The college had attributed the closure to the debt incurred in its $10 million purchase of a 33-acre lakefront property from the Roman Catholic Diocese of Burlington in 2010.
That deal, orchestrated by then-Burlington College President Jane Sanders, wife of Sen. Bernie Sanders, I-Vt., is the subject of a federal investigation, according to records and interviews with former college employees.
The college’s only remaining property is a boxy addition to the former St. Joseph’s orphanage built in the 1940s. The college has sold the rest of its property to developer Eric Farrell for more than $9 million.
People’s United Bank is expected to buy the structure at a public auction-style sale that has yet to be scheduled. The bank and Burlington College have agreed to then sell it to Farrell. He already owns and is renovating the former orphanage.
Farrell said Wednesday he’s not concerned about losing the building to another buyer. He’s already received city approval to redevelop it as part of a massive residential project he’s planning for the former campus.
“They would have to come in and outbid the bank, and I don’t think anybody is quite that crazy,” Farrell said. The judge’s foreclosure order allows People’s to put the entire $3.7 million owed by Burlington College toward the purchase.Farrell and Burlington College board Chair Yves Bradley have pegged the sale price agreed upon by Farrell and the bank at close to $3 million, though neither has provided an exact figure. Farrell declined to comment on the exact price Wednesday.
It’s unlikely the building is worth anywhere near that amount to a buyer that doesn’t own the surrounding land, Farrell said. However, it’s also unclear why Farrell is willing to pay so much for the building.
Bradley, a real estate broker with Pomerleau Real Estate, said that in his professional opinion, the building is worth nowhere near $3 million.
“Essentially that building has to be gutted and put back together,” Bradley said. The heating and cooling system doesn’t work, most of the windows are failing, and the ceilings are too low, he said.
Bradley said his understanding is that the sale price was reached when Burlington College was still operational and occupying the space. “Now that the college is closed it doesn’t make sense, but while the college was open, it was the only way to get the bank on board,” Bradley said.
If People’s sells the building for $3 million, that would still mean a loss of $700,000 for the bank. That doesn’t count more than $100,000 People’s paid to keep the lights on at Burlington College and defray the school’s legal costs while it wound down its affairs, Bradley said.
Michael Seaver, president for People’s United Bank in Vermont, declined to comment on the judge’s order or his bank’s arrangement with Farrell.
Farrell said one reason the bank foreclosed on Burlington College late last year, instead of just selling him the remaining building directly, was that it allowed liens from other creditors to be dismissed.
“The only way to get those discharged, other than paying them, is for the bank to go through a foreclosure,” Farrell said.
The foreclosure order lists the estate of Jason Conway as a creditor. The former Burlington College faculty member left $70,000 that was supposed to be used for scholarships.
VTDigger reported in 2014 that Burlington College “borrowed” $50,000 from the Conway scholarship fund to cover operating costs. The school had pledged to put that money back into scholarships when its finances stabilized, but it closed before that happened.
The executor of the Conway estate sued the school and was granted a mortgage on the remaining Burlington College property, but an attorney for the estate has said his client had no expectation of recouping any of the donated money.
Other creditors listed in the foreclosure judgment include New England Floor Covering Co., which placed a lien for $13,295 on the property; D.S. Specialties Inc., which is owed $6,811; and Neagley and Chase Construction, which is owed $6,600.
Once the foreclosure sale is completed, Burlington College will cease to exist, according to Bradley. None of the creditors behind People’s United Bank will get any money, he said.
Another entity that lost money on Burlington College is the Vermont Economic Development Authority, which loaned the school $250,000 in 2014 and has said it was still owed $145,000 when it closed.
Others include the Catholic diocese, which loaned Burlington College $3.65 million to help finance the land purchase. It lost at least $1 million when it settled with the college in 2015.