Photo: Aerial view of Middlebury, VT. Courtesy photo.
by Bruce Edwards, Vermont Business Magazine Rob Carter calls it a mixed bag.
“Certainly, those (businesses) mandated to close are really being challenged in trying to get back open,” said Carter, president of the Addison County Chamber of Commerce.
As if the COVID-19 pandemic wasn’t bad enough, Middlebury is also facing another challenge: a 10-week shutdown in the downtown to complete an $80 million infrastructure project.
Despite the challenges, he said business owners are trying to make a go of it.
“We’ve certainly seen a lot of creativity with takeout menus and more online ordering and those kinds of things to compensate,” Carter said.
Other businesses not directly impacted by the shutdown, including financial services, are doing well, he said.
Carter said the reopening of Middlebury College in the fall will be “somewhat helpful.” But he noted at least initially students will be required to remain on campus.
“So it won’t be like they’ll be going to the restaurants and stores,” he said.
He also said there won’t be visitors coming onto the campus either.
“So it’s not going to be this sudden surge of customers coming into downtown Middlebury,” Carter said.
Numbers
The global COVID-19 virus has taken a human and economic toll.
As of August 16, Vermont had recorded 58 deaths and 1,515 confirmed cases, according to the state Health Department. Addison County had 76 cases and two deaths. Vermont has the fewest cases, the lowest per capita rate and one of if not the lowest positivity rate.
Like the rest of the state, the county is coping with the economic fallout from COVID-19.
The county posted a 6.9 percent unemployment rate (not seasonally adjusted) in June, down from 9.4 percent in May and down from an April peak of 14.8 percent.
And while there has been steady improvement since April, it was a different world a year ago when the county’s June jobless rate stood at just 2.4 percent.
The statewide unemployment rate (seasonally adjusted) fell again in June to 9.4 percent from May’s 12.8 percent.
The county’s median household income is $65,093 compared to a statewide median income of $60,076 (2018), according to the US Census Bureau.
Diverse
So far Addison County’s diverse economy has been a buffer, helping to limit the damage caused by the pandemic, according to Fred Kenney of the Addison County Economic Development Corp.
The county’s economy relies on hospitality and tourism, retail, manufacturing, higher education, health care and agriculture.
Like the rest of the state, the county’s retail and dining sectors have felt the brunt of the pandemic.
Kenney said there have been a few closings, some of which were caused by pre-COVID business conditions while other closings were directly attributed to the pandemic. He said most of the closings were in the retail sector.
“If the pandemic continues and not everyone is able to reopen fully and consumer confidence, not only in the economy but also in the ability to go into stores, if that doesn’t rebound,” Kenney said, “we’re going to lose more businesses.”
He said the county is blessed with many small and midsized manufacturers and a few larger ones like Cabot Creamery in Middlebury and Collins Aerospace in Vergennes.
According to Kenney, Collins Aerospace (now part of Raytheon Technologies Corp after a massive merger earlier this year with 195,000 workers worldwide) employs approximately 800 workers and was adding workers before the pandemic hit.
“They just got a bunch of new contracts and are doing very well,” he said.
The College
With a fiscal 2021 budget of $272 million and 1,300 employees, Middlebury College is the largest private employer in the county and in many ways the lifeblood of the town’s economy.
Like other aspects of life in Vermont, the pandemic has forced changes at the liberal arts school.
For the fall semester, Middlebury is anticipating 2,300 students will return to campus, about 300 less than a typical semester, said David Provost, executive vice president, finance and administration.
Provost said some international students are not likely to return because of travel restrictions.
The other factor is the cancellation of fall sports which could result in some students taking a year off so they can play next fall, he said.
He said given the COVID spikes in other parts of the country the final tally of students returning to campus could change.
The college is implementing a three-phase approach to the fall semester.
It starts with students being required to sign the Middlebury Health Pledge and abide by the state’s COVID-19 restrictions. Faculty and staff are required to sign a similar pledge.
Provost said the school will have a rigorous testing protocol in place once students return to campus.
