[B]URLINGTON — The site of the massive downtown Burlington CityPlace development doesn’t look much different than it did two months ago, six months ago, even nine months ago.
It’s a gloomy scene — mostly dirt, with some concrete blocks, steel beams and assorted construction materials in and around a pit. Surrounding the site, forming a fence, billboards paint a brighter picture for the future, with photos of smiling people “living, working, shopping, learning and eating” in a shiny new downtown development.
Since August, the site of the $220 million development has sat empty, as a projected construction start date has been missed and spring turns to summer.
While there appears to be little activity at the site and concerns among some city officials and the public continue to grow, the developers insist that behind the scenes they are working hard to get the project off the ground.
“We’re on it, we’re all over it, we’re working really diligently, but there’s a lot of work to do,” Will Voegele, the senior vice president for development of Brookfield Properties said. “That’s how I would characterize it.”
The most substantial recent development is Brookfield’s securing of a financing term sheet — a financial proposal in preparation for a final agreement — for the project. Brookfield is also evaluating the project’s design, reviewing construction bids, working with the city on planning public improvements using Tax Increment Funding and fighting a lawsuit from project opponents.
Brookfield owns 51 percent of the project. Developer Don Sinex — who had been the public face of the project until January — owns the other 49 percent. Brookfield has been taking a significantly more active role in the project this year compared to last.
Brookfield backed away last month from an anticipated June 1 construction re-start date, and Voegele would not provide the council with an estimated — or even general — re-start date.
Earlier this month, Voegele provided the City Council a list of the key design, financing and other “milestones” that have to be reached before construction on the development will restart.
David White, the interim director of the city’s Community and Economic Development Office, and Jeff Glassberg, an outside consultant working on the project for the city, wrote a memo accompanying the checklist.
“We continue to work with the involved City departments and the developer to advance the process responsibly and thoughtfully,” they wrote. “There is incremental progress daily, though never as quickly as we’d all prefer.”
Financing
The project’s financing has been a major point of contention. For months, Sinex had told city officials that the financing would be lined up shortly, when in fact he didn’t have a deal with a financial institution.
Voegele told the council in April that the developers had secured a term sheet from the Bank of the Ozarks.
“I will tell you, term sheets don’t come easily from banks,” Voegele told the city council. “An executed term sheet is no small thing.”
Brookfield is now working with the Bank of the Ozarks to reach the conditions necessary to finalize the loan documents.
Voegele said the term sheet outlines an agreement between the bank and developer with conditions. Once the conditions are met, the two sides can agree to binding, formal loan documents, he said.
Chelsea Ziegelbaum, a development manager for Brookfield, said in the period between signing the term sheet and producing final documents, the bank does their due diligence to understand more about the project, including appraisals and environmental reports.
“They kind of have to dot the i’s and cross the t’s in terms of really understanding the project,” she said. “In the term sheet, they look at the project as a whole, but this is their chance to really dive deeper.”
Councilor Brian Pine said he saw the executed term sheet as a major step that means the lender believes the fundamentals of the project are solid enough to move forward.
“It’s a significant step in this process, I have a pretty good level of confidence that that means the project is on track,” he said.
John Franco, a lawyer who has represented project opponents for years, said the term sheet execution wasn’t as significant as Brookfield made it out to be.
“The term sheet says this is what you need to do to get financing. It doesn’t mean you are going to get it,” Franco said.
Design and pre-construction work
Brookfield is evaluating and refining the project’s design, Voegele said.
“It’s really as simple as looking at the project to determine if there are things that make it better for us, better for the market and better for Burlington,” he said. “It’s not an unusual exercise, it’s just part of this agenda of important things that we have to work through.”
Voegele said it would be premature to discuss the scope of the changes. All of the construction documents for the project are out for bid, with some bids received and under review.
Brookfield is currently evaluating bids and negotiating and finalizing Guaranteed Maximum Price contracts, according to the memo. GMP contracts compensate contractors for the actual costs of the project and a fixed fee.
The original estimate for CityPlace was $220 million.
Voegele said Brookfield was two-thirds of the way through evaluating bids.
“The numbers are coming in, we have a ways to go to evaluate them, but we’re not in the position to say one way or another whether they’re meeting our expectations,” he said. “We’re really not through the process.”
Around the country, bids for construction projects are coming in higher than expected due in part to a labor shortage in the construction industry and rising costs of steel and aluminum due to tariffs instituted by the Trump administration.
Vermont is not immune to these challenges. For example, bids for the City Hall Park renovation were higher than anticipated, for a variety of reasons, including the availability of other work in the region due to a strong economy and higher material costs industry-wide.
“All the factors are in play, it’s the world we live in as developers,” Voegele said. “Things change, tariffs happen, escalations happen, making sure that the labor force is up to the task, any number of those things…. It’s all of those complexities, and that’s why the process takes time.”
The project is “as complex as development gets,” Voegele said, integrating many uses into one block. This makes the contracting and bidding stage of the project complicated.
“Just imagine the different construction types and the different materials,” he said. “And that translates to all different contractors, different suppliers. Putting that puzzle together is a big job.”
