Jay Peak partners pitch $500 million investment in three Northeast Kingdom towns

Bill Stenger announces a $500 million investment in Northeast Kingdom developments. Photo by Anne Galloway

Bill Stenger announces a $500 million investment in Northeast Kingdom developments. VTD Photo/Anne Galloway

NEWPORT–The Northeast Kingdom has long been plagued by unemployment and a depressed local economy. The sparsely populated region has lagged behind the rest of the Green Mountain State for decades economically. Many people still scratch a living from dairy farming or the tourist industry here.

From time to time, the state of Vermont has injected funding for projects in the region. A prison was built in Newport; Pike Industries has a large operation near the border; and a military helmet factory remains in business in Newport. But many other companies, especially wood products industries, have gone by the boards over the years: Ethan Allen Furniture closed in Island Pond; a plywood factory folded in North Troy; and the largest paper mill in the area closed.

So when Bill Stenger, the CEO of Jay Peak Resort, and his partners announced the largest economic revitalization investment of its type in the history of the Northeast Kingdom on Thursday it seemed natural that a TV news reporter would push a microphone in the face of one of the developers and ask: “What’s different this time?”

That’s a question to which Stenger gave a quantitative answer: $500 million, 10,000 jobs, 60 months.

Stenger and his partner Ariel Quiros plan to build seven new businesses as part of an “enterprise” initiative in Newport, Jay and Burke. The partners have purchased five of the properties and have attracted 10 percent of the financing to begin construction.

All seven projects will be built simultaneously Stenger says. Ninety-five percent of the money will come from the EB-5 Visa program, which enables foreign nationals to invest $500,000 in “targeted employments areas” in exchange for a two-year green card. Each investment must result in 10 jobs.

The EB-5 program had been set to expire this year until Congress extended it earlier this month. Sen. Patrick Leahy, D-Vt., a strong backer of the program, was instrumental in extension’s passage and President Barack Obama is expected to sign the bill.

Stenger praised Leahy’s efforts in Congress. “It’s his work that has opened this window,” the ski area mogul said. “If it were not for him, this window would not exist.”

“It’s nice to see a government program that brings jobs here,” Leahy said. “The most important part is it didn’t cost the taxpayers a penny.”

The Stenger and Quiros mega-project is a complex array of industrial, commercial and travel projects, some of which have been in the works for several years. The initiative traverses most of the Northeast Kingdom.

The plan includes:

  • A 75,000-square-foot research tower in Newport for AnC Bio, a South Korean biotechnology firm that will produce stem cells, vaccines and possibly artificial organs. The tower will be located on a 40-acre campus that includes the former Bogner clothing plant, a 90,000-square-foot facility that will begin manufacturing and distributing AnC Bio products in the spring of 2013. Stenger says $50 million has been raised for the project, which will cost a total of $104 million.
  • A high-end window manufacturing plant, will also be located on the 40-acre AnC Bio campus. Menck Window Systems, based in Hamburg, Germany, which designs energy efficient windows will locate an operation in Newport that will employ 140 workers. The estimated cost of the plant is $20 million.
  • A marina and grand hotel on Lake Memphremagog in Newport, located right off I-91 and a walkable distance from downtown, will feature restaurants, retail space and conference facilities. The 150-suite hotel will accommodate 1,200 people and cost $100 million to build. The land, now occupied by a retail strip mall, is owned by Burlington real estate developer and Newport native Tony Pomerleau.
  • The Renaissance Block is a a four-story residential and commercial space near the Orleans County Courthouse in downtown Newport. The new building would take the place of a row of late 19th century offices and shops on Main Street now owned by the Spates family. The cost? $70 million.
  • The Newport Airport expansion will include a 1,000-foot extension of the runway, new hanger space for regional passenger service, a private aviation light plane manufacturing and repair facility, an expanded terminal and a bonded warehouse for free trade zone goods. The expansion will pave the way for small jet (20-seat) service in Newport. The cost of the new construction is $20 million.
  • The Burke Mountain Resort will get a makeover. Stenger and Quiros bought the resort in May. They plan to construct four “rustic” lodges that will house as many as 1,250 people on the mountain. This fall the company will invest $1 million in snowmaking upgrades at the ski area. Total investment: $108 million.
  • Jay Peak Resort will get another dumping of $170 million in cash for the West Bowl ski area which will have 15 trails and three lifts and the Stateside project, which includes an 84-unit hotel, 100 dwellings and a medical center.