“We have a full system in place to test every student twice from day zero to day seven and then we will test randomly about a third of the population every week throughout the semester,” Provost said.
He said faculty will have the discretion to offer in-person classroom instruction, remote teaching or hybrid courses that combine classroom and online instruction.
Like other businesses and institutions, Middlebury has absorbed a significant cost in adjusting to the effects of the pandemic.
“Right now we’re projecting the cumulative impact both from FY20 and what we’re projecting for FY21, it would be somewhere in the 25 to 30 million dollar range,” Provost said.
The cost of personal protective equipment, testing and other COVID-related health expenses are in the neighborhood of $4 million, he said.
He also said schools like Middlebury have not been eligible for federal support during the pandemic, including the Payroll Protection Program.
Provost said the only federal support was related to helping the most vulnerable students, $1.8 million, which was disbursed directly to the students.
The school’s fiscal 2021 budget maintains current pay and benefits, relying on budget cuts and tapping into the college’s $1.1 billion endowment to meet its obligations.
“We’ve tried to maintain a commitment to wage continuity and benefits continuity,” Provost said. “So we were able through the spring semester to keep all full-time benefit eligible employees on.”
He said the FY21 budget assumes everyone remains on the payroll.
Provost cautioned, however, that the budget is not cast in stone and that adjustments would be necessary if student enrollment falls below estimates or the school is forced to send students home mid-semester.
In either case, Middlebury would consider other budget options including a reduction in the school’s retirement match through next June 30 or tiered-based pay cuts. Any employee making less than $50,000 a year would not be affected.
“We’ve signaled to the community we would only do that if things get much worse,” he said.
Provost said there was a discussion of how much the college should tap into the endowment with some faculty urging a more significant withdrawal rather than budget cuts.
He said the senior leadership team has taken a pay cut in the 10 to 20 percent range.
He also said the college has adopted health and safety protocols for students, faculty and staff that meet or exceed state Department of Health guidelines.
Porter Medical Center
Many of the smaller hospitals in the state were facing financial challenges before the pandemic hit, including the Middlebury hospital.
The impact of the pandemic has only added to the financial stress of the hospital, which has 800 employees.
Photo: Porter Medical Center, Middlebury, VT. Courtesy photo.
"The COVID-19 pandemic created significant financial issues for Porter, our UVMHN (University of Vermont Health Network) affiliates and every hospital in Vermont, driven mostly by the suspension of elective procedures for many weeks this winter and spring,” Ron Hallman, vice president, communications and engagement at Porter, said in an email. “Thanks to some early efforts to reduce expenses, combined with aggressive applications for all available federal and other funding, Porter was able to successfully address our current fiscal year's projected deficit.”
He said there have been no employee furloughs.
Hallman cautioned, however, “that any new outbreak this fall or winter will once again place a strain on our operations and potentially our finances.”
The Green Mountain Care Board approved the hospital’s fiscal 2020 budget of $87.5 million, an increase of 3.4 percent from the previous year.
Hallman said the hospital is focused on providing patients with a myriad of services including elective surgeries under “very strict protocols intended to keep our patients and staff safe.”
Hallman also urged people not to delay seeking necessary care.
PPP
Addison County businesses have taken advantage of the federal assistance programs available during the pandemic.
National Bank of Middlebury processed nearly 400 PPP loans totaling $26 million, said Meaghan McLaughlin, vice president, business community lender.
McLaughlin said despite the pandemic commercial lending has not gone away and is “a little bit more active than anticipated.” She said businesses continue to be bought and sold and there has been refinancing activity as well.
McLaughlin said the bank has been active in making loan deferrals to help customers through the crisis, “making accommodations, as necessary.”
“I think as a result of the accommodations we’ve made to date, combined with the various stimulus packages, we have not seen any substantial uptick in delinquencies at this time,” she said. “The future is obviously to be written.”
McLaughlin said the bank’s residential lending remains strong - a combination of new home purchases but mostly refinancing.
