Margolis: Is Stenger's grand plan for the Kingdom feasible?
 

Margolis: Is Stenger’s grand plan for the Kingdom feasible?

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

Editor’s note: Jon Margolis is VTDigger’s political columnist.

That’s some economic development project they announced up in the Northeast Kingdom the other day.

Hundreds of millions of dollars to be invested. New hotels, ski lodges, shops, offices, and apartments to be built. New factories to open. A cityscape transformed. An airport improved, expanded, and – who knows? –maybe even one day bringing commercial flights to the Kingdom.

And best of all, jobs. Thousands of jobs for the least prosperous area of Vermont, the one with the state’s highest unemployment rate (6.7 percent in August, compared to 5.0 percent statewide). One estimate was 10,000 new jobs.

What’s not to like?

Not much, apparently, because almost everybody seems to like it. Both statewide and in the region, Democrats and Republicans, businesspeople, educators, and editorial writers cheered the announcement by Bill Stenger, co-owner of the Jay Peak resort and driving force behind the development plans.

Well, there was a little unease expressed at the outset by the Kingdom’s veteran state Sen. (and now Republican candidate for auditor) Vincent Illuzzi, who said, “It almost feels a little overwhelming. Can the area absorb that much change?”

Where people gather – on sidewalks, in  coffee shops and taverns, at Post Offices – some in the Kingdom are pondering Illuzzi’s question: Can the area absorb that much change?

No organized opposition to the proposal is visible. But where people gather – on sidewalks, in coffee shops and taverns, at post offices – some in the Kingdom are pondering Illuzzi’s question: Can the area absorb that much change? Does it have enough doctors and hospital beds, teachers and classrooms, to accommodate the influx of potentially thousands of new residents? Will all those additional cars pollute the air or clog the highways? Will the new residents trigger construction of suburban sprawl housing developments and strip malls, forever changing – many would say ruining – the unique character of the Kingdom?

And whatever the answers to those questions, did Stenger and his allies even try to find them before announcing the development package on Oct. 4? If studies were being conducted, they were being conducted out of the public eye.

Behind all these questions was a more basic challenge. This project is effectively an act of central economic planning. Not in the old Soviet manner, to be sure. This is private enterprise planning. But it has lots of government subsidy, both direct and indirect, and it is likely to change the Northeast Kingdom. Hence the question: Who elected Bill Stenger to transform the region’s economy and society?

“Nobody,” said Bill Stenger, who then quickly added that he had regularly been in touch with elected and appointed officials – educators, economic development planners, health care administrators, and more, telling them what he intended and listening to their concerns. And when he announced the project, he did so with the enthusiastic backing of Gov. Peter Shumlin, Sens. Patrick Leahy and Bernie Sanders, and Rep. Peter Welch, all of whom were elected.

So the answer to the second question – whether Stenger and his associates tried to get the information – is a qualified yes. They may not have undertaken a detailed demographic/economic study of Orleans and Caledonia counties. But they talked to the people who have much of that information, kept them informed, and sought their input.

“Bill Stenger and I have been in regular communication,” said Steve Patterson, the head of the Northeastern Vermont Development Association. “I didn’t know every detail of the plans. But I had a general idea.”

That does not prove that the answer to the first question – can the Kingdom absorb the change? – is also yes. Here the more likely answer is: It depends. And perhaps depends on how wisely and how actively local authorities plan to manage the growth.

In much of the Kingdom, though, “planning” is a four-letter word.

Or as Brian Shupe, the executive director of the Vermont Natural Resources Council, diplomatically put it, officials in the area have been guided by “a strong sense of local control that has discouraged a lot of land use regulation or forward-thinking planning on how to shape growth.”

Stenger said he was reluctant to go public about his early planning until Congress reauthorized the EB-5 program, the mechanism by which he plans to finance all this new construction. That’s the system in which foreign investors get U.S. residence status for a $500,000 investment that creates or preserves 10 jobs that last at least two years.