The Northeast Kingdom Economic Development Initiative comes on the heels of an initial $250 million Jay Peak Resort expansion that is 75 percent complete and encompasses a new hotel, an indoor water park, condos and extensive upgrades to the ski area. Stenger and Quiros have kept 500 construction workers busy for five years.

All told, the Jay property investment alone will total $420 million. The combined projects will total $750 million.

Has the capital infusion begun to pay off? Stenger says last year was Jay Peak’s “best year ever, and the snow was horrible.” He chalks up their success to the year-round attractions at the resort, which employs 1,000 people.

The projects were planned in anticipation of the extension of the EB-5 program. Stenger said he has hired four architects and six construction companies to handle the simultaneous build out of the projects.

The EB-5 Visa investments are coming from all over the world, Stenger said, but largely from the Asian and South American markets. He is raising about $3 million a month, he said. Though has has about 10 percent raised so far, Stenger says he anticipates attracting all of the money he needs within 12 to 14 months. None of the projects are dependent on taxpayer funding, he said.

“This momentum is so good it is going to catapult us forward,” Stenger said.

State Sen. Vince Illuzzi, R/D-Essex-Orleans, said he found the prospect of the developments “almost overwhelming and a bit scary to have all of this happening essentially at the same time, but it’s a window of opportunity, not only because of EB-5 but because the world economy has all but collapsed.” More investors, he said, are seeking a safe haven in North America.

Follow Anne on Twitter @GallowayVTD

Anne GallowayAnne Galloway

Comments

  1. Bill Gardyne :

    We’ve been waiting for some real economic development in the NEK for many decades and there has been very little. Finally we’re going to have some and in a big way and hurry too. Bill Stenger has put a new meaning to the old VT farmer’s saying, “Make Hay while the sun shines” with his aggressive use of the EB-5 program to fund all this development. Obviously little of it would happen without it. Their plans include both tourist-based and good manufacturing jobs the likes of which the NEK has never seen very many of. It hopefully can reverse the trend of our youth having to leave the NEK to find a decent job. As a lifelong NEK resident I’m very pleased and excited about the plans.

  2. Gaelan Brown :

    This looks like a really good plan, a mix of actual productive high-value enterprise and a big injection of tourist-attraction. Nice work Bill!

  3. David Tucker :

    It’s lake Memphramagog – not lake Magog.

    • David Carter :

      Magog is a town in Quebec near the north end of the lake that you referenced.

  4. Editors,

    Years ago, when GM’s Saturn project was rippling across the American landscape with great promises to change the automaker and make a different kind of car, small futuristic, light, even electronic, a Saturn salesman in Charlotte named Dexter Riffe told me, “I didn’t catch any of that fire.” The fire Dexter means was money in his pocket, a personal pay off for a guy who sold the cars. Who will catch the fire from Bill Stenger’s big boom project in the Northeast Kingdom?. Though not the single biggest investment in America, like Saturn was some thirty years ago, the NEK plans carry a similar promise for our region of jobs, growth, and progress, along with hype, corruption, tax breaks for powerbrokers and failure.

    The big problem with the NEK vision is how last century it is in many respects. The Korean body-parts shop, where high-tech medical parts, instruments, even limbs, may be forthcoming is far and away the most promising part of the plan. Insulated window manufacturing is a strong concept as well. And for sure, giving Newport’s airport an upgrade is a no-brainer. But a 500-room hotel and yacht club on Newport’s waterfront as part of the EB-5 money coming from the 1% elsewhere in exchange for green card is a weak idea. Lake Memphramagog in Newport is dying for well-designed, appealing, engaging public access. Not limited use for profit. Just look across the mountains to Burlington or north to Magog for examples of mixed use. The waterfront development to date in Newport has little life. There’s nothing there to draw you but the views and free parking. The city deserves more than just adding rooms and more restaurants to that limited picture of accessibility to what is one of the more beautiful and inviting settings in our state.