“Interest rates are just extremely low right now,” she said.
She said because of the pandemic and the state’s low COVID numbers the bank has seen some out-of-state relocations. McLaughlin said the ability of people to telecommute from home could result in longterm benefits to mitigate some of the demographic challenges Vermont continues to face.
She also said businesses have moved to modernize their operations to offer more online access or changing the way they interact with their customers.
The major focus of the Addison County Economic Development Corp. has been to disseminate information to businesses about federal and state financial programs like the CARES Act (The Coronavirus Aid, Relief, and Economic Security Act).
The ACEDC has also helped out with its revolving loan fund.
Kenney’s organization has formed the Addison County Recovery Team made up of businesses and social service organizations.
“Now we’re trying to move more towards longterm recovery,” he said. “Looking at the longterm and looking out to what’s going to happen in the coming months.”
Industry
Middlebury’s Exchange Street is an industrial hub that’s home to a diverse group of businesses including Appalachian Gap Distillery, Stonecutter Spirits, Vermont Hard Cider, Vermont Coffee Company, Champlain Valley Creamery, Agricola Meats, Bee’s Wrap, Bow Ties of Vermont, Maple Landmark and Vermont Soap.
Kenney said several companies had already established an online presence so were in good shape to sell to conduct business when the pandemic hit.
Other companies pivoted to making masks to help out during the pandemic while distillers like WhistlePig and Appalachian Gap were able to provide alcohol, which was in short supply, to make hand sanitizer, he said.
Vermont Soap
If there is one lesson to be learned from the current pandemic, it’s that hand washing plays a key role in staying healthy and keeping the virus at bay. No one knows that better than Larry Plesent, founder and CEO of Vermont Soap.
“People are using soap like crazy,” said Plesent, whose company
makes a variety of mostly certified organic soap and cleaning products, including bar and foaming hand soap.
For Vermont Soap, the emphasis on hand washing and cleaning has resulted in a significant boost in business - a “sustainable bump” of 20 percent, he said.
Photo: Right: Workers at Vermont Soap in Middlebury ready orders to ship. Courtesy photo.
“We’ve sold a lot of foaming hand soap, a lot of refills, a lot of gallons,” he said.
Plesent said he’s hired another five workers, bringing the total workforce to 37 at his 32,000-square-foot manufacturing facility off Exchange Street.
The company also makes iZaroma, a multipurpose cleaner that’s 70 percent alcohol.
The jump in business came with its own set of challenges.
Plesent said there was a worldwide shortage of spray caps and bottles making them hard to find.
There was also a shortage of alcohol but Plesent was able to partner with WhistlePig, the Shoreham craft distiller.
Photo: Vermont Soap in Middlebury, which manufactures a variety of mostly organic-certified soap products including hand soap, has seen a significant increase in business during the pandemic. Courtesy photo.
“We all worked together and we were able to give out some 12,000 bottles of sanitizer to clinics, first responders, you name it,” he said.
Because hand sanitizers are regulated by the FDA, the multipurpose iZaroma is marketed as a cleaning spray that’s 70 percent alcohol combined with essential oils, he said.
Vermont Soap manufactures products under its own label sold through its website, in health food stores and on Amazon. The company is also a private label maker and bulk supplier to more than 100 companies.
The company’s products are also sold in Singapore and Japan.
Dairy
Before the pandemic struck, dairy farmers were already struggling with low milk prices. During the first quarter the average milk price was $17.56 per hundredweight.
Kenney said agriculture and hospitality-related businesses are probably the most at risk-industries in the county.
Vermont continues to lose dairy farms. In 2011, there were 996 farms in the state. Today, there are 651 dairy farms, according to the state Agency of Agriculture, Food & Markets.
With 99 dairy farms, Addison County has the third most dairy farms behind Franklin and Orleans counties.
Since the first of the year the state has lost 28 dairy farms with three in Addison County.
In July, the Scott administration announced a program to help struggling farmers. The $41 million Vermont COVID-19 Agriculture Assistance Program includes $25 million in grants to assist dairy farmers and dairy processors.
