[T]he municipal manager of Waterbury sought last week to hold the town and village harmless from a $15 million state property devaluation, but his request fell on deaf ears.
William Shepeluk told the Senate Committee on Institutions that the town is losing funding as a result of the devaluation of the Waterbury State Office Complex from $48.74 million to $33.71 million.
Many of the historic buildings of the former Vermont State Hospital were destroyed or heavily damaged by floodwaters from Tropical Storm Irene in August 2011. State workers were dispersed to other locations and the state tore down more than a dozen buildings. The state is in the middle of constructing a new complex that will house the Agency of Human Resources.
The devaluation reduces payments in lieu of taxes (PILOT) the state makes to Waterbury. Payments would go from $165,010 in the current fiscal year to $127,545, Shepeluk said.
In what’s already a tough budget year for Waterbury, Shepeluk said the devaluation would mean tax rate increases of 1.3 percent for the town and 4.6 percent for the village.
Shepeluk asked the committee to hold harmless the $165,010 PILOT in the capital spending bill until property values increase.
“Sixty-two percent of the town’s total revenue is PILOT,” Shepeluk said. “Very few communities see the value of state property drop by 30 percent in the course of a year.”
Sen. Dick Mazza, D-Grand Isle, said some members of the Committee on Institutions talked after the hearing and likely will not grant Shepeluk’s request.
Mazza said increasing the PILOT amount would set a precedent, and this year’s budget pressures are also an issue.
Waterbury’s economy will benefit from the new complex, he said. About 850 Agency of Human Services employees are slated to move into the Waterbury offices early next year. About 1,200 state workers worked there when Irene struck.
“We had choices back then of whether we should relocate there,” Mazza said on Friday.
“I feel that we’re all in this together, and with our commitment, I just think that they should be working with us and trying to work with us instead of trying to seek money out for the PILOT program,” he said.
Shepeluk testified that Waterbury’s Grand List has already dropped by more than 3 percent since the flood, “and will likely not exceed its pre-Irene level until 2017.”
Additionally, the state owns at least 40 percent of the property in town — including the Agency of Natural Resources-controlled state forest — leaving the municipality with fewer options for revenue, Shepeluk said.
The Waterbury State Office Complex project
Gov. Peter Shumlin’s budget asked for $17.45 million in this year’s capital bill to fund the Waterbury State Office Complex project, which includes buildings in several different towns that house the services that were previously at the Waterbury site.
Michael Clasen, deputy secretary of administration, said the cost to the state in fiscal years 2016 and 2017 will be $34 million. The state will need to pick up another $6.5 million in fiscal year 2018, Clasen said.
Some payments from the state’s insurance company, Lexington Insurance, are still pending.
The Federal Emergency Management Agency will finalize the amount it will contribute toward the $136.89 million project once the insurance company has paid the state. The federal government has agreed to pay 90 percent of the remaining cost; the state must pick up the remaining 10 percent.
Mike Stevens, the project manager for the Department of Buildings and General Services, said the project preserves the historic buildings at the center of the complex that were once part of the Vermont State Hospital, which was built in the late 19th century.
Stevens said the historic buildings need to be restored from the outside and “completely” renovated from the inside so state employees can work in a “vibrant” environment. There will be atriums for guests, key-card access for security purposes, and open-office setups to foster collaboration, he said.
Stevens said the state filled in the underground tunnels connecting the buildings, improved the flow around the campus, and is installing new windows.
Rep. Tom Stevens, D-Waterbury, called the former state hospital a “very, very difficult place to be,” with underground tunnels that produced “bad karma,” and he said the campus was never integrated into the community.
“It was a hospital,” Rep. Stevens said. “If you didn’t belong there 100 years ago, you didn’t go there. Recently, as a state office building, you’d go in and find your place, and you’d work there.”
Rep. Stevens said, “I think this one is kind of going to be built so it’s more welcoming in some ways, but certainly returning the 900 state workers back will be beneficial for the economy.”
