[T]he fate of Burlington College remains uncertain. The school is running on fumes as it attempts to strike a deal with real estate developer Eric Farrell, who wants to build 20 private homes and 500 housing units on a large portion of the 32-acre property located on Lake Champlain.
While proponents say the deal with Farrell will eliminate much of the college’s debt and potentially save the school, critics believe cash from the land deal won’t be enough to bring Burlington College back into solvency.
The college’s troubled finances were thrown into sharp relief this month when students who were trying to focus on final projects and papers did not receive financial aid payments from the school.
The school expected a $150,000 non-refundable cash deposit from Farrell last week. Sources say without that cash infusion, it’s doubtful Burlington College can survive until Jan. 20, the expected closing date for the land sale.
It is unclear whether Farrell delivered the cash on Friday. Administrators and others in the know are tight-lipped.
Saturday afternoon, college spokeswoman Corallee Holm said the school is still working through the details of the sale with the developer and lenders.
“The rumor that the college is closing this weekend is just that, a rumor,” Holm said in an email.
In what some say is a sad irony, the school is staggering under ballooning debt from the purchase of the property in 2010. The new, $10 million campus was meant to strengthen the tiny liberal arts college. Now the impending sale of a large portion of the property may not be enough to rescue it.
The college has had significant fiscal problems for several years, and the Vermont Attorney General is investigating alleged financial mismanagement. Christine Plunkett, the former president, left the college in August under a cloud, and the new interim president Carol Moore is set to take office next month. The college remains on academic probation and has not attracted new students for the next semester.
The college’s financial issues and the potential development of the property under its ownership has raised eyebrows. The campus, formerly owned by the Roman Catholic Diocese of Burlington, is considered to be the most valuable piece of undeveloped lakefront property in the city.
One developer, who declined to give his name, said the original purchase and the new deal with Farrell does not pass the smell test because so many powerful people — the wife of a U.S. senator, city councilors, former and current state officials and several prominent developers — are involved.
The development is also rife with potential conflict of interest issues. If the sale goes through, Farrell’s development of the property will require city approval. Many of Burlington College’s trustees hold elected or appointed positions with the city and will be in a position to approve the plans they helped to craft.
Meanwhile, conservationists want to preserve a portion of the much-coveted property, but they say the college’s sales agreement with Farrell is a craftily worded legal document that makes conservation of the land difficult.
Financial aid problems
Students say the school for many weeks did not distribute their federal financial aid checks.
The college acts as a middleman. It draws down federal loans that students have received, keeps tuition money and writes checks to students for the balance.
One student said that after months of wrangling with administrators, a staff member showed him his financial aid check, money he uses to pay for living expenses, but said he could not sign or give it out because it would not clear the bank.
“It didn’t seem right,” said the student, who declined to be named.
Other students and faculty told similar stories of students who did not receive the federal loans they were owed.
Holm said if a student did not receive aid it was likely because he or she had not filed the correct paperwork. Many checks were eventually distributed Dec. 12, staff and students said.
Meanwhile, the college has seen record turnover among staff overburdened by work. The federal financial aid system is complex and new staff are still learning, Holm said.
As a result of its financial woes, Burlington College is on academic probation from the New England Association of Schools and Colleges. The school submitted a report to the regional accrediting agency in November according to Barbara Brittingham, NEASC’s higher education commission president.
“The problem is money,” Brittingham said. The school could come off probation, she said, if it could show it was on more sound financial footing.
The college’s ability to receive federal financial aid could be jeopardized if it loses accreditation.
Details of the deal
Burlington College this month inched closer to signing a final deal with Farrell, who began courting the school in 2011 when Christine Plunkett became president.
Plunkett took the reins of the college after former president Jane O’Meara Sanders, wife of U.S. Sen. Bernie Sanders, I-Vt., stepped down in September 2011 because of differences that emerged with the board about the school’s future. Both Sanders and members of the board at the time have refused to divulge details about why she left.
As president, Sanders drove the 2010 purchase of the 32-acre North Avenue campus from the Roman Catholic Diocese. The church sold the land to pay settlements for sex abuse cases, including some by former orphans who lived in what is now the Burlington College building.
