[T]he auction of the last piece of property owned by Burlington College took less than five minutes Wednesday morning.
People’s United Bank, which held a mortgage on the property, was the only bidder. A senior vice president put in a bid of $3.1 million, more than the city’s assessed value of $2.6 million for the two buildings and 6 acres of land on North Avenue, but less than what a court said Burlington College owed the bank on mortgages and other expenses connected with the property. That figure was put at $3.75 million.
Local developer Eric Farrell, who wants to develop the site being auctioned as part of a larger project, attended the auction — his first, he said — but did not place a bid or even register to bid. He said he planned to let the bank buy the property as was expected and then negotiate directly with the bank.
Farrell said in an interview before the auction that he believed he could get a better deal if he negotiated directly with the bank. Too much was owed for the bank not to step in and protect its interests if someone made a lowball offer, he said.
“I’m not going to bid against them,” said Farrell. He thinks the property is worth less than what the court said was owed, but won’t say how much. An earlier report by VTDigger said he and the college had worked out a deal for close to $3 million for the North Avenue parcel. The site being auctioned “sits in the living room” of his much larger development project, Farrell said, and it is a property he wants.
“I want it, but I don’t need it,” he said.
Farrell is seeking to build a massive development that includes another 27 acres he already bought from the college when it was financially strapped in 2015. He already has city approval for a development on the new property.
The bank is trying to recoup money from the assets of Burlington College, which borrowed $6.7 million in 2010 toward a $10 million purchase of land owned by the Roman Catholic Diocese as part of an ambitious expansion plan. The college closed in 2016 under the “crushing debt” caused by those loans and the failure to increase enrollment. The college sold off equipment and furniture last summer and the proceeds went to People’s.
This last property, an addition to the former St. Joseph’s orphanage, includes a boxy 1940s building that Farrell plans to turn into commercial and residential space. Inside, the rooms looked partially gutted except for one room filled with books.
Other college assets have been previously sold with the proceeds going largely to the bank.
Former Burlington College President Jane Sanders, the wife of Sen. Bernie Sanders, I-Vt., is under investigation by the FBI on allegations she misrepresented to People’s the amount of charitable pledges the college had received to use as collateral for the loan.
Former college trustee Jane Knodell said the auction of the last remaining property represented a final sad chapter in the history of the college. She said believed the college had a viable expansion plan.
Knodell said the college allowed the properties to go into foreclosure and the college never declared bankruptcy because the foreclosure process was simpler and less expensive. Some contractors, including the Vermont Woodworking School, a program run by Jane Sanders’ daughter, Carina Driscoll, were not fully paid.
The court order requiring the auction stated several contractors and an estate with claims against the college would have to come up with the full amount owed the bank — $3.75 million — or be “forever barred from all equity of redemption” in the property. Those contractors included Mike’s Electric, New England Floor Covering, and Neagly and Chase Construction Co. No amounts were given on what those companies had sought from Burlington College.
In addition to the contractors, the foreclosure order also 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 and was allegedly used for operating expenses.
“The bank is first in line,” said Knodell.
People’s Senior Vice President Matthew Carter had little comment after the sale, but acknowledged the bank would prefer to be in the business of lending money but not actually owning real estate. Carter said in an interview before the auction that he shared “the goal of every creditor” to try to maximize the amount the bank would get from the property, even if it meant buying it and holding it to try to resell again.
Auctioneer Thomas Hirchak started the bidding at $5 million with no takers. Carter stepped in shortly after and bid $3.1 million. No other bids were made.
The bank and Burlington College had agreed the bank would try to work out a direct sale to Farrell if no one came forward at the auction. A judge must approve the sale to the bank, though no objection is expected.
Farrell said in May that one reason the bank foreclosed on Burlington College late last year, instead of 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.
“It just brings it all back that we had to close the college,” Knodell said when asked to comment on the auction, which she did not attend.
Knodell said the board dissolved itself and for all intents and purposes, the college no longer exists.
“I did think that we had a business plan that was going to work. We just ran out of time and money,” Knodell said. “This is the very last chapter of the book.”
