Brookfield Properties is still planning to start construction on the long-delayed downtown CityPlace development project later this year despite economic uncertainty caused by the coronavirus pandemic, a spokesperson for the company said Wednesday.
Ken Liatsos, who the company hired to be a spokesperson for the development, said in an interview with VTDigger that the permitting process has slowed due to the pandemic. But he said the company is continuing design and permitting work.
“We’re still moving forward and making progress,” he said. “I don’t see a lot of impact on the construction timeline yet … It seems like we are continuing to move forward productively as planned, though slightly differently.”
The downtown site has sat idle since August 2018, as the developer struggled to secure financing and promised construction start dates passed without movement. Brookfield determined that the project was not feasible as designed last summer and rolled out a redesign late last year, aiming for an August 2020 start of construction.
Brookfield is now planning a 10-story building that includes a 175-room hotel and 280-300 housing units. The site will also include retail and office space, with the University of Vermont Medical Center as the leading office space tenant.
Liatsos said that since the project was not set to be completed until 2023, the company believes the economic considerations at the heart of the development have not changed.
“This was always far enough out, in terms of the construction schedule, that I don’t think it makes sense for us now, with the information we have now, to try to game out those scenarios,” he said. “I think we have to assume, like everyone else is assuming, that our economy will be pretty well open for business by then.”
The University of Vermont Medical Center, the premier office space tenant for the site, has not indicated any changes to their commitment, Liatsos said. The UVM Health Network is projecting a $152 million loss this fiscal year.
Annie Mackin, a spokesperson for the hospital, said via email that UVMMC has not made other arrangements.
Brookfield Properties released a message to shareholders March 20 that stated the company had been preparing for an economic downturn for several years and believed it was well-positioned for the crisis.
Mayor Miro Weinberger said that while he had been in touch with Brookfield about the project, he was more focused on other issues during the pandemic.
“I think it’s fair to say that there has been some impact on that project, like just about anything else, as a result of the emergency,” he said. “At the same time, Brookfield has indicated to us that they see the impact as more of a short-term impact than something that fundamentally changes their outlook on the property.”
Weinberger said the city would have a more in-depth update at an upcoming council meeting.
City Councilor Brian Pine, P-Ward 3, said he would not be surprised if Brookfield pushed the start of construction to next year.
“The pandemic certainly raises concern about the viability and the timing,” he said. “Our entire economy, locally and nationally, is in a very different place than it was two months ago. It definitely is a cause for concern.”
Pine said he was hopeful that Brookfield would still consider the development a good investment for the company.
“These guys do take the long view, they are an extremely large development company,” he said. “But no one’s experienced this, it rivals or even surpasses the decline we experienced in the Great Depression. I’d say all bets are off right now.”
Pine said that while he believed Burlington would always have a high demand for housing, he said he was less sure about the feasibility of the project’s planned hotel.
Tom Torti, the president of the Lake Champlain Chamber of Commerce, said he believed the hotel industry would bounce back from the pandemic. He said similar questions about hotel projects were raised during the 2008 recession.
“People looked out and said, at some point people will want to vacation, and what made Burlington the place people wanted to go has not changed,” he said.
Councilor Joan Shannon, D-South District, a realtor, said the residential real estate market remains strong despite the pandemic, and she believes housing demand remains high. But she anticipates Brookfield may adjust its schedule.
“I wouldn’t be completely surprised if they wanted to delay their construction plans until the dust settles,” she said.
Councilor Perri Freeman, P-Central District, said she thought the developer’s communication with the public needed to improve. But she said she is more focused on the public health response to the pandemic than development.
“Obviously it’s a project people have felt has been a focal point, because regardless of Covid, we have not seen the anticipated development and construction that we’ve expected,” she said. “But I think a public health emergency is a different scenario. It doesn’t have to do with the other factors, that have been business or market factors, that have contributed to the delays in that project.”
John Franco, an attorney who represents project opponents, said he would be shocked if Brookfield did not announce the project is on hold for the foreseeable future.
“If they couldn’t get financing before, how on God’s green earth are they going to get financing for a project like this now?” Franco said. “How many businesses will even be open downtown when this is over, how many restaurants will still be in business? This is really quite scary, people are legitimately concerned.”
Franco said there was no chance construction would start this year, as the city’s permitting processes have stalled during the pandemic.
“Forget whether they are going to start construction in September,” he said. “Whether this is going to happen at all is on pause.”
Business leaders remain a little more optimistic about the long-term health of the project, while acknowledging it’s a difficult time to try to predict the future.
“I remain optimistic, but that said, I think we’re not quite sure how this virus is going to play out over the long term,” Torti said. “I’m hopeful, but I’m not going to say, ‘all is well, don’t worry.’”
Kelly Devine, the executive director of the Burlington Business Association, said while Brookfield is a very large company, it is dependent on commercial real estate, a sector facing particularly large challenges during the pandemic.
“We have a project that needs to move forward, so I think it’s important, unless Brookfield says otherwise, to hold them to the timeline they’ve committed to so far,” she said.
Devine said Brookfield is likely evaluating if the economic model for the project can work, as it needs to pay for itself over a number of years in the long run.
“Organizations like Brookfield look out 18 months, three years, five years when they look at a project,” Devine said. “What’s happening now is very immediate, it’s very very right now.”
Find more than 500 local businesses offering curbside pickup, new hours and phone orders in VTDigger’s business directory.
Get the latest statistics and live updates on our coronavirus page.
Sign up for our coronavirus email list.
Tell us your story or give feedback at coronavirus@vtdigger.org.
Support our nonprofit journalism with a donation.
