Photo: Kelly Devine (Burlington Business Association Director), Michael Seaver (People’s United Bank President), Doug Nedde (Nedde Real Estate), Miro Weinberger (Mayor City of Burlington), Steve Theriault (Wright & Morrissey) celebrated the groundbreaking and renovations of 77 Pine Street. Courtesy photo.
by Bruce Edwards, Vermont Business Magazine Frank Cioffi didn’t sugarcoat what Vermont and Chittenden County are facing: “COVID was a beast and still is a beast and we’re going to be awhile recovering from it,” said Cioffi, president of the Greater Burlington Industrial Corp.
Cioffi has the facts to back up the toll the pandemic could take on Chittenden County’s businesses.
He cites a Brookings Institution analysis that of the 6,631 small businesses in the county, 21 percent are at immediate risk of failure, 30 percent face a near term risk and 47 percent face a longterm risk.
Brookings based its analysis on data from Moody’s and the Boston Consulting Group.
According to Brookings, as of March, those 6,631 small businesses employed 83,815 people.
Number of establishments and employment in small businesses (1 - 249 employees) in industries with immediate or near-term risk by state
|
State |
Number of small businesses in |
Number of small businesses in |
Employment in small businesses in |
Employment in small businesses in |
Share of small |
Share of small |
Share of small business employment in industries with immediate risk |
Share of small |
|
Vermont |
5,468 |
5,948 |
54,442 |
38,785 |
26% |
28% |
29% |
20% |
Number of establishments and employment in small businesses (1 - 249 employees) in industries with immediate or near-term risk by county
|
County Name |
Number of small businesses in |
Number of small businesses in |
Share of small immediate risk |
Share of small |
|
Chittenden County, Vermont |
1392 |
1502 |
25% |
27% |
Brookings Institute
“It appears that 90 some-odd percent of them are less than 100 workers,” Cioffi said. “That’s quite significant.”
The businesses that are in the high risk category are hotels, restaurants, retail stores, and salons.
He said those businesses and others that weren’t deemed an essential business” were forced to shut down in mid-March.
The fallout from the shutdown is evident in the unemployment numbers. The Burlington-South Burlington labor market posted a May unemployment rate of 11.4 percent, down from 14.7 percent in April. Last May the unemployment rate was 1.8 percent.
Statewide the May unemployment rate stood at 12.7 percent, down nearly 4 percent from April, according to the state Department of Labor.
Chittenden County has long been regarded as Vermont’s economic engine.
But Cioffi said the county’s economic importance may have in fact been underestimated.
He cited a report commissioned by the GBIC on “The Role of Northwest Vermont in the State Economy.” The report was authored by economist Arthur Woolf who said this in his summary:
“With 35 percent of the state’s population, the three northwestern counties of Vermont—Chittenden, Franklin, and Grand Isle, are more important to the state than their population share indicates. They account for a larger share of jobs, income and wages than their population share. They are growing in population while the rest of the state’s population is declining. More people commute into the region from other Vermont counties, and from other states, than leave the region for their jobs. Average wages are higher than elsewhere in the state. A much larger share of income taxes comes from the region than its population share. The only reason other tax revenue sources are less than its population share would suggest is the because of the impact of a large value of vacation property surrounding the state’s ski areas and the economic activity associated with those and other tourist destinations.”
Chittenden County is home to the University of Vermont, University of Vermont Medical Center and many of the state’s major employers including Dealer.com, Ben & Jerry’s, Global Foundries, BioTek Instruments, Gardener’s Supply and Revision Military.