By the time Congress extended the program last month, Stenger and partner Ariel Quiros were ready to announce their plans, based on getting $500 million in EB-5 investments.

The 10 jobs-per-$500,000 requirement under EB05 can include both direct and indirect jobs, including “induced” jobs.

That’s where the 10,000 jobs figure comes from, and that’s the figure behind some of the unrest. Ten thousand workers and their families streaming into an area now home to not quite 60,000 would be more than just a transformation. It would be an upheaval.

That’s not the way it works. First, not all those jobs are going to be in the area. As Stenger explained (an explanation confirmed by officials of the U.S. Citizenship and Immigration Services) those 10 jobs-per-$500,000 can include both direct and indirect jobs, including “induced” jobs.

Part of the new plan, for instance, calls for construction of a hotel and conference center in Newport. The contractor for that job could be from out of the area or even out of state, but many of its employees would count as jobs created (or extended) by the construction in Newport. If that contractor’s extra work meant it would have to buy a new truck, some of the workers who produce that truck might count, too, even if the truck is manufactured in Detroit.

That number – 10,000 – is reached not by counting actual workers in Vermont, but by economic modeling. Don’t expect 10,000 workers and their families to be streaming into the Kingdom.

Besides, Stenger and other local leaders hope that many of the new jobs will be filled by people who already live there. According to the most recent Labor Department statistics, there are only about 1,000 unemployed people in the Newport area. But that doesn’t include those who have stopped looking for work.

Patricia Sears, executive director of the Newport City Renaissance Corp., said she and others had been working for years with the vocational educators at North Country High School on “workforce development” so that when new jobs do open up, they can “more easily be filled by folks who are here.” Those folks, she said, include people who have “grown up on farms and understand how machinery works,” giving them the skills needed to work at some of the new projects.

Unlike so many modern development projects, this one is – at least on its face – anti-sprawl. Most of the projects are right in the small city of Newport, which despite its natural advantages – it’s on the southern shore of Lake Memphremagog – has been in the economic doldrums for years. As Stenger noted, most of the Newport projects – the hotel/conference center, two factories, a rebuilt city block of stores, offices, and apartments – will be “within walking distance.”

That’s why the project has at least tentative support from environmentalists such as VNRC’s Shupe and Paul Bruhn of Preservation Trust of Vermont.

“Bill (Stenger) clearly wants a bright strong town in Newport and that would be a very good thing,” Bruhn said. “That direct development will be an enhancement.”

The bigger challenge, Bruhn said, is whether “the secondary growth can be also managed and targeted and planned and developed in a way that fits in with the basic characteristics of the Kingdom. That’s going to take some work.”

Some of that work is going on. Stenger met last week with Robert Kern, the superintendent of the local school system, and has met in the past with Claudio Fort, the president of North Country Hospital. Fort said he and Stenger have plans to create a “medical clinic that would be able to provide primary care” and other medicals services in Jay.

That might relieve some of the burden on North Country Hospital. But both Fort and Kern said they could not make precise plans until they get a better idea of just how many new permanent residents the new EB-5-financed projects will bring to the area. So far, they said, nobody has been able to give them an estimate.

The region would have to attract more physicians and teachers to accommodate 5,000 more residents.

Were the population to rise by 5,000, Fort said (consistent with an influx of roughly 2,000 new workers), “we would have to recruit probably a couple more primary care physicians.” Kern’s situation is more ambiguous. Some classrooms in his district’s 12 schools have plenty of room. Others are “challenged for space,” and under some circumstances, the district might have to hire more teachers, he said.

These are problems, but also opportunities. Recruiting physicians and teachers to the Kingdom should be easy, and would bring reasonably affluent professionals who would pay taxes, eat in restaurant, buy at the local shops.

The bigger challenge is: Where would those new workers and their families live? In the villages and on the farms or country homes that now typify the Kingdom? Or in a new collection of suburban subdivisions sprawled along Routes 5 and 105. This is the “secondary development” quandary that concerns the VNRC’s Shupe, Bruhn of Preservation Trust, and many in the Kingdom. Already, noted Shupe, the Derby Road east of Newport is “strip development unfolding before our eyes,” and worries that the EB-5 projects could lead to more of it.

