Rutland County Economic Report: Embracing the flexible economy

Photo: The Opera House in downtown Rutland. Photos courtesy CEDRR.

Rutland County moves beyond prepandemic life to find new ways of doing things

by Olga Peters, Vermont Business Magazine Rutland County’s economy feels strong despite the constraints imposed by housing and workforce shortages.

Has Rutland County found its new normal after almost two years of the COVID pandemic?

Not yet — and that’s OK.

“What I am seeing right now is energy,” said Lyle Jepson, executive director of Chamber & Economic Development of the Rutland Region. “I’m seeing people who are energized by the fact that we’re going to have to put this pandemic behind us one way or another.”

Jepson said he feels energy vibrating through Rutland County.

“And if it’s the new normal, then so be it,” he said. “We will live with this, and we will make the best of it.”

When he can stop long enough to look outside the walls of Rutland Regional Medical Center, President and Chief Executive Officer Claudio Fort sees an economy poised to rebound from the pandemic — except for the aforementioned housing and workforce shortages, and an absence of child care options for families.

Photo: Claudio Fort, CEO of RRMC. Courtesy photo.

A lack of nursing staff is a daily concern for Fort.

“I think if we could make any material changes in the availability of workforce housing and expand access to high-quality child care, we’d have a lot more growth,” he said. “I think those two are constraining things.”

The outgoing economic director of the Rutland Regional Planning Commission, Ed Bove, is excited by the organic growth he’s seeing in the commission’s member towns.

“It is exciting in that there’s incremental growth of communities and little steps and things growing into something bigger,” he said.

Bernie Carr, executive director of the Brandon Area Chamber of Commerce, said his community is actively crafting new solutions to problems posed by the pandemic.

“If we can give COVID any credit, it’s made us rethink things we’ve done — done for years comfortably — and we changed them and made it work to our advantage, to have a more successful options we’ve never had before,” he said.

“I think people do feel that they might have a superpower,” added Jepson. “And their superpower is we went through the pandemic.”

Jepson continued, “The state and federal assistance were critical to that because, if nothing else, it provided people with the feeling that they weren’t being left on their own. People had confidence that everyone’s working together, and we will get through this.”

In Jepson’s opinion, the pandemic changed the economy into what he calls a flexible economy. He said that video conferencing, co-working spaces and online shopping are the new normal.

What does this flexible economy mean for Rutland County’s villages and downtowns? It means they need to become places that curate experiences and community connections.

The project Jepson believes embodies this flexible economy is the HUB CoWorks, a co-working and digital entrepreneurial training center, developed through a private-public partnership between CEDRR and MKF Properties, in the city of Rutland's Opera House on Merchants Row.

Photo: The Opera House in downtown Rutland. Photos courtesy CEDRR.

The 24,000-square-foot space — designed by the same team behind Burlington’s Hula — will feature private offices, hot desks, flexible workspace and conference rooms. People can access the space by becoming HUB members or choosing a rental option.

CEDRR is overseeing the project. The organization is applying to the US Economic Development Administration for a Build to Scale Program grant. If CEDRR receives the $750,000 matching grant, it will use the funds to launch entrepreneurial training programs for tech startups and the digital economy. CEDRR, Rutland Regional Medical Center, the city of Rutland and the state have pledged matching funds.

Jepson said this new tech on-ramp programming would be called Rutland Tech Start-up Incubator, or RTSI.

“The programming will be specifically designed for the digital economy and tech startups,” he said. “Our hope is that this will be a very busy location for both education and training.”

Jepson said the decision to focus on tech grew from CEDRR’s work with the Center on Rural Innovation, known by the acronym CORI, based in Hartland. According to CORI’s research, rural communities like the city of Rutland can build their economy using so-called digital assets like high-speed internet, nearby colleges and high-tech employers such as GE, Casella Waste and Rutland Regional Medical Center. Other organizations, including the Center for Women and Entrepreneurship, the Small Business Development Center, the NAACP and Castleton University, will provide a match through their work with the CEDRR.

Though supply-chain issues have delayed the HUB’s opening, Jepson anticipates its doors will open in August.

Once completed, the HUB will serve as a sister organization to the city’s existing maker space, Make, Innovate, Network and Tinker, or MINT. This site focuses mainly on product development and design, Jepson said.

Since it opened in 2017, MINT has expanded from 7,000 square feet to 14,000 square feet and exceeded its internal targets for membership, growth and number of programs.

Jepson highlighted several projects happening in the city of Rutland as examples of this new energy. Among them is the expansion of the Wonderfeet Kids’ Museum, which is moving from its current Center Street location to the Green Mountain Power Energy Innovation Center on Merchants Row.