    My biggest issue with the NEK vision is related to this hotel/restaurant/more tourists with dollars mindset. That is, the vision rests on a future of cheap gas and highways and cars, a very dubious proposition. If GM’s Saturn project had become what was originally sold to the public and to government supporters, a laboratory for the future where small, light, high mileage, even electric and hybrid cars, would pour forth, the new division might have succeeded. But it didn’t. It failed, stuck in the last century by a managerial mindset that couldn’t accept the world we inhabit now. One with disappearing petroleum reserves, an aging population, and escalating climate worries from emissions, many of them from auto tailpipes.

    At any rate, for the region, Bill Stenger and company’s big plan does hold out a ray of sunlight in dark and uncertain times. I hope that the leadership of his team, in state government, and especially in the Northeast Kingdom doesn’t just sit and clap its hands like trained seals. But takes apart the elements of the project, fits them to the needs of the people, and spreads out the fire so everybody gets a little heat. And the dream doesn’t burn into ashes in a decade or two.

    Joe Sherman
    Montgomery, VT

    • Bruce Post :

      Joe, thank you for an insightful and absolutely wise parsing of this proposal. I wholeheartedly agree that the different parts need to be separated out and judged individually. What I found most disturbing about the cheerleading of our most prominent public officials is that they appeared to be boosting a project prior to any substantive environmental review. Personally, I think Act 250 is a rather weak force, but other than informed public opinion, it appears to be all we’ve got.

      Stenger and company have prepared quite a package, but you don’t eat a loaf of bread in one gulp. Vermont would do well to consider this “pitch” — as VT Digger put it — slice by slice.

  5. Suzanna Jones :

    When was the last time a group of people from the Northeast Kingdom stood in front of the statehouse demanding to be economically developed? We haven’t. Most of us are satisfied and content with our lives in this lovely land. On paper my family looks “poor” but our lives are rich and fulfilling. Many of us have meaningful work on the land. This is what has made Vermont what it is. But thanks to Shumlin, Leahy, et. al. we are becoming New Jersey.

    We don’t need the “development” or “jobs” offered by these corporations. We need meaningful livelihoods. This kind of development may make the NEK attractive to the wealthy, but the only “jobs” created for those of us who live here now will be cleaning their toilets.

    Developers need places and people to exploit and our current political leaders are aggressively handing over our homes and our very lives to corporations while claiming to be doing something virtuous and “green”. And how is expanding the airport or promoting more tourism reducing our carbon footprint? It isn’t. But it is going to put a lot of money in the pockets of the rich while those running -on- emptiness go shopping.

  6. Carl Mahoney :

    In reply to suzanna jones, the typical Vermonter who wants NO kind of jobs, prosperity, income etc. you’re the type that has kept VT in the dark ages for decades. Meaningful livelihoods?? Yes all the unemployed in Newport or those who barely scrape by working at the ONE poor excuse for a grocery store there. Yes there existence is SO wonderful!!! Why disturb it with a medical center for those who need it? Why bring tourism and hospitality dollars in??? God forbid! Let’s just forage through the forest! That’ll pay our bills and feed our families!! IDIOT!

    • Randy Koch :

      Wow, Carl. Has Vermont really been in the dark ages for decades?

      Would those be the decades when places like Quechee, Ludlow, etc ethnically cleansed of Vermonters by hyper-development and the real estate inflation that it brought? When Chittenden County was so heavily suburbanized? When Rutland’s wonderful strips were built? Are these the dark ages you mean?

      By the way, is “foraging through the forest” what we used to call “hunting” ?

      • Carl Mahoney :

        Yes Randy I know MY bad. I forgot Vermonters want to live like its 1890. Ride on a horse and buggy 40 miles to get milk from a cow or water from a well. I would want any sort of modern conveniences like a STORE! Oh my god! How dare I! It’s almost 2013 and these nutjobs want to be cut off from civilization. Maybe Vermont should secede. All the quacks who don’t want jobs or business or healthcare can go live like pilgrims on some state land and the rest of us can enjoy the future! See you on the pasture Randy!!

