BURLINGTON — Around noon on New Year’s Eve in 2010, a group of anxious attorneys, bankers and college administrators gathered at People’s United Bank’s downtown offices.
They were assembled for the close of a major real estate deal. Burlington College was set to purchase 33 lakefront acres from the Roman Catholic Diocese of Burlington for $10 million.
The complex transaction involved People’s loaning $6.7 million to the college through tax-exempt bonds issued by a state lending agency. The diocese would provide an additional $3.65 million loan as part of the deal.
Debt from those loans became an albatross that the small liberal arts college was never able to shed. Burlington College closed in May 2016 under what it called the “crushing weight” of that debt after People’s refused to renew the school’s line of credit.
The U.S. Department of Justice is investigating representations about pledged donations made by former Burlington College President Jane Sanders, wife of U.S. Sen. Bernie Sanders, I-Vt. Those pledges were used as collateral to secure the People’s loan.
In its application for tax-exempt bonds, Burlington College laid out an ambitious plan to raise millions of dollars and more than double enrollment to pay down its debt and make improvements to the property.
However, documents and interviews show that, even prior to making the purchase, Jane Sanders, relying in part on the counsel of local real estate magnate Tony Pomerleau, had envisioned selling, leasing or partnering to build developments on the land.
Jane and Bernie Sanders have a close relationship with Pomerleau, whom they’ve known for close to four decades. The democratic socialist and the Republican business mogul have found common cause despite their political differences. Jane Sanders told The Burlington Free Press in 2015 that she and her husband value Pomerleau’s “friendship and generosity.”
Pomerleau, according to a video about his life made by his real estate firm, took a small Burlington grocery and built it into a sprawling real estate empire. His philanthropy and business acumen would have made him an ideal confidant and potential patron for a college president with an ambitious plan.
Back in the People’s offices, at the last possible moment on that New Year’s Eve, Pomerleau rescued the entire Burlington College land deal.
The tax-exempt bonds came with a low interest rate, but to comply with regulations the deal had to close in 2010, according to multiple people involved in the transaction.
“Things all of the sudden come to a halt, and everyone’s waiting, waiting, waiting,” recalled Yves Bradley, a broker with Pomerleau Real Estate who was the listing agent for the diocese. Bradley later served on the Burlington College board of trustees from 2013 to 2016.
At the last moment, Bradley said, it was discovered there was a $500,000 shortfall that had to be plugged before the bank would sign off on the deal.
The closing dragged on several more hours. “People’s phones start ringing. Everyone’s stepping out and coming back in with glum looks on their faces, because they’ve all been chewed out by their family” for breaking New Year’s Eve plans, Bradley said.
Then Pomerleau showed up and walked into People’s United Bank Vermont President Michael Seaver’s office. “I don’t know what’s up, and then he leaves,” Bradley said.
As Bradley would soon learn, Pomerleau had agreed to lend Burlington College $500,000 to fill the shortfall. The deal literally came down to the wire: A wire transfer had to be arranged outside normal banking hours so the money could be deposited and the closing completed, according to Bradley.
Turning to Pomerleau for guidance, support
Board minutes and planning materials show Jane Sanders frequently sought Pomerleau’s guidance during the yearlong negotiation with the diocese.
“Jane spoke with Tony, who thought $10 million is good for both the college and the Diocese for all three properties,” state the minutes from a March 24, 2010, meeting where the board voted unanimously to allow Sanders to negotiate terms with the diocese. The diocese land was subdivided into three parcels.
Earlier in the meeting, the minutes state Jane Sanders “is in contact with the diocese three times a week with the strategy to have them think we are the inevitable buyer.” Notes from a subsequent executive session include a section of unattributed remarks from members, including one that states, “We should beg, borrow or steal to get this property.”
A month later, the board voted to give Pomerleau and his wife honorary degrees, and minutes indicate that Jane Sanders was courting Pomerleau’s daughter as a potential board member. Pomerleau said Sanders recruited him to join the board as well, but he declined.
Pomerleau also recommended Burlington College hire attorney Jack Bergeron to help craft a purchase and sale agreement between the school and the church — advice the college heeded.
The 99-year-old real estate developer recalled in a recent interview that during that time he also advised Sanders to sell some of the land if the college was able to make the purchase.
“It was a fabulous piece of land. It’s the best piece of land in the state, and I say you keep a good piece of it for the future,” Pomerleau said, describing what he told Sanders. “When you find out what your plans are, you can sell part of it. I suggested that, but the conversation never recurred.”