The money was allocated by the Legislature as part of the Coronavirus Relief Funds.
Housing
Finding affordable housing has become a more daunting challenge, according to one housing advocate.
“It’s gotten worse,” said Elise Shanbacker, executive director of the Addison County Community Trust. “The supply of housing right now is incredibly limited both in ownership as well as in rentals.”
The problem is especially acute for the homeless. Shanbacker, who works with homeless advocates, said the common refrain is that there are no apartments that fall within the federal payment standards for people to rent.
She said there are between 30 and 40 families and individuals who are living in motels in the county.
The state has imposed a moratorium on evictions until the end of the COVID state of emergency. But Shanbacker said past due rent accrues and will have to be paid back once the emergency declaration is lifted.
She said another ominous sign is that unless Congress takes action expanded unemployment benefits of $600 a week were due to expire at the end of July.
At the state level, Shanbacker said there is help available.
Governor Scott announced a $25 million program to help renters, homeowners and landlords. Renters can apply for assistance through the Vermont Housing Authority, homeowners having trouble making their mortgage payments can seek help from the Vermont Housing Finance Agency.
Landlords can apply through the Vermont Landlord Association.
Addison County Community Trust owns and manages 282 rental units and owns another 16 managed by a third party. The Trust also owns nine mobile home parks with 340 lots and 75 shared equity, permanently affordable, single-family homes.
Photo: Addison County Community Trust is building this 24-unit affordable apartment house on Armory Lane in Vergennes. Courtesy photo.
The Trust is nearing completion on a 24-unit apartment building on Armory Lane in Vergennes. Shanbacker said she expects the building to be fully leased by the end of the year. There were 74 applications for the one and two-bedroom apartments. There is also one three-bedroom unit.
Rents are based on income. One bedroom apartments range from $659 a month to $965; rent for a two-bedroom ranges from $780 to $1,175. Rents include heat and Wi-Fi.
Alleviating the state’s housing shortage will require a multi-faceted approach. Shanbacker said that includes zoning changes that make it easier to add apartment additions onto existing single-family homes as well as zoning modifications to increase housing density in downtowns.
Even with new housing, she said there will be an ongoing need for more rental assistance.
“So we really need an all-of-the-above approach to move the needle,” Shanbacker said.
Broadband
With the pandemic forcing people to work and learn from home, the crisis has put a renewed focus on the critical importance of broadband access throughout the state.
The Addison County Regional Planning Commission recently received a $60,000 grant from the Department of Public Service to conduct a feasibility study and business plan to expand broadband in the county, said Adam Lougee, the planning commission’s executive director.
“In the meantime, we’ve just had four towns form a communications union district,” Lougee said. “That will probably be the operating entity for whatever we’re able to do for a broadband feasibility study.”
The four towns are Monkton, Ferrisburgh, New Haven and Leicester.
Lougee said he expects other towns to join depending on their need and existing level of service.
“It won’t be a priority in Bristol or Vergennes or even Middlebury but it will be a priority I expect in Whiting and Shoreham,” he said.
“There’s a lot going on with communications union districts and money for expanding rural broadband right now,” he said.
Lougee said the expansion is being helped along by CARES Act money.
Downtowns
In addition to the Middlebury bridge/rail project, Vergennes and Bristol have their own downtown work lined up.
“Vergennes is repaving its main street and Bristol is repaving its main street right now too,” Lougee said. “They’re also doing a lot of other ancillary improvements.”
In Vergennes, the city is reconfiguring the timing of traffic lights and building bump outs (for pedestrian safety) and bike lanes, he said.
“So a lot of bike/ped oriented changes in Vergennes this summer and then in Bristol some of the same along with sidewalks and lighting,” Lougee said.
Kenney said Bristol received a grant from the Northern Borders Regional Commission for the Stony Hill mixed-use development. The project includes light manufacturing and a residential component.
Bruce Edwards is a freelance writer from Southern Vermont.