Burlington City Council unanimously passes CityPlace agreement

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Burlington City Council unanimously passes CityPlace agreement

Wed, 02/24/2021 - 10:33am -- tim

Architects rendering of CityPlace at St Paul and Cherry streets.

by Timothy McQuiston, Vermont Business Magazine In a special meeting Tuesday night called by Mayor Miro Weinberger, the Burlington City Council voted unanimously to resolve litigation and execute the newly negotiated Amended and Restated (A&R) Development Agreement with the Developer of CityPlace Burlington. This is the next step in reconnecting St Paul and Pine streets and then rebuilding the demolished central section of the downtown mall and refurbishing the existing buildings. It requires developer Devonwood Investors to reconnect the streets at their expense that were cut off 40 years ago when the mall was first built.

The complicated settlement agreement puts to rest competing lawsuits between the city and Devonwood. Devonwood, based in New York City, still needs to secure financing, which it has sought from the AFL-CIO Trust Fund for the $165 million project. The labor agreement was a key component in moving forward with the Trust.

The City Council on February 16 initially tabled the settlement as the labor unions raised concerns. Councilor Brian Pine (P-Ward 3) was a major player in working with the Trade Council to secure a wage deal, which then led to widespread support among the unions and the City Council.

Devonwood and principal Don Sinex first proposed a $225,000 redevelopment in April 2016. But financing has been a constant roadblock to the project. Devonwood's financial backer, Brookfield Properties, then took over the project. But after demolishing much of the mall and the parking garage by the summer of 2018, no other construction occurred.

The pandemic further set back plans as office and retail space were viewed as less viable. A new hotel was dropped from the plans. The high-rise portion (a point of contention when first proposed) was scaled-back from 14 stories to nine.

The latest iteration of the development includes more housing (over 400 units) and less overall commercial development (see detail below). Still, the whole thing is over 700,000 square feet.

The proposed settlement agreement, first brought before the City Council on February 16th, was the result of mediation between the city, represented by Mayor Weinberger, and the developer.

Failure of the City Council to approve the settlement agreement, the mayor has maintained, would have meant a return to court, and potentially years of further delay on the CityPlace project with no guarantee of securing terms as favorable to taxpayers as the negotiated settlement.

Over the last week, the mayor led additional negotiations to amend the A&R Development Agreement, codifying additional benefits including the developer’s commitment to pay all construction workers on the site Vermont State Prevailing Wage for the Burlington Area.

Those wages range from the low teens for "helpers" to $17.63/hour for roofers, to $23.65/hour for carpenters, to $25.09/hour for plumbers, to $27.29 for electricians, to $31.27/hour for boilermakers, and to $42.43/hour for electric power line installers.

At Tuesday’s City Council meeting, the labor unions and members of the public provided comments strongly in favor of a Yes vote to execute the agreement and move forward with the CityPlace project.

The Building and Construction Trades Council, AFSCME, IBEW, AFL-CIO, and many others, all voiced their unanimous support.

Tim LaBombard (IBEW Local 300), President of the Vermont Building and Construction Trades Council said, “CityPlace Burlington represents an enormous opportunity for Vermont construction workers, and the developer’s commitment to pay prevailing wages guarantees that all workers on the job will be compensated well. We can’t wait to get to work on this outstanding project.”

Don Sinex, right, with Mayor Weinberger in front of the Cherry Street entrance to the mall at the April 2016 announcement. VBM photo.

Don Sinex said in a statement: “I’d like to thank the Mayor and the City Council for all their hard work to reach this historic milestone. CityPlace Burlington will bring many benefits to our Downtown community, Chittenden County, the State of Vermont, and far beyond. Tonight’s vote means we can finally begin planning the construction of this long-awaited project and gives us a solid framework to move forward.”

“I also am appreciative of City Councilors Karen Paul and Brian Pine for their hard work and collaborative efforts over the last few weeks to help the City, Developer, and Trades Council find common ground. This agreement delivers substantial benefits to both Burlington and hundreds of construction workers.

“While maintaining management and control over our project, we are delighted to further commit to pay the Prevailing Wage rates to all construction workers at our project and our team looks forward to working with all trades in Burlington to produce an outstanding project that will provide so many wonderful benefits to the City and all its citizens.”

Councilor Karen Paul (D-Ward 6) called Tuesday’s decision on CityPlace, “a vote to remember.”

Councilor Chip Mason (D-Ward 5) added, “I view this as a Big Win... this provides a much better path forward with no risk to taxpayers, this is the only path forward."

Mayor Miro Weinberger said: “I have been absolutely committed to reaching this milestone. I appreciate all of the hard work and collaborative efforts over the last few weeks to help the City, Developer, and Trades Council find common ground. This unanimous vote is a victory for Burlington. While many challenges still remain in the years ahead, tonight’s vote will ensure that we will correct the historic mistake of the 1960s, reconnect the lost streets, and build the public infrastructure that will allow homes, jobs, and shops to once again flourish in the north-western quadrant of our downtown.” 

Sinex told VBM earlier this month, "I am hoping to start construction by September 2021."

He still needs to work up all the new plans and go back to the Development Review Board. There is also the possibility of more lawsuits to navigate during the process and he still must complete the financing.

"If all goes well with no intervening lawsuits, September is an optimistic start date but possible," he said.

"Settling with the City was necessary in order to move the project ahead. The deal agreed to by the parties is good for the City and good for us too, so I think it was the right balance and a good outcome."

Sinex is working with local partners Farrington Construction, Omega Electric and SD Ireland.