Northwest Vermont Counties Share of Vermont
|
Population |
35% |
|
Population Change 2000-18 |
129% |
|
Jobs |
39% |
|
Job Change 2000-18 |
74% |
|
Wages |
44% |
|
Personal Income Taxes |
42% |
|
Sales Tax |
30% |
|
Meals & Rooms Tax |
33% |
|
Property Transfer Tax |
38% |
|
Education Property Tax |
33% |
Selected Tax Revenues ($mil)
|
VT Total |
NWVT Share |
|
|
Personal Income |
$724.7 |
41.5% |
|
Sales and Use |
$380.9 |
30.3% |
|
Meals and Rooms |
$178.7 |
33.0% |
|
Property Transfer |
$49.8 |
37.9% |
|
Total |
$1,334.2 |
37.5% |
Wage Indicators
|
Total Wages |
Average |
Wage |
|
NWVT |
$6.5 billion |
$53,200 |
|
Rest of VT |
$8.6 billion |
$44,000 |
|
VT |
$14.4 billion |
$47,600 |
|
NWVT Percent of VT |
44% |
112% |
Arthur Woolf Consulting courtesy GBIC.
Revision
Throughout the COVID crisis while restaurants and other nonessential businesses were forced to close, essential businesses like Revision Military in Essex Junction continued to operate.
Revision, a maker of protective eyewear for the military and law enforcement, instituted a number of safety protocols at its manufacturing facility and office to keep its 140 workers safe, said of Kelly Krayewsky, the company’s director, brand marketing and government affairs.
In terms of orders, Krayewsky said business remains steady.
“At this point, our business is pretty diverse with customers here in the US, as well as customers in Europe and other parts of the world,” she said. “I think we’re pretty happy with what our pipeline looks like.”
In October, Revision sold its protective eyewear business and name to a New York private equity firm, ASGARD Partners & Co. Revision’s new president is Amy Coyne.
Revision’s former parent company, which includes protective headgear made in Newport, renamed itself GALVION.
In addition to protective eyewear, Krayewsky said Revision took excess material and made 2,000 medical-grade face shields that were donated to the Vermont Veterans’ Home in Bennington, other longterm care facilities, law enforcement and fire departments.
The company is also marketing those face shields to the military and police for COVID-related reasons, she said.
Photo: A worker at the Revision Military plant in Essex Junction checks a pair of ballistic goggles. The parent company sold its protective eyewear division last year to ASGARD Partners & Co., New York private equity firm. Courtesy photo.
Revision is also developing anti-laser protective ballistic eyewear.
“This is actually lenses that block 99 percent of harmful laser wavelengths,” Krayewsky said.
She noted that “green lasers” can easily be purchased on the open market and have been targeted against police during the recent civil unrest across the country.
Krayewsky also said Revision has partnered with Burton’s optics business to license their magnetic face integration technology. She said it works with a balaclava that protects the face and neck and integrates it with Revision’s Snow Hawk cold weather goggles.
Retail
While the slow reopening of the economy is the smart and the right thing, Tom Torti of the Lake Champlain Regional Chamber of Commerce said, “from a business survivability and business continuity perspective it doesn’t work.”
Torti said the shutdown “crushed” the retail and service sectors.
He said it’s important for Vermonters to the extent possible to support local businesses. “Vermonters buying from Vermonters, do that,” he said. “I’ve never seen the words Amazon emblazoned on the back of a Little League jersey, hanging at the Patrick Gym or Gutterson Fieldhouse or any other local venue.”
When the economy finally opens up, Torti said how consumers respond in terms of spending on items that are not critically necessary “is something we don’t know yet.”
Torti remains optimistic that retail will bounce back within a couple of years. “I don’t think retail is dead,” he said.
When it comes to tourism, Canadian tourists are a significant contributor to the local economy. But COVID has shut down the Canadian-U.S. border. Torti is not optimistic the border will open in time to salvage the summer season for tourism-related businesses.
“Canadian business sustains a lot of our retail and restaurant in Burlington, Essex, South Burlington and Colchester,” he said. “So without Canadian traffic, without robust traffic coming from other metropolitan areas, it’s a gut punch, it’s a sucking chest wound to these businesses.”
Construction
“There’s no question COVID-19 has taken a bite out of everybody, PC included,” said Jay Fayette, president and CEO of PC Construction, the largest general contractor in the state and one of the largest along the Eastern seaboard.
One of PC’s largest projects is the $80 million University of Vermont multi-purpose event center.