The move will triple the museum’s space. Wonderfeet will lease the space from Green Mountain for $1 for 10 years, with an option for another 10 years at $1.

“Wonderfeet is a place you go and do cool stuff,” Jepson said. “It’s a center where families, particularly young children, can enjoy activities that stretch the imagination.”

The expansion is expected to begin in early 2023.

The Paramount Theatre in downtown Rutland is undergoing a multimillion-dollar renovation. Next door, renovations to the Richardson Block’s upper floors will convert the space into a multiuse entertainment and event venue, Jepson said.

Ongoing beautification efforts at the train depot will make the city a more welcoming gateway for travelers, he said.

“It’s not just growth in the city of Rutland," he said. “You’re seeing it countywide.”

Brandon, for example, has completely re-invented itself as a destination town, he said. Fair Haven has a popular new pub and brewery. And the municipality of Killington is hoping to soon launch the long-imagined Killington Village — a mix of condominiums and shops at the top of the mountain. The municipality has applied for a Tax Increment Finance designation to finance water and wastewater infrastructure, while a private developer builds out the rest.

These initiatives serve CEDRR’s larger goals of population growth and attracting a skilled workforce, Jepson said.

According to the US Census Bureau, Rutland County had a population of 60,591 in 2021, making it the second-most populated county in the state. Attracting people to the area is one thing; getting them to stay is another. For that, they’ll need good jobs, vibrant communities, child care and affordable housing, Jepson said.

According to the state Department of Labor, Rutland County’s unemployment rate was 2.9% in May, slightly higher than the state’s 2.7%. As a result, CEDRR and its many subcommittees, such as real estate, business development and regional marketing, are trying to pull multiple levers simultaneously.

Jepson explained that the organization’s concierge program accessed through has helped people relocating to the county. The idea is that potential residents are paired with a volunteer who helps them navigate their new community. Mud season? Snow tires? Town Meeting Day?

“Our goal is to create a relationship,” he said. “It’s the relationship that gets people to come and stay here.”

In Jepson’s conversations with new residents, he’s learned that many are making lifestyle choices as much as professional ones. The pandemic has made some of these choices easier for people who can work remotely.

In Jepson’s view, one of the silver linings brought about by the pandemic is that people were forced to work together in a common cause.

“Right? We had to be very patient when there wasn’t toilet paper. We got through it, so we feel like we can make a difference,” he said. “It caused everyone locally, statewide, federally to talk with one another, and that was the relationship building.”

Incremental growth on a human scale

Last summer, Bove took a road trip with his two children through the Rust Belt of Ohio, Pennsylvania, Indiana and Illinois. He described the communities’ downtowns as “crumbling ghosts,” ringed by 12 to 14 companies like Walmart.

“We don’t see that here,” he said. “So you can’t lose sight of that. Even in a place like Rutland, which gets a bad rap for so many things, it’s still a lot better than a lot of other places.”

Bove said it’s too early to consider a new post-pandemic normal, but he is excited by the incremental growth he has seen in the area. Mega-projects may have their place, he said, but organic development is more sustainable. He held up Brandon as an example, noting that several young entrepreneurs there have opened “cooler” businesses downtown, which has sparked new energy in the region.

Bove noted that businesses once located at the edge of the city of Rutland's downtown have moved deeper into the downtown area. The city is discussing how best to use Center Street, which functioned as an outdoor space during the pandemic and proved to be a great pedestrian area, providing multiple opportunities for placemaking, he said.

“And not automobiles, because what we liked was getting a human scale and a sense of place,” he said.

The Rutland Regional Planning Commission is helping several communities revise or modernize their bylaws. For example, Wallingford eliminated its parking requirements and changed setback rules for new projects. The goal is to support compact, walkable downtowns, Bove said. The way most community’s bylaws are written, he added, conflicts with Vermont’s historical development patterns. Many downtown areas, were they to burn down, could be replaced only with the equivalent of suburban sprawl, he said.

These zoning rewrites will help towns support their sense of place. Bove said it is vital that zoning facilitates projects and does not act as a barrier to good development. Housing is often the leader in these efforts.

“If you have housing in your downtowns, that’s what starts that ball rolling on other things like businesses, restaurants, that sort of thing,” he said. “You can’t have the other stuff before the housing.”

If a space feels good for people, it’s usually a reflection of good development and regulations, he said. Walking on a sidewalk along a four-lane highway, he explained, is not particularly comforting, while walking on a dirt trail through a downtown with slow-moving traffic and active community life may well be.