Shelburne-based PC Construction remains the construction manager, or general contractor overseeing the project, even though Sinex had told the city last August he planned on firing PC.
The target start of construction is “pending,” Brookfield noted in its memo.
Sinex told VTDigger in March that construction would re-start May 6. Brookfield then clarified that the start date would be June 1. Last month Brookfield backed away from a firm deadline of any kind.
Voegele said there were “a lot of factors” for the delay but that he “couldn’t point to one thing.”
“I think it’s not unusual to be optimistic looking down the horizon on projects like this, and then as you see things you know you need to address, you need to take a step back,” he said.
TIF Funding
In 2016 the deal with Sinex was sealed and Burlington voters approved $21.8 million in TIF bonds to re-connect Pine and St. Paul streets through the site. The TIF funding will also pay for improvements on Bank and Cherry streets, including streetscape, stormwater, utility and lighting improvements.
TIF funding pays for public infrastructure that encourages private development. Municipalities are able to issue bonds that cover the costs for new infrastructure, which are paid for with the new property tax revenue that comes from the increased value of the private development.
Glassberg said the city and developers are looking at the work laid out in the TIF ballot item, designing those improvements, making estimates for that work and evaluating those costs relative to the $21.8 million budget.
Voegele said Brookfield and the city have been discussing the issue in their weekly meetings.
“We’re not yet at a conclusion of that process, that might be 60 to 90 days away,” he said. “The good news is there’s a whole lot of focus on it.”
Under the development agreement, all of the work on the public improvements has to be completed by the deadline for the TIF bonding, which is June 30, 2021. If that deadline is missed, the city would have to ask the Legislature for an extension.
Voegele said Brookfield was cognizant of the deadline.
“I don’t see it as an issue right this minute, but we understand it’s out there,” he said. “It is not unusual to have those kinds of conditions, it’s not something that’s keeping me up at night right now.”
Reporter Aidan Quigley discusses Brookfield and the CityPlace delays on our Deeper Dig podcast:
Lawsuit
The final milestone on the memo from Brookfield is the “resolution of recent project-related lawsuit.”
The pending lawsuit was filed by Franco on behalf of a group of Burlington citizens, alleges that the developers did not live up to the settlement agreement made with project opponents by not properly informing them of changes to the project.
A similar lawsuit alleging that the city had not properly notified project opponents was dismissed by a federal judge. The current lawsuit alleges the developers had not fulfilled their end of the deal.
Underground parking is the main area of contention, which would affect construction. Voegele couldn’t say whether construction could start with the lawsuit pending.
“It would be irresponsible to say anything to that effect,” he said.
Franco speculated that resolution of the lawsuit might be part of the term sheet with Bank of the Ozarks. If that is the case, resolution of the dispute could be required for financing.
“I think there are significant questions about the feasibility of this thing, if there weren’t they would have had the financing and been off to the races a year ago,” Franco said.
Communication
The partnership is also taking a different approach in regard to communicating with the public about the project, Voegele said.
“We are working together with our partner to make sure that we are in alignment in how we reflect that long view, that horizon, as we get things queued up,” he said. “We’re looking to be as cohesive as we can be in our communication going forward.”
This new alignment was reflected in Sinex’s response to questions from VTDigger Thursday.
While Sinex had been quick to respond to requests from reporters in the past, on Thursday he forwarded VTDigger’s questions to Voegele, who told Sinex he had already spoken to the reporter.
“I would suggest that you simply reply that Brookfield is representing the partnership to the media and they should be in dialogue with us,” Voegele told Sinex in an email Sinex forwarded to VTDigger.
Voegele reiterated that Brookfield was committed to improving its communication with the public.
“I know people are hungry for information, and the fact we are on the phone here and the other things that we’re doing are proof that we want to do a better job communicating,” he said. “It’s just that we’re not in the position to share information we know people are looking for until we get through the process.”
Pine said Brookfield was improving its communication with the community, including meeting with councilors individually.
“The level of communication is improving, but it still has a little ways to go in terms of keeping the councilors and overall community informed with what’s happening,” he said.
City Councilor Adam Roof said the checklist Voegele provided to the council would help the councilors ask more informed questions about the status of the project moving forward.
“I think everyone would feel a lot better if they were in an active construction process, which is not the current state,” he said.
Another update to the city council is expected at the council’s June 3 meeting.
Partnership
Voegele said nothing has changed in regards to Sinex’s role as a partner in the project. He said Brookfield’s status as the majority partner means the company has a “huge” interest in the development, which is translating into a more upfront role.
“We are a partnership, we are going forward to get this project developed, that’s the fundamental reality,” he said. “Yes, there has been a shift in how’s that’s happening, but all that should be viewed as part of a process and viewed in a positive light, but no reasons for innuendo or anything else.”
Voegele declined to comment on whether Brookfield has talked with Sinex about buying him out of the project.
“You’re stepping into a world that translates to legal things, and it’s a policy we have that we can’t speak to anything like that,” he said.