      • Mike Curtis :

        Ethnic cleansing isn’t a term that should be tossed out so thoughtlessly.

        Vermont has changed a lot — for better or worse — but the change isn’t comparable such an unimaginable crime.

    • Robert Barlow :

      I believe that Vermont is a great state as is, but could also use a little economic help. The lack of big cities and large suburban areas lend themselves well to many people, but that lack can also cause problems for others because of the economic disadvantages. Vermont needs to find a balance between development, and keeping the beauty of the state as is.

  7. Paul Monette :

    As Mayor of Newport City I have always looked at the glass as half full and not empty. I am truly amazed at all the negativity from this announcement and believe a lot is being fueled by fear. I am in awe of the dollar amount of the investment and improvements but know it will take place. The development of this area has long been overdue and to answer Suzanna many of us have traveled to Montpelier to remind the folks down there to send economic dollars to our area vs. other areas of the state.

    Newport has and is working extremely hard in welcoming business to our area. Through the hard work of many folks from all walks of life we changed our zoning to make it easier for businesses to locate here. The model we have is now being looked at by communities all over the state. With regards to jobs we have many extremely talented and hard working folks living in our area of the state and that is why the German window company chose Newport. I would like to remind folks the jobs being created in this ambitious plan range from tourist and manufacturing to research. I truly commend Bill Stenger and his partner Arie Quinos for their vision and all the folks working behind the scenes on this project and many other projects and ideas. The use of EB5 monies is a great example of government creating a program at no cost to the taxpayers and entrepreneurs taking advantage of it. I told someone today, over coffee, if people just took 10% of their negativity and did something positive things in our area would have changed many years ago.

    • Jim Willard :

      My family and I left Vermont over twelve years ago. We’re doing quite well now down here in Texas but certainly miss the state, where I was born and raised.

      What has changed since we left is the ability of Vermont’s elected officials and business leaders to actually work together, to provide a vision and a solid plan behind that vision, to bring opportunity to Vermonters. That ability seems to have drastically improved. And if so, then I do hope the Northeast Kingdom is finally able to capitalize upon the vision that business and government have forged into a working plan.

      If the U.S. Congress could put aside its bi-partisan differences and collaborate on a solid economic plan, as Vermont’s tri-partisan delegates were able to do, this country would not be dragging through such a prolonged economic crisis.

      I wish the Northeast Kingdom and Vermont the best in its quest to better its prospects, and hope that the rest of the country pays attention.

  8. Moshe Braner :

    To those who get overly excited by such promises, I offer one word: Husky.

  9. Pete Novick :

    If you’re in a bar and you meet someone who doesn’t meet your expectations, what should you do?

    Lower your expectations.

    There’s no right answer here. Invite Mr Stenger to come up to the NEK and make his pitch to ordinary working folks. I bet he accepts and I bet you’ll be favorably motivated to support some of these initiatives as a result.

    What you need to know about this initiative is that much of the rest of the world has become fabulously wealthy in the last 40 years and there is a vast pool of money out there looking for safe, smart investment projects. Just ask our neighbors to the north. Canada did not have a housing bubble, did not have a banking crisis and most importantly, did not double the number of people un- and/or under-employed in the last 5 years as has been the case in the United States. Canadian companies have had their checkbooks out for some time all across the United States as they buy up promising companies. Guess who owns your electric utility?

    There is no free lunch. Some folks in the NEK will see this for what it is and make the most of it.

    It’s like Wal-Mart: you can whine and complain but there is no getting around the face that it is the largest private sector employer in the known universe and while employees at the lowest tier do not do so well (think business model), Wal-Mart provides decent middle class wages and salaries to more than 500,000 people.

    I recommend you give Mr. Stenger the benefit of the doubt here.

  10. I’m not sure but I do believe this business plan began with the Canadians, in Vancouver.

    Few Americans know that the Homestead Act was based on a Russian plan to settle the steppes. At the time, Catherine the Great was reigning.