Sanders has said the school is not in debt because of the land purchase. She blames the financial problems on Plunkett’s failure to implement the fundraising and enrollment growth plans they agreed to before her departure. Tuition is the primary source of income for the school, and Sanders wanted to double enrollment numbers from 200 to 400 students by 2015. The school now has around 200 students. Over that same period, Sanders wanted to raise about $5 million in funds from donors. The money didn’t materialize.
Burlington College got a good deal on the property, which not only includes the lakefront acreage, but also several large brick structures. The diocese property was valued at $20 million in 2009-2010, according to city records; the college purchased it for $10 million in 2010.
The school financed the purchase through a $6.7 million loan from People’s United Bank and through a $3.5 million loan from the diocese. Antonio Pomerleau, a prominent real estate broker and developer, and a friend of the Sanders family and of the Catholic church, gave the school a $500,000 bridge loan to close the deal, documents show.
Pomerleau will be paid back as part of the land sale to Farrell, according to those with knowledge of the deal. While Pomerleau has said he was once interested in the land himself, he told Seven Days in August that he is now focused on other projects.
Farrell is set to buy 27 acres of the lakefront property for $7 million and plans to build at least 500 units of senior, affordable and market-rate housing, including 21 single-family homes. That leaves six acres for the college, including the building, parking lot and a green in back. On Dec. 9, the college signed a purchase and sales agreement after signing a memorandum of understanding on Nov. 14.
Farrell was set to buy about 25 acres, but at the last minute, the school offered to sell him another 1.3 acres in exchange for a non-refundable cash deposit of $150,000, according to the college.
The sale must be approved by People’s United Bank and the Roman Catholic Diocese of Burlington, which hold the first and second mortgages on the property.
The diocese’s finance council met Wednesday night to discuss the sale, according to a source with knowledge of the meeting. Diocese officials have said they are not yet prepared to comment on the sale. In August, the college defaulted on its loan to the diocese, according to an audit report. The diocese has imposed a $140,000 interest penalty because of the alleged default.
Farrell is also silent, as is Burlington College Board Chairman Yves Bradley and officials at People’s United Bank. The rest of the board, as well as former interim president Michael Smith, declined to comment for this story.
Farrell has developed Eastwood Commons in South Burlington and Thayer Commons and Appletree Point in Burlington. He plans to build housing on the Burlington College campus in partnership with the Champlain Housing Trust and Cathedral Square, which worked with him on the Thayer project.
If the Burlington College deal is finalized, Farrell’s development plans will go to the city. Several college trustees serve on city boards that would be asked to approve the development.
Powerful people in the mix
The Burlington College land deal features a who’s who of well-connected state and Burlington VIPs.
Yves Bradley, for example, is chairman of the city Planning Commission, which approves plans and regulations for developments. Last year, Bradley recused himself from a discussion about a Farrell’s prior plan to develop 16 acres of the Burlington College campus.
Jane Knodell, the newest member of the Burlington College Board of Trustees, is a city councilor as is Karen Paul, another college trustee.
Knodell, a professor at the University of Vermont, was a member of the interim trio who took the reins at the college after Plunkett stepped down in August. She served with Mike Smith, the Douglas administration’s secretary of administration and former FairPoint interim president, and David Coates, a former KPMG managing partner.
Knodell and Paul are also members of the city’s six-member Board of Finance.
Richard Goodwin, the city’s assistant chief administrative officer, is also on the Burlington College board. Jonathan Leopold, the city’s former chief administrative officer, was on the board until 2011, and left around the time he became tangled in a lawsuit over the Burlington Telecom scandal.
The other Burlington College board members are Tom Torti, president of the Lake Champlain Chamber of Commerce; Megan Smith, the state commissioner of tourism and marketing; Armando Vilaseca, former state education commissioner; Joel Miller, George Ewins Jr., Patrick Mahoney, Brendan Donaghey, Sara Wright Adsit (BC ’11,) and current student Katlyn Aviles.