In Bove’s opinion, all the county’s rural communities are struggling, many with their sense of identity. The western part of the county, for example, once relied on the slate, railroad and agriculture industries. Today, those industries are gone, and the affected communities have yet to figure out their economies.

The city of Rutland's challenges are primarily aging housing stock and aging populations. It is imperative, Bove said, to attract younger and more culturally and racially diverse people to make the city more welcoming to newcomers.

In Bove’s opinion, the challenges that the county’s rural and urban communities experience are different. But he believes that efforts to increase diversity, create
equitable communities and update planning regulations benefit everyone.

Communities are beginning to understand that progress isn’t defined by the number of automobiles or parking lots in town, Bove said. “It’s about human capital,” he said. “I’ve seen that shift.”

Bove will step down as RRPC executive director in the new fiscal year but will continue to work part time at the commission. He looks forward to returning to planning work.

“Sometimes it’s not bad to have big-city problems,” Bove said. “It also means you have big-city potential.”

Enjoying the new facelift

“So, 2020 was going to be our coming-out party,” said the Brandon Area Chamber’s Carr, who also co-owns Carr’s Gifts with his wife, Beth. “And then COVID pulled the rug out.”

The town of Brandon had just emerged from nearly four years of intense construction in its downtown when the pandemic struck. Fortunately, Carr said, business has picked up over the last 18 months for most downtown retail stores. Restaurants and breweries have taken a bit longer to rebound, he added.

Chamber members are surprised by how steady business has remained; every retail space downtown is currently occupied, Carr added.

Carr attributes the energy downtown to the facelift the town received from the $30 million streetscape construction project financed by the Vermont Agency of Transportation. Several derelict buildings have been either demolished or renovated as well, he said.

Since 2018, approximately 15 new businesses, including an insurance company, several pubs and an engineering firm, have moved into town, Carr said. Yet Brandon faces the same worker-shortage issues plaguing most other areas of the county. The furniture factory, crouton factory and pizza restaurant, just to name a few, are all desperate for staff, he noted.

Still, Carr has also witnessed the community’s creativity in finding new ways to do things. Businesses have updated their websites, nonprofits have moved annual fundraisers online and restaurants have pivoted to curbside pickup.

“Brandon is moving forward,” he said.

Remaining a destination

Thirty or so miles southeast of Brandon, operations at Killington Resort have continued unabated throughout much of the pandemic. As of mid-May, the resort’s 2021-22 ski season was still underway.

Though Killington’s final numbers have yet to be calculated, a release from the National Ski Areas Association notes that national skier visits for the 2021-22 season are up 3.5% over last year, despite a lower-than-average amount of snowfall. The NSAA attributed the uptick to people’s desire to be outside.

“Uphill travel continues to grow at Killington Resort and Pico Mountain,” said Kristel Killary, the resort's PR and communications manager. “We’ve also seen midweek visits continue to increase year over year since the 2019-20 season.”

The summer also promises to be busy, she added. “We continue to be a mecca for year-round adventure, with lifts spinning every day of the year to provide mountain access all four seasons,” she said.

Killington will offer a full summer lineup of more than 20 events again this year, including the always-popular Cooler in the Mountains Concert Series and Killington Brewfest. The resort will also host the Fox US Open of Mountain Biking again this year — attracting some of the sport’s best competitors from around the world — and offer adult and children’s bike camps.

In the meantime, construction of the new K-1 Base Lodge continues apace, with a Thanksgiving weekend opening planned to coincide with the Audi FIS Ski World Cup. The 58,000-square-foot lodge will feature floor-to-ceiling windows providing panoramic views of the mountain, a staff break room and a rental shop with tuning and repair services, to name just a few amenities.

Photo: Rendering of the new K-1 lodge at Killington. Courtesy photo.

Not only has COVID failed to substantially harm Killington’s operations, it has also been responsible for launching some new traditions at the resort. An employee food giveaway, initiated in 2020 out of a need to clear out freezers during a temporary shutdown of the mountain, was so well-received that management has decided to continue the practice, said Mike Solimano, president and general manager of Killington Resort and Pico Mountain.

“Now, we are not cleaning out the freezers but buying food to give away to staff — each time trying to have a different theme for the food choices,” Solimano said. “Getting ready for summer, we decided on a barbecue theme.”

The company gave away about $25,000 worth of food and some 3,000 gallons of gas to employees at the April event.

Killington has also begun to address employee-housing issues with the purchase of Mendon Mountainview Lodge in 2018 and Hillside Inn in April. Combined, the two properties can house 275 employees.