Crea Lintilhac, a philanthropist and donor, said that when she toured the new property, Sanders spoke of selling off a piece of it to lower the debt. Lintilhac now says the college could have survived if it did.
It appears Pomerleau’s advice to sell some of the property is reflected in a 2010 planning document titled “Catholic Diocese Property Process — February through July,” which contains a laundry list of considerations and action items. They include: “Partner with a developer to build income-producing property on-site to defray costs?”; “Allow the sale or long-term lease of personal residences to defray costs”; “Developers (sic) to ascertain interest in purchasing or partnering to create housing or other income producing property.”
Bradley, the listing agent, who accepted a reduced commission negotiated by Pomerleau, said he was unaware his boss was advising Sanders in 2010. The diocese paid him $100,000, or a 1 percent fee, lower than a typical 4 percent fee. Bradley further agreed to donate $50,000 of that to the Bishop’s Fund. He said he agreed to the reduced fee because the diocese had begun negotiating with Burlington College before hiring Bradley as its broker.
“All I knew was (Pomerleau) was supportive of the college, because Jane was in here all the time,” Bradley said during an interview at Pomerleau Real Estate headquarters on College Street.
Bradley said he assumed Pomerleau was supportive because of his close ties to the diocese. The late Bishop Kenneth Angell was a personal friend, according to Bradley, and the Pomerleau family has generously supported Catholic charities.
“My thought was that she was coming in here all the time to ask for money,” Bradley said.
As it turned out, that was also true. Sanders listed Pomerleau as a potential $1 million donor to Burlington College’s capital campaign in the People’s loan documents.
“(Sanders) had told me a woman was going to give her a million dollars, and I said, ‘Well, if that client of yours gives a million dollars, I’ll match it.’ I’ve given a lot of million dollars throughout the state,” Pomerleau said.
Earlier this year, VTDigger reported that the other $1 million donor, whose pledge is listed as “valid and enforceable” in the People’s loan, was Corinne Bove Maietta, of the Bove’s Restaurant family.
However, in an interview, Maietta denied having signed a pledge agreement with the college, and her accountant said the terms that were discussed differed from how the pledge was represented in the loan.
Maietta’s donation was to be a bequest, or gift upon her death, according to people involved.
Pomerleau said Sanders and the college never followed up on his $1 million match offer. “It never occurred, and I never bothered to ask her, because I knew if she got it, she’d come get me,” he said.
After that, Pomerleau said, his involvement with the college ended.
In a May 2011 letter to the board of trustees, Sanders wrote, “I have continued to work with another donor who had suggested he would make a million dollar gift but has chosen to assist us in other ways to date.”
Things fall apart
Five months later, in October 2011, Sanders was ousted by the board. In a farewell letter to the board, released to The Burlington Free Press by Sanders family spokesman Jeff Weaver, Jane Sanders makes a final effort to push her development plans for the college.
“While some of you have clearly perceived my entrepreneurial approach and community perspective to be too expansive for our small college, I think it is extremely important that the next president have those broad skills,” Sanders wrote.
Among her recommendations to the board are to “consider developing the lakefront lot to allow for some leased sites on the lower bluff,” which she noted was discussed at the board’s first meeting about the diocese land in March 2010. “I’ve always thought we should plan for that, if only as a fallback,” she wrote.
Sanders also wrote that she was working with the Greater Burlington Industrial Corp. to shop the 9-acre southernmost parcel of the diocese land to a financial services firm. The deal would “substantially lower or eliminate our mortgage debt,” she wrote.
GBIC President Frank Cioffi confirmed that in the summer of 2011 he reached out to Sanders to gauge her interest in selling land to the firm, which had expressed interest in locating in Vermont. Cioffi was hoping to pitch the firm on an addition to the former orphanage building on the bluff below, he said.
Sanders countered, offering the southern parcel because that land wasn’t encumbered by the limits on commercial development that came with the tax-exempt bonds. She also had plans to possibly build out the campus on the land he preferred, Cioffi said.
Cioffi said the prospective business gave her proposal serious consideration, but engineers were concerned that North Avenue wouldn’t be able to absorb the traffic, and the southern parcel would have been a “very tight fit” for what the financial services firm was looking for.
When Sanders was forced out, Cioffi shifted his focus to other property owners who were interested in selling to the firm, which ultimately never moved to Vermont, he said.
“We missed the window of opportunity. You’ve got to move really quickly in these instances,” he said. “If Jane had stayed, I would have continued the dialogue with her about the whole site.”