Miller rents 12 units of housing to Burlington College students, and he said he doesn’t see his role as a landlord as a conflict of interest. “I’m doing them a favor,” he said in a phone interview.
Knodell said her positions on the board and city council do not inherently conflict.
“There could be items that come before the council on which I could be conflicted … it would depend on the specific thing,” she said.
Opponents scramble to fight the deal
As the deal with Farrell has unfolded, students and others have become increasingly critical of the board.
A group that calls itself Friends of Burlington College and includes several former board members as well as faculty, students and neighbors, is organizing a community meeting.
The group, however, is split on how to approach the situation. Some are focused on saving the land, while others are more interested in the school’s survival. Students have started an online petition called “Save the land behind Burlington College” that so far has 648 signatures.
Mannie Lionni, a local architect, Old North End resident and former Burlington College board member, says the board has exercised poor oversight of the college, and he has suggested that the group should call for the resignation of all board members and the appointment of a new board.
The board in recent months has said it is doing all it can to save the school, despite criticism from students and others that it has neglected its duties. Bradley has said the board inherited a bad situation and is trying to preserve the college.
Meanwhile, the Vermont Attorney General is investigating the school for alleged misuse of scholarship money. Bill Sorrell said his office is in the “fact-finding” stage and in talks with the board’s attorney.
Sorrell said it is too soon to know whether his office will file a formal complaint.
Boards under Vermont law bear a responsibility for fiduciary oversight, and they have an obligation to make decisions in the best interest of an organization. Many in the friends group believe the board has neglected those duties.
Sorrrell said his attorneys look at how egregious the behavior of the board is or how dramatic the harm is to the organization, he said.
“It’s a balance. Simple negligence without a dramatic negative impact on the organization, it would be infrequent that there would be some dramatic action,” Sorrell said.
Former president Sanders said her experience with the school’s board was excellent. The trustees during her tenure provided good oversight, asked good questions and brought different perspectives, she said.
“That’s what a board is supposed to be: a sounding board. Somebody that can challenge you when there’s any questions about anything. Not in a bad way, in a constructive criticism way,” Sanders said.
Sanders in the past has said she did not want to sell the land to a developer. Documents from the 2010 sale, however, show the school intended to develop the property.
In a 2010 plan, the college considered an independent senior housing complex and other options such as townhouses and single-family homes on land leased from the college, along with housing for faculty, staff and 200 BC students.
The college’s plan called for a “lakefront community for college-affiliated families on the lower parcel. This could utilize townhouses and/or single homes and/or independent senior housing,” the plan says.
Under Farrell’s current plan, the college could lease back properties for student housing.
A long-running interest in conservation
The site consists of rolling hills down to a bluff that overlooks Lake Champlain. There is a natural sand plain forest on the northwest corner including red and white oaks, red maple, white birch and white pine trees. The beach is sandy in places and rocky in others, and it is part of the Winooski River delta, which was formed thousands of years ago.
Alicia Daniel, a University of Vermont naturalist, said in a letter to the mayor that the groves of aspen and birch trees behind the school are excellent songbird habitats.
“The wild lands in Burlington are a huge part of the city’s unique and beautiful nature,” she wrote.
Conservationists have long wanted to preserve the property. There was a push to conserve the land, before Burlington College purchased it. As early as 2000, the diocese was interested in selling the property and had talked with the city’s Conservation Board.
When the Conservation Board tried to acquire part of the property, the diocese was hesitant to sell off a parcel. When the college stepped in to buy the land, Matthew Moore, the chairman of the board, was taken by surprise.
The board has been amassing a $1 million conservation fund for land purchases and the former diocese property has been on the board’s list for a long time, Moore said.
“We’ve been saving up for something like this, to be honest,” Moore said. “The Conservation Board has publicly in many meetings over the years clearly stated our interest in conserving the property.”
Now, as the land is about to be sold again, there is talk again of conserving part of the property. The preliminary sales agreement gave conservation groups 60 days, until mid-January, to match Farrell’s $7 million and in return secure development rights for the property.
Conservation groups, however, say the wording of the sales agreement renders a conservation easement almost meaningless.