  11. Ethinc cleansing is the wrong word. Woodchuck cleansing? To me the term woodchuck is a native Vermonter and a quality to be proud of. How about cultural cleansing?
    I interviewed David Budbill this year for a profile I am doing on him in my new book A Liftime of Vermont People. He said he gave a reading at the Warren school and was surprised how quiet the children were. She said they were no native Vermonters left; they were all from families who moved in from out of state. Well, a couple of grains of salt but you get the idea.
    The fish biologists in Montana did a story on the wild trout population on the Madison River. They shocked the river at Vuarney Bridge, counted the wild trout, put dthem back and dumped in hatchery trout and later reshocked it. Guess what? All the native trout were gone. They swam north.

    hatchery trout into the river at Vuarney Bridge. Later they re

  12. This post is quick to post, hopefully they killed the first.

    Ethnic cleansing is apt, but the wrong word. How about Woodchuck (an honorable word for a native Vermont) Cleansing or the politcally correct Cultural Cleansing?

    I interviewed David Budbill, the poet for my new book A Lifetime of Vermont People. He said he was giving a reading at a school in Warren and was amazed at how quiet the children were. The teacher said, in essence, all the children were from families that moved to Warren from out of state.

    Years ago the fish biologists in Montana made a study of the Madison River, which has only wild trout in it. They shocked a section of the stream at Vuarney Bridge, counted the wild trout, put them back and dumped in hatchery trout.
    Later they re-shocked it and found that all the wild trout had vacated their home and swam north.

    Well, that’s what I’m planning, for the NEK is the last stronghold of the Yankees. So take it easy up there, save at least some part of the Kingdom for the native Vermonter, an endangered species.

  13. Alan Smith :

    I’ve been following this story for over a year new, at least as it concerns AnC Bio. There is one important question that I have not seen addressed. When will they start accepting applications for these jobs? Will there be a job fair, postings online, etc.? How will they be announced?

    I expect there will be a rush to apply for these positions, and I don’t want to miss the boat. I’m looking forward to moving back home from Boston to the NEK.

  14. Kate Scarlott :

    I’m sorry to see so little attention given to the inevitable environmental costs of all these “wonderful” proposals. It is such a dreary refrain to hear Jobs, jobs, jobs as the automatic highest and best outcome of big projects and so little concern over the short and long term costs. And how many permanent, well paying jobs will these projects generate as opposed to temporary and/or low wage jobs, really? What about our dependence on oil and the foreign “terrorists” that we moan and groan about having to buy it from? It takes my breath away that anyone could think of FLYING to Burlington to shop as conscionable or sane. “Improving” the snowmaking capacities at Jay Peak and Burke — how about the fossil fuels snowmaking eats up? The degradation of the water in these watersheds? The impact on the wildlife, if there any left, on these mountains? Humans want, so humans will take — that appears to be the bottom line, even here in our beloved “green” state.

  15. Stephen Marshall :

    Let’s do the numbers:

    Each green-card recipient pays 500,000 dollars. To round up 500,000,000 dollars, 1000 rich people from elsewhere in the world need to buy in.

    What is the effect of this on the communities of Vermont? The Northeast Kingdom becomes a second-home bastion of luxury, where the cost of home ownership shoots up, gobs of land is removed from productivity because the locally evolving farm sector can’t afford the property anymore, local people can’t afford to buy property or homes because it’s too expensive, and the jobs which are available to local people are the low wage jobs that go with washing laundry and raking leaves for the wealthy.

    This is not an economic development plan for Vermonters. This is an economic development plan for converting Vermont into a gated community for the world’s wealthiest. I believe in diversity, but we can achieve diversity without destroying the lifestyle and culture of the Northeast Kingdom. Why, for example, can’t we get a visa program for the people who actually work in Vermont and contribute to its economy – the dairy workers? Let them bring their wives and send their children to our schools. Vermont – where French, Spanish, English, Swahili, Hindi, and Bantu are spoken. YES!

    We do not need to entice global investors with green cards. We need a long term plan which effectively utilizes native capital for slow-money style, distributed profits, which induce slow, long-term, sustainable jobs, and builds community life and infrastructure. This plan, if implemented, will result in a great deal of profit for some, over-construction of cheap housing stock for the boom-time workers who later find the work disappear, and ghost towns, in 10 to 30 years.