Fayette said the arena portion of the project is on hold “and will be for some time.”
The project also includes renovations to Gutterson Fieldhouse and the Forbush building which are moving forward, he said.
Photo: PC Construction won an $80 million contract to build a multi-event center at UVM and renovations to Gutterson Fieldhouse and the Patrick Gymnasium. Work continues on the renovations but UVM put construction of the multi-event center on hold because of the financial fallout caused by the coronavirus. Courtesy photo.
“I would say half the project is continuing and the other half on hold indefinitely,” Fayette said.
PC is also waiting to hear whether UVM will award a contract for the $31 million Firestone Laboratory project. Four general contractors including PC bid on the project.
PC recently broke ground on a $45 million project at Stowe Mountain Resort. The company also has ongoing work at Global Foundries and for Green Mountain Power Corp.
PC is the general contractor for the downtown CityPlace project but that project is in a holding pattern, in part because of the ripple effects of the pandemic. “It’s just a complete unknown at this time,” he said.
Fayette said there is other construction activity in the pipeline in Chittenden County, including projects in Essex Junction, and the Burlington International Airport. But he also said the effects of shutting down non-essential business in March and April is still taking its toll.
“We’ve got some tough sledding ahead for all of us,” he said.
Fayette said major construction projects just aren’t on the horizon right now. He said for jobs that do come along “the competition is going to be fierce.”
“We think construction will be impacted through 2021 and ’22,” he said, adding that the company is projecting a 20 percent decline in revenues this year and next year.
Fayette said another casualty of the economic fallout has been lending, which has “tightened up incredibly” for private development.
So far PC has not resorted to layoffs. “We’ve done a really good job of keeping people active and employed,” he said. But he cautioned that could change in the coming months depending on the company’s workload.
PC has 375 employees of which 175 work in Vermont.
Medical Center
By the end of its fiscal year Sept. 30, the University of Vermont Medical Center is projecting a loss of $17 million. That’s $63 million below its budget target. All of the loss is attributed to COVID-19.
UVMC President and COO Dr. Stephen Leffler said the hospital lost a combined $62 million in March and April when the state’s emergency order shut down elective surgeries at hospitals throughout the state.
Leffler said the situation has since improved with a loss of $9 million in May.
Photo: University of Vermont Medical Center President and COO Dr. Stephen Leffler. Courtesy photo.
“In March and April, we were losing more than $1 million a day,” he said. “We’ve significantly decreased that but we still have work to do clearly.
Of UVMC’s 8,000 workers, he said as of mid-June the hospital had 557 workers who were either on full-time furloughs or reduced hours.
On a positive note, he said the hospital has recalled 90 employees.
“We have a significant number of people out basically matching staffing to the volume of care that people are seeking,” he said.
The next several months through the end of the fiscal year will be crucial as the hospital puts in place a new budget for the fiscal year that starts Oct. 1.
“We are really watching June very closely, July and August because we believe this is close to our new normal … and so we probably won’t have the same capacity for services prior to COVID getting here,” Leffler said.
At this point, he said the medical center “does not foresee further layoffs or furloughs.” But he cautioned the medical center will match staffing with patient demand.
Leffler said furloughs are far preferable to layoffs because furloughed workers maintain their benefits and can be recalled to work more easily than someone who is laid off.
He said the medical center did not qualify for the federal government’s emergency Paycheck Protection Program but did receive $23 million in federal stimulus aid.
The added safety precautions resulting from the pandemic required the hospital to spend an additional $4.5 million during the last quarter on personal protective equipment.
Regarding the CityPlace project where UVMC would be the major tenant, Leffler said while the hospital has not made a firm commitment, the hospital also “has not made other arrangements.”
CityPlace, a large mixed-use project in the heart of the downtown, is in the midst of a redesign to make the project economically viable.
Most vulnerable
Those who are at or near the bottom of the economic ladder have been hit particularly hard by the health crisis.
Jan Demers, executive director of the Champlain Valley Office of Economic Opportunity, said she’s hearing from people who have never asked for help before.
