The newly brokered CityPlace development agreement may combust over concerns that the leaders of the long-delayed project won’t commit to unionized construction labor.
About a week ago, the city government announced it had reached a settlement agreement with the leaders behind the CityPlace downtown development project. The agreement aims to compel construction on the streets surrounding the project and to guide new construction, which has run into one snag after another since 2018.
But this new agreement doesn’t contain any guarantees that union labor — and the higher wages and benefits that come with it — will be used to build CityPlace. That has prompted Vermont AFL-CIO President David Van Deusen to encourage Burlington city councilors to vote against the new agreement Tuesday night.
Van Deusen is also raising concerns that Don Sinex, a developer involved with the CityPlace project since the beginning, won’t guarantee that he will commit to union financing of the project — his most recent proposal to fund CityPlace construction.
Until a few weeks ago, Van Deusen said he was excited about a potential partnership between Sinex and the national AFL-CIO labor union’s housing trust. Now, “I’m feeling troubled,” Van Deusen said.
Van Deusen has been talking with Sinex about using the union’s $6.7 billion mutual fund to invest in the downtown Burlington project, which includes hundreds of apartments and new retail spaces. The union will take on projects only if they have a U.S. Department of Housing and Urban Development guarantee, which ensures that a loan is protected if a project falls into default.
Sinex recently explained to VTDigger that he saw union investment as an optimal financing avenue, given that private financiers are wary about the risk of new developments during a pandemic.
CityPlace has been largely stalled because of a revolving door of financiers — Rouse Properties was the first firm to promise financing, but then was acquired by Brookfield Asset Management, a global investment firm, which also promised in 2018 to finance CityPlace, but pulled out in 2020.
Sinex said he wasn’t confident a HUD guarantee could be secured. “HUD is a creature of habit,” he told VTDigger. “And I’m just not familiar with what they are.” Sinex also said he’s still considering the private financing route.
At the time, Van Deusen said he was “extremely confident” union financing and a HUD guarantee could be secured. The partnership would also produce hundreds of union jobs and apprenticeships for marginalized groups. But after seeing Sinex’s comments in VTDigger, he said the union’s confidence has faltered. He said the union began reaching out to Devonwood Investors LLC, Sinex’s real estate firm.
“That set off a red flag,” Van Deusen said. “We’ve expressed to Devonwood that, look, if you want to go in a different financing direction, we will be happy to partner with you. But we need to have in writing that we’re going to have union jobs on this project. We need more than just a verbal commitment.”
‘We want to be locked in’
Sinex has refused to commit to using union labor for the project, Van Deusen said, so he’s asking city councilors to reject the current development agreement and modify it, to ensure union labor is used on the project.
“Don Sinex has indicated that he doesn’t want to be locked into anything at this time,” Van Deusen said. “We want to be locked in. We want to know that this project is going to benefit working-class Vermonters and be done by union labor.”
In an emailed statement to VTDigger, Sinex said it can take over a year to acquire a HUD guarantee, and even then can be turned down. Those potential delays are why his team is still looking into private financing.
“We can not rely solely on HUD, and therefore the AFL-CIO, and to do so would be foolish and irresponsible of me and our team,” Sinex wrote.
The new development deadlines in the settlement agreement also add pressure. They stipulate that construction has to begin within two years or developers must foot the cost for street construction work around the development, which would otherwise be covered by tax increment financing — an arrangement in which new property-tax income resulting from the development will pay off the loans.
Van Deusen contends the development agreement can be revised to be more flexible and account for HUD guarantee delays. He said the union has also offered its resources to Sinex to help navigate the HUD process.
“We have given everything to Devonwood on a silver platter,” Van Deusen said. “There’s a little bit of mystery to me about what the holdups are.”
Sinex also said the development agreement, as written, has numerous labor conditions — including that some of the project’s employees be paid a livable wage, as determined by Burlington Livable Wage Ordinance. But the agreement does not require that unionized workers be hired.
“The provisions in the new development agreement on labor, wages and labor practices clearly reflect our commitment to provide the local community with good jobs that pay good wages and require our JV [joint venture] to adhere to good labor practices, which benefits everyone in the community,” Sinex wrote. “These labor conditions that we have agreed to will be fulfilled by us no matter how we finance the project.”
Van Deusen said an agreement has been offered to Sinex that would assure union labor be used to build CityPlace. But after Sinex initially refused to sign, Van Deusen said he’s not confident a deal will be reached by Tuesday evening’s council vote.
What will the council do?
On Monday afternoon, City Council President Max Tracy, P-Ward 2, said he would not sign the development agreement without a union labor guarantee. He said he’s not sure where his progressive colleagues — a majority on the council — currently stand. They’ll be caucusing on the issue later Monday.
“This is an issue where we really need clear commitment from Don on this piece of the agreement, Tracy said.
He said councilors are trying to work through these concerns Monday and Tuesday. “I’ve also expressed these concerns to the administration,” Tracy said. “And so they’re trying to work through what that commitment might look like. But as of now I haven’t seen anything.”
Burlington Mayor Miro Weinberger did not respond to a request for comment.
