[B]urlington city councilors have given the green light to the developer of a major downtown project to pour the foundation, even though all of the funding for the $225 million project has not been secured.
The council voted 8-2 Monday night to allow developer Don Sinex to move ahead, arguing progress was better than an idle construction site. They also maintained the city was protected because the foundation, at a cost of $16 million and paid for by Sinex, could be used by another developer if Sinex’s CityPlace project unexpectedly fell through.
Meanwhile, an attorney for project opponents called the council approval “reckless” because a pending lawsuit over parking changes is still in court. In March, attorney John Franco filed suit, claiming an agreement between Sinex and project opponents — brokered by former Mayor Peter Clavelle — was violated when Sinex got city approval to change the parking requirements without notifying them. Sinex said he did not have to consult the opponents before seeking the change.
“This is appalling on just so many levels,” said Franco, a former assistant city attorney.
Sinex of Devonwood Investors LLC is leading the redevelopment of a large part of the downtown core, including replacing the mall that was adjacent to the Church Street Marketplace. The development will have office, retail and residential space and rise as high as 14 stories. Demolition of the old mall was completed in August, delayed for several months after the unexpected discovery of asbestos. The site has been largely idle for the past several weeks.
Originally, the developer hoped to have the project open next year. Recently, Sinex said retail openings, the first part of the project, would be delayed until the fall of 2020.
City Councilor Jane Knodell said Tuesday that approving the waiver to the development agreement between Sinex and the city — which had required the developer to secure full financing for the project before construction could start — involved weighing the risks of saying yes or no.
“The risk of saying ‘yes’ is if Don’s project doesn’t work and there’s some other project that comes in that his foundation won’t work in some major way for the next project and delays the redevelopment of that site,” Knodell said. The council, she said, was assured the foundation could be easily transferred.
“The risk of saying ‘no’ — that you have to stick with the existing language in the DA (development agreement) and when you get everything lined up you come back for a foundation permit — is that then you have an unknown period of time, could be three months, four months … where nothing is happening on the site and confidence in the whole project starts to erode and the whole thing falls apart,” she said.
Council President Kurt Wright agreed.
“To have not done this, which would have created a six- to seven-month delay, which could have potentially imperiled the contract with the medical center and left the project just dormant, doing nothing, would have, on top of all this, created this really bad public perception and sometimes public perception can become the reality,” Wright said Tuesday.
Knodell and Wright said they supported the waiver to avoid another “hole in the ground” similar to one in Newport. There, a downtown project stalled with a hole dug when the developers, Ariel Quiros and Bill Stenger, were charged with securities fraud.
“The mall’s been demolished. It’s gone. There’s a hole there now,” Wright said.
Supporters of the waiver, including Mayor Miro Weinberger, said Sinex had plenty of financing for the foundation project. The supporters argued it made sense to use the time while Sinex lines up financing to move the project forward.
The council met with Sinex in an executive session of more than an hour prior to the Monday vote, the second time he has appeared before the council in private recently for a project update.
Wright said the council expects Sinex to have full financing in place in the next several months.
“The sooner, the better,” he said.
According to a letter to the council from the mayor, Sinex secured $56 million in financing last year. Devonwood took on Rouses Properties as an equity partner. Sinex has said he expects to get the rest of his financing from a commercial lender.
Sinex was unavailable for an interview on Tuesday. He said last April he was “highly confident” he’d have all the commercial bank financing in place a month later. Wright said his willingness to invest $16 million in the foundation was a positive sign.
Sinex told WCAX on Monday: “We are just at a point where the project is now ready for foundation, but it’s ahead of the conditions that we need to satisfy.”
Meanwhile, any unresolved disputes between Sinex and the general contractor, PC Construction, are a private matter, Wright said, and did not weigh into his decision to support the waiver. The mayor, city councilors and the city’s development director have acknowledged problems between the developer and contractor. None will describe the nature of the conflicts.
“All I can say is as of today — and I don’t know about tomorrow, that’s up to Don — still as of today,” Sinex and PC Construction are working together, Wright said. “Whether it will hold beyond that, I don’t know and that is something we’re curious about and hear rumors on the street” but, Wright said, the decision is up to Sinex, not the city. A representative from PC could not be reached.
“Ultimately, it’s not the city’s role,” he said.
A spokesperson for the University of Vermont Medical Center, which is expected to take almost half of the office space, said the hospital is working with the developer over the delays. The hospital had hoped to move downtown by January of next year.
“Don Sinex has kept us fully informed about the factors influencing the schedule. We are committed to this project and are proceeding with internal planning to be able to occupy the space as soon as it is ready,” said Michael Carrese.
Weinberger praised the City Council vote and said the development agreement and the “public-private partnership we’ve formed” gave Burlington stronger protections than most private projects.
The development agreement, he said, “gave the City Council the opportunity to carefully review the status of the project over the last couple of weeks, and to confirm with professionals that it is in the city’s interest to allow the permitted foundation work to proceed at this time.”
Reacting to Franco’s assertion, the mayor said: “The council’s strong decision was deliberate, prudent and keeps this critical project for the future of Burlington’s downtown on track — in short, the council’s 8-2 decision was the opposite of reckless.”
Wright and Knodell said there was no discussion of the opponents’ lawsuit prior to the vote. They and the mayor said city lawyers maintain Franco’s suit is separate from the foundation pouring permit. Franco said it was irresponsible to pour the foundation when the issue of underground parking has not been settled in court.