Real estate still high velocity

The difference between the hype and the reality around the real estate market is not substantial: Buyer demand remains strong, said Nathan Mastroeni, who manages offices in Burlington, Killington, Stowe and Rutland for Four Seasons Sotheby’s International Realty.

“It’s what we call a high-velocity market,” he said.

According to recent market reports, the county has less than a month of housing inventory. Homes rarely stay on the market for more than two weeks, and many are snapped up much faster than that.

From the first quarter of 2021 to the first quarter of 2022, homes sales dropped more than 25% (227 to 167) while the median listing price rose 10%. Average number of days on the market decreased from 42 days in 2021 to 14 in 2022.

These trends have persisted throughout the pandemic. Mastroeni believes the pandemic was the kick in the pants that many people who wanted to purchase a vacation home needed to pull out their wallets. Many of these new homeowners have stayed in Vermont year-round, which Mastroeni attributes to an ability to work remotely. He believes the pandemic’s impact on the housing market will not abate for at least a while.

Mastroeni points out that two of the largest populations, baby boomers and millennials, are simultaneously active in the real estate market — something not seen in past years.

“It was always the younger generation who needed a house in the suburbs so that they could go to work in the city, while the older generation was downsizing,” he said. “Now, we have two massive generations that are both looking for lifestyle and saying, ’Hey, you know what? We’re going to balance our lives better.’ And I’m not sure that when we get three or four years past COVID if that’s going to go away.”

Mastroeni points to the recent sale of a house in West Rutland as indicative of the red-hot market. The ranch-style home, set on a 6.4-acre parcel, listed for $479,000 and sold for $605,000.

“West Rutland is neither a resort area nor a true Airbnb destination,” Mastroeni said. “This is most likely a buyer looking to live in the house.

“We’re seeing a number of things like that, where you have a decent house in an area where we wouldn’t necessarily think it would get an over-asking-price offer of more than $100,000.”

The question now is whether rising interest rates will slow the market. Mastroeni expected to see at least some downturn when mortgage rates reached 5%. Nothing yet.

“It’s been a head-scratcher,” he said.

More housing is still needed

From Mary Cohen’s perspective, the Rutland County economy is humming along. But she’s also acutely aware that the shortage of workers and worker housing persists.

Cohen took over two years ago as executive director of the Housing Trust of Rutland County, which develops and manages rental units across the county. The organization houses approximately 600 people in fewer than 400 multifamily units.

Cohen said she has heard story after story of people at all income levels not being able to find adequate housing.

“The whole housing spectrum is in crisis,” she said, echoing housing experts across the state.

In Rutland County, the shortage looks slightly different. The county’s housing stock is old; many units are plagued by aged electrical systems, health and safety issues, or faulty plumbing. Moreover, many of the county’s landlords are getting on in years and have less energy to care for their properties.

A significant number of units have also been converted to short-term rentals. The vacation rental site VRBO lists approximately 300 Rutland County properties for rent, two and a half times the number listed just two years ago.

According to a 2021 housing needs assessment commissioned by the trust, the county lacks rental property for residents at all income levels. The study also found that approximately 53% of residents in Rutland County qualify for subsidized housing. In the city of Rutland, that percentage is 62%.

Cohen added that the trust considers a rental vacancy rate of 5% as healthy. Right now, the rate stands at 3.5%.

The trust has several projects in the pipeline. One project in Rutland involves redeveloping a building called the Tuttle Block, which houses 13 residential and two commercial units. The trust is moving its offices out of the building and converting those spaces into three more apartments.

Cost of construction, supply-chain issues and a lack of workers are the most significant barriers to completing many of the projects. For example, the lead time for some of the large windows planned for the Tuttle Block was 48 weeks.

The trust recently opened 24 units in West Rutland, is looking at redeveloping another property in Rutland and is investigating purchasing 100 acres in Fair Haven for new development.

Lincoln Place in Rutland, which opened last year, has proven very successful. The trust converted a former Catholic school into 19 micro- and one-bedroom apartments as permanent housing for people experiencing homelessness.

Cohen said that partnering with service organizations such as Rutland Mental Health Services and the Homeless Prevention Center proved crucial to the success of the project.

“It would be great for the state to figure out ways to incorporate services (such as these) as standard practice” in housing funding, she said.

Not going back

The challenge ahead, county officials agree, is to not grow complacent amid the many recent achievements.

“The economy is different now,” the chamber’s Jepson said. “Retail is never going to come back the way it was before. Amazon is the new normal. UPS trucks driving up to my house is the new normal. And what our downtowns need to become are places filled with experiences.”

Olga Peters is a freelance writer from southern Vermont.