In which case, the Northeast Kingdom would become … well, it would become something else. Still not a bad place to live and raise children. As the NVDA’s Steve Patterson noted, many in the Northeast Kingdom can’t afford to enjoy its cherished quality of life because they can’t get a good-paying job. Perhaps some suburban sprawl is a reasonable price to pay for more economic opportunity.

But it won’t happen if Bill Stenger can help it.

“I don’t want to see that,” he said. “We’re going to do everything we can to avoid that.” Part of his plan, he said, is more “affordable housing in the city limits.”

Based on his track record, Stenger just might be able to pull that off. If voters did elect leaders to transform their region, Stenger might well win that election, and deserve it. He’s not only energetic and public-spirited; on the evidence at hand – the recent Jay Peak expansion, the artist conception of the new “Renaissance Block” in Newport – he appears to have taste.

But suppose another kind of powerful, energetic leader were to play a similar role elsewhere, someone who envisioned more housing subdivisions, big-box stores, shopping malls with multiplex theaters and chain restaurants, not out of greed, but because he or she preferred that kind of development. Many people do. Could that leader impose that kind of development on an area of Vermont?

No, said Stenger, at least not without “community support,” which he does not think such development would get. “I know my community and I listen,” he said.

So it seems. It will be interesting to see if he can pull it off.

Jon Margolis

Leave a Reply

23 Comments on "Margolis: Is Stenger’s grand plan for the Kingdom feasible?"

1000

Comment Policy

VTDigger.org requires that all commenters identify themselves by their authentic first and last names. Initials, pseudonyms or screen names are not permissible.

No personal harassment, abuse, or hate speech is permitted. Be succinct and to the point. If your comment is over 500 words, consider sending a commentary instead.

We personally review and moderate every comment that is posted here. This takes a lot of time; please consider donating to keep the conversation productive and informative.

The purpose of this policy is to encourage a civil discourse among readers who are willing to stand behind their identities and their comments. VTDigger has created a safe zone for readers who wish to engage in a thoughtful discussion on a range of subjects. We hope you join the conversation.

Privacy policy
Sort by:   newest | oldest | most voted
4 years 1 month ago
“Stenger said he was reluctant to go public about his early planning until Congress re-authorized the EB-5 program, the mechanism by which he plans to finance all this new construction. That’s the system in which foreign investors get US residence status for a $500,000 investment that creates or preserves of 10 jobs that last at least two years.” The $500,000 paid by the multi-millionaire immigrants is basically a bribe to get to stay in the US. The $500,000, which usually will pay no interest and no dividend to the immigrants is used by Vermont project developers to build ski/recreation areas,… Read more »
ruth sproull
4 years 1 month ago
At least within the city limits, we have the most progressive zoning code in the state, form-based code, which honors the existing built environment while presenting clear standards for development. This will preserve the unique character of Newport’s downtown. And while in Newport form-based code is about build-to lines rather than set backs, encouraging dense development which in turn promotes walkable and bikable communities, Margolis is right about Route 5 since that’s in Derby which has traditional zoning rules (which can often encourage sprawl). Also, Newport’s city plan, which we on the planning commission are currently updating, is mindful of… Read more »
Peter Conlon
4 years 1 month ago

Before believing that 10,000 workers and a big new biotech firm are a fait accompli, just remember the fanfare of Husky Injection Molding. The promise was the next IBM, a huge campus, lots of great paying jobs. The reality more than a decade later is a far cry from the promise.

Julie Hansen
4 years 1 month ago

Thank you for this article. The announcement also included expanding the capacity of Burke Mountain, including two large hotels. Is is said that no environmental impact studies have been submitted. Have there been? Has there been public input?