Publicly, Sanders and the board cited differing visions for Burlington College’s future as the reason for her departure. At the time, VTDigger reported that concerns about fundraising also contributed to her termination.
Reporter Greg Guma, who covered Sanders’ exit for VTDigger, wrote that she was interested in inking another four-year contract with the board. “But negotiations over a new contract stalled as doubts emerged about her plans and fundraising. In August, the board voted to negotiate an early exit package,” he reported.
The board minutes and other documents obtained by VTDigger don’t offer further insight into the reasons for her ouster. Minutes from finance committee meetings on Sept. 14 and Oct. 7, 2011, make no mention of the impending split.
Minutes from an Oct. 11, 2011, executive committee meeting show board members unanimously approved a motion to accept Sanders’ resignation, write a letter expressing “appreciation for her service and accomplishments,” and name a gallery and scholarship fund for her. The minutes reflect no discussion of the reasons for her departure.
Former trustee David Dunn told The New York Times in July that the board was not initially concerned about the purchase. Board minutes from the period suggest members were enthusiastic about the deal.
However, after the land deal and before Sanders was forced out, “the board was made aware that the rate of donations that were pledged was not near what was received,” said Dunn, who also told the Times that overstated pledges were a factor in Sanders’ ouster. Dunn did not respond to an interview request from VTDigger.
Pomerleau defended Sanders’ tenure as Burlington College president but declined, when pressed, to speculate on why the board pushed her out.
“I’m not going to get involved in that,” he said. “I think she did a very good job as president of the college. I don’t know what went on with the board and all of that.”
Development plans falter post-Sanders
It’s unclear why Burlington College didn’t pursue options for developing its land in the months following Sanders’ departure. Several board members from that time declined to be interviewed or said they could not recall why development plans stalled.
There was a transition in leadership to Sanders’ deputy Christine Plunkett, who took over as president, as well as turnover on the board. However, another factor may have been that developing the land was more complicated than originally thought.
It was not until Bradley joined the board in 2013 that the college made a serious effort to do so, he said. Shortly after he joined the board, Burlington College issued a request for proposals from developers to build student housing.
The school needed permission from both People’s United Bank and the diocese, which each held a mortgage on the property, for any development to go forward. Having “two masters” with sometimes conflicting interests became a “logistical nightmare,” Bradley said.
There were also the limits that came with the tax-exempt bonds. Still, plans for student and market housing coalesced with developer Eric Farrell, who had emerged from the 2013 bidding process.
However, when Michael Smith took over as interim college president in 2014, he decided the school’s finances were too far gone for a partnership to be viable. Burlington College needed to sell the land or it would run out of cash in a matter of months, Smith has said. Selling required Burlington College and People’s to convert the tax-exempt bonds, thereby relinquishing the low interest rate.
The school sold 27.5 acres to Farrell, erasing much of its debt, but the windfall was not enough to stave off financial ruin when People’s pulled a nearly $1 million line of credit in the spring of 2016.
The college folded that May. Earlier this year the last piece of its property, a squat 1940s addition to the orphanage building, was sold at a foreclosure auction. People’s bought the building, assessed by the city at $2.6 million, for $3.1 million. The bank plans to sell it to Farrell, who has city approval for a large mixed-use project on the site.
‘Low man on the totem pole’
The federal probe of the Burlington College land deal began with a January 2016 letter from Republican attorney Brady Toensing. Toensing requested an investigation, alleging that Jane Sanders’ overstating of pledged donations amounted to bank fraud.
In a May 2016 follow-up letter, Toensing alleged that Sen. Sanders had pressured People’s to make the loan to the college led by his wife. The Sanderses have denied the allegation, dismissing it as politically motivated. It recently emerged that the source behind Toensing’s allegation was a former People’s employee with no direct knowledge of the loan.
Pomerleau was also dismissive of the idea that Bernie Sanders pressured the bank.
His good-natured but deprecating anecdotes about what he tells Vermont’s junior senator are well-known to friends and reporters. Pomerleau has often repeated what he claims he told Bernie Sanders upon his 1981 mayoral victory: “You may be the mayor, but it’s still my city.”
So why does the real estate mogul say the allegation that Sen. Sanders pressured People’s bank doesn’t pass the smell test? “He wouldn’t get any interest (from the bank) because he was the low man on the totem pole. I never tried to advise him to do anything, and to the best of my knowledge he never got involved,” Pomerleau said.