“There are so many people who have been on furlough or have lost their jobs,” Demers said. “So people who have not needed food before are needing food and are told to shelter at home.”
At the Chittenden Emergency Food shelf, homebound deliveries increased from 110 a month to close to 250, she said.
Because of the pandemic many homeless are now sheltering in hotels with no access to meals. So Feeding Chittenden began delivering meals to hotels - 1,400 a day, Demers said.
Housing is the other critical issue.
The CVOEO helps people with housing through its housing assistance program with first month’s rent and security deposit.
Demers said many people are not eligible because of their past income but who had recently lost their jobs.
She said the Vermont Community Foundation and United Way stepped up with funds to help people who were not eligible
Although the state put a temporary hold on evictions, Demers said past rent will be due once the emergency order is lifted.
“We’ve tried to keep up with what we can to make sure that rents are paid,” she said.
Home sales
The ripple effect of the pandemic is reflected in the housing market in Chittenden County and northwestern Vermont.
In May, closed sales plummeted 41.5 percent for single-family properties and fell 34.2 percent for townhouse-condo properties, according to the Northwestern Vermont Board of Realtors, which covers Chittenden, Franklin and Grand Isle counties.
The median sales price for a single-family home declined 2.3 percent to $315,000 in May and decreased 0.5 percent to $237,450 for townhouse-condo properties.
But Kathy Sweeten of the Northwestern Vermont Board of Realtors believes that the market is starting to turn the corner.
“People are back out putting their homes on the market, people are out buying and so I imagine when I see the June numbers they will be very different,” said Sweeten, the board’s chief executive officer.
She also expects the real estate market “to pick up substantially in the third and fourth quarters.” On the national level, Sweeten said, barring a second COVID wave, home sales are forecast to be back to pre-COVID levels by next year.
Sweeten said the challenge for buyers remains low inventory. “We’re seeing houses not stay on the market as long because the inventory is so low,” she said.
The inventory of homes priced under $350,000 in northwestern Vermont “is very tight,” she said.
As a result, she said there is a greater interest in condos because there aren’t enough homes in that $350,000 price range.
Along with real estate professionals from around the state, Sweeten said while there is an apparent pandemic-related uptick in interest from out-of-state buyers, that interest is primarily concentrated in the southern part of the state.
“It’s the same phenomenon as 9/11,” she said. “People are looking for more rural, more peaceful environments and Vermont certainly has that to offer.”
Putting the current crisis aside, last year was a good year for the real estate market in Chittenden County, reflecting a strong national economy.
The Northwestern Vermont Board of Realtors said in its annual report that closed sales in 2019 were up 8.1 percent with 2,952 properties sold.
The median sales for all properties price increased 4.4 percent to $291,327 for the year. Single-family home prices were up 3.7 percent compared to 2018. Townhouse-condo home prices were up 7.9 percent.
The inventory of single-family homes fell 34.2 percent and 28.4 percent for town homes and condos.
Housing
It’s one of the largest real estate developments in the county.
Finney Crossing is a mixed-use development in Williston that encompasses 186 homes or condos, 330 apartments and several commercial properties.
Photo: Home2 Suites is one of several new businesses that occupy Finney Crossing in Williston. Courtesy photo.
Developer Chris Snyder said all the residential units are sold and occupied. Another 65-unit apartment building is under construction and nearly complete, with half the units already leased, he said. Occupancy is expected by the end of July, he said.
Rents are between $1,100 and $1,900 a month.
Snyder said demand remains high for rental housing. “If you walk in today, you can’t move into a unit out of 330,” he said.
On the commercial side, a completed hotel is ready to open as soon as the state further relaxes its COVID-19 restrictions, Snyder said.
Other commercial tenants include Union Bank which opened last fall and a Healthy Living store under construction in the same building, he said.
“We have a couple of other smaller tenants that are moving into that same building in some adjacent spaces,” he said.
Snyder said he continues to have discussions with potential restaurant tenants. He said restaurants are being more cautious about moving forward because of the current health crisis.