    To understand this assessment, we must remember the fundamental fact of economic development: no more can come in than goes out. What does the NEK offer? Land, logs and beauty. Land only makes money for the select few who own it if you can drive up the cost of land, hence a plan to bring in 1000 wealthy from other countries. Land can also be used for farming, but farming more democratic and a distributed form of wealth generation. It is implicitly excluded under the proposed plan. Logs can only create big piles of wealth (for those who control the capital, not for ordinary people) when there is a housing and furniture boom, hence this plan. Logs can also produce distributed wealth in a long-term sustainable development model. But where is it? Beauty is also only profitable when there is exaggerated demand, hence this plan. Beauty can, however, also be part of a sustainable development plan.

    The essential effect of a 500,000,000 dollar economic development plan is to create a decade long bubble of investment, after which the enterprise will deflate and after having stripped our natural resources, will endow us with the poverty we had before, or – worse – we will become a playground for the global elite, and revert to the poverty we had before. Is anyone hearing me? This plan will change the face of Vermont by making it friendly to the super-wealthy. Welcome to feudalism, everybody.

  16. What’s the carbon footprint? Shumlin and Sanders say climate change is our top priority. This proposal will involve lots of cars, planes, and emissions. We care about climate change when it is politically convenient, and not when it isn’t?

  17. Bill Gardyne :

    Many folks like to think of the NEK as the last REAL Vermont and feel that nothing needs to change up here as they like it just like it is. It should be a defacto State Park as far as some feel. Well it’s no fun to live in a State Park if you actually have earn money to live and support a family and hopefully prosper and retire without having to go on welfare. Jobs in general and good jobs in particular have ALWAYS been in short supply in the Kingdom; more so than any other part of the State. For those of us that were born here, grew up here and stayed here to raise a family the plans for Jay, Newport and Burke couldn’t be better news. Rising tides will float all boats and just maybe some of those here that really struggle and receive the myriad of benefits the State provides just to survive will actually be able to get jobs. Whether that’s designing replacement human organs, making energy efficient windows or cleaning toilets at the resort they are all good.

  18. Nancy McCarthy :

    How many green cards will be issued ? I am sure the foreigners who will be coming over to the US will be hired first. Low pay and then they get to stay here for two years or longer. Also the above article states that ANC Bio will also be manufacturing VACCINES. Is this safe for the enviroment? Where will the people who have business’s on the waterfront go?

  19. Jeff Seguin :

    As a former Newporter, this is some of the best news for the area I have heard in years.
    The naysayers have and always will be there. They are the ones that keep the status quo in the Kingdom. That and certain factions that “have theirs and don’t want someone to tread on their private playground”.
    Newport’s biggest problem was the same as Jay Peak’s prior to Bill Stenger taiking over: attracting people beyond a day trip. You need to become an “end-resort”. Give people a reason to come and stay for a week or two, not just drive through.
    Jobs are jobs and the possibilities for any one to have are unlimited. If you’re concerned lobby your congressman, heck talk to Bill Stenger about your concerns. I’ve known him for years and he’s about the most approachable, down to earth business person I know.
    And develop that lake front rather than have the way it is now. Magog learned long ago not to have it’s businesses with their a$$ facing AWAY from the lake.
    The Kingdom has a great chance to flourish here if allowed. Chances like this do not grow on trees……….

  20. Larry Johnson :

    A couple of years ago when the Vermont Tiger was wild and roaming free, there was a regular contributor to the site by the name of Daniel Foty. During one of his commentaries he promised to contribute an article addressing the EB-5 Program. Daniel, if you’re out there listening, how about adding your voice to this conversation.

    Larry

  21. Don Peterson :

    EB-5 may prove to be a mixed blessing in this respect:

    Like the national housing bubble of the past decade, EB-5 is a sugar jolt of capital to the NEK. There is lots of money to be spent, and when that happens, some of it is wasted on bad development.

    A manufacturing base sounds like a good idea. We should welcome that opportunity since these companies already have a revenue stream and support themselves with existing sales (somebody checked that, right Mr. Stenger?)

    More hotels and ski lifts and restaurants smells like boomtime overbuilding to me, so not such a great idea. We’ll have to wait and see.

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