Ron Pulcer
4 years 1 month ago
I don’t live in the Northeast Kingdom (although I skied at Jay Peak one week in 1990s, before I moved to VT), so I won’t comment on the appropriateness of any particular development plan for NEK. But I find the EB-5 program a little bit troubling from the point of view that these development businesses do not seem to be trying other means of financing. Perhaps “Locavesting” from Vermonters could be at least part of the funding mix? I read this VTDigger article almost a year ago, and then read Amy Cortese’s book, “Locavesting: The Revolution in Local Investing and… Read more »
George Plumb
4 years 1 month ago

Bill Stenger calls his projects “sustainable.” Really? Bringing thousands of more people to Vermont for tourism and living who are going to add to our carbon emissions is sustainable? With the world running out of cheap fossil fuels this is sustainable? Construction jobs are sustainable? I wonder what his and the environmental organization’s definition of sustainable is?

4 years 1 month ago
While supporting business development anywhere in Vermont, I’d suggest this EB-5 thing is highly questionable. Bribe is an appropriate word. These “buyers” are theoretically provided investment packages on these projects. Have domestic investors, who are rolling in cash, seen these plans? Perhaps they have, but it’s likely they wouldn’t touch things like a water park in the most remote part of Vermont with a 10-foot pole. The people pushing these are not doing anything wrong, just taking advantage of “the system”. At least the construction industry creates jobs for a couple of years; but the aftermath of these risky ventures… Read more »
4 years 1 month ago

Dave,

These project development people ARE doing wrong by taking advantage of a corrupt system to enrich themselves, but TALK about how they are doing all this for others, as if they are God’s gift to the Northeast Kingdom and the Vermont economy; mendacity and hucksterism reins supreme in Vermont.

Annette Smith
4 years 1 month ago
VPR’s Vermont Edition covered this subject. I posted a link to a Public Service Board document, an Order from 2012 titled “VEC-DRD-12 Final Jay Peak Project NTA (11-7-11).pdf” that gave a good overview of Jay Peak’s energy consumption, including a chart showing that Jay Peak’s energy consumption was projected to increase from 5MW in 2010-11 to 15MW in 2013-14. The Order is no longer at the link, nor could I find it on the PSB website. It is rare that PSB Orders disappear, I wonder what happened. Here’s a screen shot of the chart: The water park consumes 2MW annually.… Read more »
4 years 1 month ago
Annette, These Vermont project developers immorally take advantage of corrupt EB-5s to get access to no/low-cost money to build their various real estate schemes, to enrich themselves at the expense of others, while claiming they are doing it all for others. The water park DRAWS a maximum of 2 MW (also called the connected load on electrical wiring diagrams), but its CONSUMPTION is in MWh. It would be interesting to find out just how much energy the EB-5-subsidized Jay Peak recreational water park consumes. High energy economic activities, such as living in mega mansions, flying private planes and helicopters, etc.,… Read more »
Paul Monette
4 years 1 month ago
I can tell everyone, as Mayor of Newport City, we are welcoming Mr. Stengers proposed projects with open arms. Why would anyone think otherwise? We are in an area with the highest unemployment and also the most economically challenged. Newport for years had a perceived reputation for being anti development and I can tell you that is not the case anymore. We revamped our zoning to allow easier development, worked hard on improving our infrastructure and have a Foreign Trade Zone in the works which will help attract businesses. The revitalization of a downtown block, which the community for years… Read more »
4 years 1 month ago
Hi Paul, My wife and I were up your way last week, had lunch at the wonderful Eastside, and I was really impressed seeing the work going on in the town. The beautiful lake certainly can be leveraged to the community’s benefit. I first got into the EB-5 thing because I was jealous on how the guys at Jay could get a “free” hockey rink and we in Stowe couildn’t get our rink project launched other than with additional tax money and we drove up to take a look. It opened my eyes beyond that single facility. However I’m still… Read more »
Paul Monette
4 years 1 month ago
Dave, I am not sure why domestic investors have not stepped up to the plate but I know they tend to shy away from rural areas. I actually look at EB5 program as a way for the US to get some of our overseas investment money back into our own country. Especially in an area which desperately needs the economic development and jobs. I am huge on public/private partnerships since government can’t do it all and this actually is paying off in Newport. Through the hard work of the State, Senator Leahy, and local efforts jobs were saved at our… Read more »
4 years 1 month ago
Paul, Mayor of Newport City. I AM sure private developers do not risk their own money for making these “investments” in marginal projects, because they likely would NOT have an adequate return on investment, ROI. Source: Economics 101. You, as mayor of a town, don’t know this for sure? No wonder your town needs subsidies. That is why developers want free EB-5 money from multi-millionaire investors who would pay the $500,000 bribe to be moved to the front of the line to get green cards and permanent residencies. Money talks, especially in Vermont. That is why you are in favor… Read more »
Paul Monette
4 years 1 month ago
Mr. Post, I truly found your comments interesting and obviously you do not live in Newport or the NEK. I do understand Economics 101and EB5 is a good program in my opinion but that is just a difference in opinion. We aren’t the only community benefiting from (as you call subsidies) but many other areas of Vermont have benefited from them for years. Many local residents tell me it’s about time we are seeing this type of proposed activity and development. I can understand your point of view with regards to the environment and energy since you represent a particular… Read more »
Frank Davis
4 years 1 month ago
There are always naysayers. Many of those above, in their comments, have principled objections to the EB-5 program, or to economic development being accompnied by increased energy usage. Many of us who actually live in the Northeast Kingdom, have experienced not just decades, but scores of years of economic stagnation and consistently high unemployment. As most plans of mice and men, this one will not be concluded without some yet unforseen glitches. However, this is what opportunity and optimism really looks like. In addition to investors, and energy resources, it will require the denizens of the Kingdom to be adaptable,to… Read more »
Bill Gardyne
4 years 1 month ago