Snyder has other projects under construction in Williston. Creek’s Edge is a 35-home development. The town homes are priced between $450,000 and $500,000.
In Shelburne, Kwiniaska Ridge is a 91 single-family and town home development. Single-family and carriage homes range from $600,000 to $750,000. Town homes are expected to be priced starting at around $500,000.
Affordable rentals
Affordable housing remains an issue in Chittenden County and elsewhere in the state. The state’s largest county (pop. 163,774) not only has the highest median family income but also has the highest rents.
The median household income in the county in 2019 was $69,896 compared to a statewide median of $60,076.
According to the National Low Income Housing Coalition, in 2019 it took an annual household income of $61,760, or $29.69 an hour, to afford a two-bedroom apartment in the county. The average fair market rent for a two-bedroom apartment in Chittenden County was $1,544 a month.
Statewide the fair market rent for a two-bedroom apartment in 2019 was $1,184.
One of the priorities of the Chittenden Regional Planning Commission remains affordable housing.
Of interest to the commission and its member towns is a housing bill, S.237, said Charlie Baker, the commission’s executive director.
Baker said one of the unresolved issues that has been a drag on the economy is a shortage of affordable housing.
He said adequate and affordable housing is a key for employers to recruit new workers.
“We’re really hopeful S.237 moves along,” he said.
Locally, Baker said the commission is working with towns on their zoning bylaws to find “opportunities to improve them, to be able to encourage more housing.”
Nedde Real Estate recently started renovations at 77 Pine Street on a $20 million project that includes 50 apartments. The renovated building will be the Vermont headquarters of People’s United Bank.
“We are super excited about renovating and repurposing this 50-year-old downtown landmark and providing a long-term home for People’s United Bank and much needed residential apartments in the core of the city,” Doug Nedde said in a press release.
Of the 50 apartments, 20 percent are set aside as affordable housing.
The project is being managed by Wright and Morrisey and is scheduled for completion next summer.
Colchester
“Colchester continues to maintain slow and steady growth,” Kathi Walker O’Reilly, the town’s economic development director, said in an email. “Historically we have had this type of sustainable growth that is highly diversified in commercial as well as residential.”
Some town services were suspended and some reduced since Gov. Scott’s emergency order in March.
O’Reilly said there are a number of commercial and residential projects planned or underway including Severance Corners.
In the southwestern quadrant, she said infrastructure work is underway on a 37-lot mixed-used development
Other residential projects include Churchill Lane, River’s Edge and Florence Lane, Thelma Lane, Lomartire and Brigante.
New commercial includes four retail spaces on Lower Mountain View Drive.
There are also plans for a 7,000-square-foot building on Main Street.
O’Reilly also noted that the long-awaited Costco gas station has opened.
Colchester, population 17,127 median household income $65,333.
South Burlington
City Manager Kevin Dorn said the city got ahead of the COVID-19 curve when it moved early on, freezing spending and hiring.
Dorn said the town furloughed 43 employees, most of whom are either working part time and/or at home. He said another half-dozen employees were completely furloughed.
He said he expects all the furloughed employees to return to work at some point.
“By doing those things, I think we’re going to be OK for fiscal ’20 year end,” Dorn said. “Fiscal ’21 of course is the great concern of all of us in municipal government right now. We don’t know what property tax payments are going to look like.”
South Burlington’s annual budget is $25 million.
Dorn said in a normal year the town receives $3.7 million from its local option tax. As a result of COVID-19 and its impact, he said it’s apparent the town will receive “considerably less.”
The spending freeze includes capital improvements.
Dorn said while the town has done the best it could to address the financial fallout “the worst is yet to come.”
But he also said the city has no plans to ask residents for a tax increase.
Several years ago South Burlington embarked on an aggressive project to create its own town center. Dorn said that effort continues to move forward with Market Street completed and open. He said there’s also additional road work and infrastructure planned or under construction.
Private developers are building a road between Market and Dorset streets. “Ultimately that road will connect to Midas Drive by Al’s French Frys,” he said.