Gil Livingston, director of the Vermont Land Trust, said development rights are different than owning the property flat-out. If conservation groups obtained an easement for the land, the college would still own the property and a third party would protect it from development.
“The development rights would not deliver what the mayor has asked for, what the parks department has talked about, what the Conservation Board has talked about or what citizens have talked about, which is a variety of ways to use the land,” Livingston said.
The city prefers to work with Farrell, said Jesse Bridges, director of the Parks and Recreation department. “There’s absolutely conversations going on,” Bridges said.
Mayor Miro Weinberger, who is a developer by trade, has said there is room for both development and conservation of the 27 acres. “It’s not an either/or situation. This is a site in which housing, open space and recreation can all coexist,” he said.
Weinberger has asked that the land be developed according to 10 principles listed in a 2001 report commissioned under former mayor Peter Clavelle. The report recommends a variety of uses for the land, including housing development, land conservation, a bike path and public access to the beach.
Steve Goodkind, Weinberger’s opponent in the March mayoral election, says there should be some development of the land and open space. The city needs affordable housing for low- and moderate-income residents, not luxury units, in his view. “Housing in and of itself is not the answer to anything,” he said.
While the hullabaloo is over the land, what is most obvious to passersby is the 77,000-square foot Victorian brick building, the former diocese headquarters, that dominates the road frontage of the property. It was built in 1884 as a residence for orphans and the elderly. Burlington Free Press publisher Henry B. Stacy originally owned the land, and he sold it to the Roman Catholic Diocese in 1872. The Rev. Cyril Beaudry of Quebec designed the building, which is listed on the state registry of historic places.
Burlington College does not use the large building. It operates in the 1940s addition, built under then-Bishop Matthew Brady that once housed classrooms, dormitories, a nursery and a gym for the nearly 200 orphans who lived there.
The diocese sold the property to help pay for nearly $20 million in settlements to plaintiffs, including several orphans, who alleged abuse by Catholic priests. The diocese ceased all orphanage operations in 1983.
A new president takes the helm
As the college prepares to resurrect itself, Moore is preparing to take office as interim president. Whether the school will survive until mid-January, when she is set to start work, is anyone’s guess.
“It is all dependent on the financial benefits of this land deal,” she said.
Moore met with staff and faculty last week to talk about the nine-month time frame for turning the school around before NEASC re-evaluates its probationary status in March 2016.
Moore’s salary is $125,000. Her anticipated term coincides with the term of academic probation.
She owns a small consulting group, Moore Academic Strategies, in the Northeast Kingdom, and she and her business partner, Mark Hilton, will both work for the school. Moore is also bringing half a dozen volunteers to work with her, friends and former colleagues who are experienced in running colleges, she said.
In an impromptu 11-minute interview on the Howie Rose radio show on WOMM, which broadcasts out of the Burlington College lunchroom, Moore said she has no intention of becoming the permanent president. Her goals are to stabilize the school’s finances, put it in a good financial position for the next decade and grow enrollment.
Moore said she will evaluate what new programs should be added and whether any existing programs should end. She said she is ready to handle what has become a tenuous relationship between faculty and administration.
“We’re all on the same team and we have to work together,” she said.
Faculty at Lyndon State College, where Moore served for 13 years until her resignation in 2011, accused Moore of mismanagement in 2010 and requested an investigation by the Vermont State Colleges chancellor and board of trustees, according to the Caledonian Record.
Moore last week called that uprising “ironic” because the school was in the best financial shape in its history. The investigation never happened, she said. Moore reduced classes that year to shave a $900,000 budget shortfall to about $500,000, according to the Record. She told the newspaper the shortage was the result of declining enrollment.
Burlington College in a press release touted Moore for her excellent management skills and work at Lyndon State, where she raised $10 million in a capital campaign.
Burlington College faculty have said Moore was not their choice for interim president.
Knodell asked her to apply, Moore said.
“There are people who love a challenge,” Knodell said. After all, she added, the challenge is not as risky as it might sound because people half-expect the school to fail.
Correction: A development plan drawing included in an earlier version of this story was outdated.