Green Mountain College and the trustees,” said Leech, general manager of radio station WVNR. 

With the college closing, she said it creates a lot of uncertainty in the business community.

Leech said two other employers in town are First Light Technologies and R&B Powder Coating.

The Poultney area is also home to the county’s slate industry.

For recreation and tourism, there’s nearby Lake St. Catherine and Lake Bomoseen. For hiking and biking, there’s the northern section of the D&H rail line that runs from Castleton to Poultney. 

In addition, Leech said a volunteer group, Slate Valley Trails, has opened hiking and biking trails.

Pittsford

Plans for a retail store on Plains Road just off Route 7 in town remain alive, though it won’t be a Dollar General.

Dollar General pulled out of the project after it was opposed by some residents. 

However, Town Manager John Haverstock said the owner of the property has a conditional permit from the town for a commercial building with no specific tenant lined up.

“For now it’s a generic permit for retail usage on that site,” he said. 

Haverstock said it’s his understanding the property owner is moving forward to obtain an Act 250 permit. 

Omya Inc., the largest employer is town, is doing well. Wayne Williams, Omya plant manager, said business is on track with last year’s numbers. Omya makes both slurry and dry products. The slurry is used in the paper industry. The dry calcium carbonate is used in a variety of industries including construction and plastics.

Omya employs 130 at its Florence plant. There are additional support workers in Proctor, the company’s former, North American headquarters. 

Later this year, construction is scheduled to begin on upgrading another section of Route 7. The Segment One project is approximately 1.4 miles and extends from the Townline Kabota dealership north to the Mobil station at the intersection of Routes 7 and 3, Haverstock said.

Fair Haven

Fair Haven Town Manager Joe Gunter said the feedback he’s getting from townspeople is positive. 

“Whenever I do a little turn though the downtown I always ask how business is and overall people are saying it’s pretty good,” Gunter said. “I haven’t had anybody say, `Oh no, it’s terrible.’”

He said the town has done a revitalization study, which led the town to apply to a USDA small business revolving loan fund to boost startup businesses.

In the Greater Fair Haven area, the economy appears to be doing fairly well, said Kerry Fowler, who owns Fowler Mechanical Services, a small engine repair business in Castleton.

“Our business has remained quite healthy,” said Fowler, who serves as president of the Vermont Lakes Region Chamber of Commerce.

He did say many of his customers are opting to repair their equipment rather than spend money to buy a new snowmobile, tractor or lawn mower.

Fowler said based on his observations “everybody seems reasonably confident that things seem to be going quite well.”

Bruce Edwards is a freelance writer from southern Vermont.