Very well stated Frank.

Paul Monette
4 years 1 month ago

I agree Bill. Well stated.

Mary Brenner
4 years 1 month ago
Although I applaud the exciting development in NEK, I have many questions and concerns: Will most of the jobs be low-paid cleaning, restaurant work, transportation jobs? Will all the high tech jobs be filled by immigrants and low-paying jobs be filled by current residents? Will we loose public space? As the increase utilization of our natural area is privatized and upgraded, only the rich can afford to recreate here. Development in downtown Newport will be for tourists and newcomers, not for current residents. Will overall impact increase in social class distinction? I fear the increase in family income and economic… Read more »
Paul Monette
4 years 1 month ago
Mary, No one wants to answer my question as to what type of development should we have? Many locals say we need development and hate that many feel the NEK needs to stay backwards and the playground for the rest of the state. We all know we cannot survive on tourism alone and we desperately need this economic development in our city. Without any type of growth the taxable grand list remains stagnant which results in either major cuts in services from fire to police or increase in taxes which many do not want. The negativity against development amazes me… Read more »
steve merrill
4 years 1 month ago
Question–How many “jobs” did the “WaterBoard Park” bring? Depends on who you ask, it seems that Stenger is now only working his “help” for one week on and a week off so they can’t collect unemployment and NO one from the “media” calls him on it. When he built the “Grand Hotel” they brought in Mexicans to the apt. building right across the common from me and they were here for over a year, all with out of state plates from Fla., NH, Pa., Tennessee (like NH where you can register a car from a PO box) to hang sheet… Read more »
walter moses
4 years 1 month ago

“don’t it always seem to go that you don’t know what you got til it’s gone?” hey Stenger, “pave paradise put in a parking lot!”

tomas payne
4 years 1 month ago
The problem with Stenger’s projects is that they have no basis in financial reality. It’s all free money. Short term, he has more money than he knows what to do with so they are building anything they can think of with free to them EB-5 money. The EB-5 money is a direct investment in exchange for citizenship. These are not loans. There is no return of the investment guaranteed or implied. The long term viability after the EB-5 money goes away is a real problem and concern. Take the olympic villages across the world as an example. Are we seeing… Read more »
wpDiscuz
Thanks for reporting an error with the story, "Margolis: Is Stenger’s grand plan for the Kingdom feasible?"