Under construction is a 50,000-square-foot city hall and library on Market Street.
“We anticipate an opening of that facility to the public late fall of 2021,” Dorn said.
There’s additional private development as well including a recently completed a 60-unit affordable housing project at the corner of Garden and Market streets. It was built by Champlain Housing Trust.
Another housing project is expected to break ground this summer on a 130 unit, market rate development on Market Street behind Healthy Living, Dorn said.
Other developments include a large FedEx shipping facility that has broken ground at Technology Park.
One business leaving town is Magic Hat Brewing Company which announced it will be relocating its brewing operations to the home of its parent company in Rochester, N.Y.
At the same time, Zero Gravity Craft Brewery will take over the brewery, purchasing Magic Hat’s brewery and equipment.
South Burlington, population, 19,509; median household income, $71,017.
Williston
The pandemic has hardly slowed construction activity in Williston.
According to Matthew Boulanger, the town’s planning director and zoning administrator, there is a fair amount of building activity going on, including Taft Corners, the town’s commercial hub.
A 96-room hotel in Blair Park is under construction. There’s also a Healthy Living Market and Cafe at Finney Crossing that is under construction and shooting for an October opening, Boulanger said.
A new 100-room Home2 Suites by Hilton extended stay is already open at Finney Crossing.
Construction is also underway across from Finney Crossing on Williston Road.
“The other big development is underway and has a building going is Cottonwood Crossing and the building that is most complete right now will be the headquarters building for Community Bank,” Boulanger said.
He said a second, three-story building at Cottonwood Crossing will have retail or commercial space and 32 apartments on the upper floors.
There are more than 200 housing units either under construction or planned at Cottonwood. In addition, Boulanger said Creek’s Edge is nearing completion of 35 units on North Williston Road. Construction is expected to begin shortly on 39 homes in the Northridge subdivision, he said.
Commercial businesses have added to the town’s tax base and have also contributed to the town’s share of the local option tax.
“We are seeing this kind of growth concentrated within Williston’s growth center in a small area of the Taft Corners area,” he said. “It means the cost of serving it with infrastructure is less because we’re not building big new roads to serve this stuff.”
The town hasn’t escaped the COVID-19 pandemic. Like the rest of the state, restaurants have been hit hard as they were forced to close. Even with the gradually reopening, restaurants continue to struggle.
Boulanger said the town moved to help as much as it could, eliminating certain fees and facilitating approvals for outdoor dining, including the use of parking areas and the use of food trucks.
Williston, population, 10,081; median household income, $87,024.
Winooski
A $23 million Main Street revitalization project for now remains on schedule. The one-mile project, almost all of Main Street, involves the installation of new water and sewer lines, putting overhead utilities underground, streetscaping, road work, and widening sidewalks.
Mayor Kristine Lott said the project is in final engineering with a decision expected in September on how to move forward.
“With the COVID-19 situation, next year’s budget is very unclear,” Lott said.
She said if at all possible the goal is “to get in the ground next year.”
Another downtown project percolating is a downtown parking garage, hotel and office space that would be the headquarters for the Vermont Energy Efficiency Corp., Lott said.
“The development agreement is in process and in permitting,” she said. “Again we don’t know how that’s going to be impacted by COVID-19.”
Lott said downtown Winooski has a very low vacancy rate of 3 percent.
For this fiscal year, Lott said revenues from the local option tax plummeted during the last quarter. In addition, the city stopped charging for parking, costing the city between $50,000 and $100,000 in lost revenue.
“On the upside through some expense reduction and furloughing of staff, I think we’re going to come out pretty even for FY20,” Lott said.
Before falling in the last quarter, local option tax revenues were coming in higher than projected. “So we’re in good shape going into the next fiscal year,” she said.
To help businesses struggling during the current situation, the city offered businesses low-interest loans of up to $10,000, she said.
Winooski, population 7,337; median household income, $45,590.
Bruce Edwards is a freelance writer from Southern Vermont.