Dave Farrington said in a statement, “The local partners in this development have excellent records of paying well and keeping their workers safe. Our intention has always been to make sure that is the spirit of this entire project, and we are happy to formally make that commitment.”

On March 3, the revised project plan will be presented to the Development Review Board for approval. Once the DRB issues the amended zoning permit, the CityPlace Burlington Team will initiate all the steps necessary to start construction, including arranging the necessary financing, preparing the required construction drawings, and resolving all other pending matters.

The CityPlace Burlington Team will now move forward on gifting the land to the City of Burlington for the new Pine Street and St Paul Street reconnections, and make good on their commitment to construct these streets if the project is unable to start construction by an agreed date.

DEVELOPMENT DETAIL

Settlement Delivers Reconnected Public Streets and Other Public Benefits

A central component of the settlement agreement is that it ensures that St. Paul and Pine Streets will be reconnected through the former mall site. The settlement agreement addresses this in two keyways:

  • The developers will transfer to the City, at no cost, the land on which the reconnected St. Paul and Pine Streets will be built, which the developer has appraised at $4.3 million. This land will be transferred to the City as soon as the settlement is completed.
  • The City will receive a guaranteed, legally enforceable contract, paid for by the developers, to reconnect the St. Paul and Pine streets at no cost to taxpayers if the developers do not succeed in starting to build the project in approximately two years, or if the developers start but do not continue in keeping with established milestones. The value of this construction contract is estimated at $3.2 million. (Some street finishes would be built later outside of this contract to avoid the need to rip out newly constructed work. If the project does proceed as planned, then the City will reimburse the developer for the streets, including all finishes, from the Waterfront TIF district, which uses increment generated by new revenues from the project – not taxpayers).

In addition, when the project moves forward, the settlement requires the developer to repay $150,000 a year in lost property taxes to the City’s Tax Increment Financing (TIF) district that have resulted from the project’s unanticipated delays. These payments have an estimated value of $300,000-$450,000 depending on when the construction begins.

Development Details

The “Revised Project”, as such term is used herein, contemplates the development of the BTC Property and the City Property with one or more buildings collectively measuring ±703,000 square feet and being no higher than 10 stories, including the following features and characteristics (all numbers are approximations and may change due to final architectural and engineering requirements):

  • ±427 residential housing units and residential amenities, including a mix of unit sizes and including both market rate and affordable (i.e., inclusionary) housing units and rental and owner-occupied units.
  • ±45,000 sq. ft. of first class retail space, designed to attract a mix of local, regional and national retailers, service providers, and restaurants.
  • ±3,000 sq. ft. community space (the “Community Space”).
  • A ±425 space parking garage including above and below-grade parking spaces, including the provision of covered long term bicycle parking facilities.
  • Uncovered short term bicycle parking facilities.
  • The re-establishment of St. Paul Street over the Parcel 3 right of way as a 60 foot-wide through, public street running between Bank Street and Cherry Street.
  • The re-establishment of Pine Street over the Parcel 1 right of way as a 60 foot wide through, public street running between Bank Street and Cherry Street.
  • A rooftop observation deck to be made available to the public, subject to the Owner’s reasonable rules and regulations and periodic, short-term closures for private rentals and events.

As of the Effective Date, the Revised Project remains subject to review and approval by the DRB. The Revised Project may be revised through the regulatory processes consistent with and subject to the provisions of this Agreement, and as ultimately may be approved by the DRB (the “Future DRB Approval”). The Revised Project includes the Private Improvements, the Public Improvements, and any Additional Public Improvements, all as subject to the terms of this Agreement.

To facilitate Owner’s development of the BTC Property and the City Property with the Revised Project, the Parties now desire to amend and restate the Original Development Agreement in its entirety.

Settlement Retains the Benefits of Earlier Development Agreement: Developer Can Move Forward with Transformational Project at No Financial Risk to City

The settlement includes an Amended and Restated Development Agreement between the City and the developer, which includes numerous changes but preserves the essential structure and terms of the current agreement.

These key pieces include:                                                 

  • All risks of construction and development will remain the responsibility of the developer, and taxpayers will continue to be fully protected from these risks. This means that the developer will not be reimbursed from the Waterfront TIF District until the components of the project are complete and incremental tax revenue begins. Further, the TIF debt will not be issued in the first place unless the developer provides secure funding to cover all of the City’s borrowing costs until the project is delivered and certain timelines and conditions are met.
  • The amended development agreement will renew the developer’s commitments to affordable housing and local employment opportunities. It also renews the developer’s commitments to minimize the use of fossil fuels to the greatest extent practicable, and states that the developer will make a good faith reasonable effort to incorporate into the project a renewable primary heating system sized to meet at least 85 percent of the project’s heating load, including by funding detailed engineering design.
  • The original development agreement outlines the terms of the tax increment financing for the project. The settlement includes revisions to these terms for two reasons: 1) the revised, smaller development and schedule is expected to produce approximately $8-10 million of TIF investment instead of the original estimate of approximately $21 million, and 2) State law has been amended to require that debt for the TIF district be issued by June 30, 2022 instead of the prior year.
  • As a result, the settlement requires the developer to pay the costs of carrying any debt until the project is built and generating tax increment, and includes a number of provisions if the developer does not meet the conditions for the issuance of TIF debt by June 15, 2022. If the developer completes the street improvements on schedule then it will be entitled to reimbursement from the TIF proceeds, but only after paying certain of the City’s related costs. In the event that there is additional revenue to the TIF district, the agreement would still create the opportunity for additional public infrastructure on the blocks surrounding the site.

Source: City of Burlington. Devonwood 2.23.2021