[N]EWPORT — City officials in Newport have received a $20,000 boost to help plan what to do next to fill a big hole in the community’s downtown.
The grant from the Vermont Housing and Conservation Board allows the city to start the process to hire a consultant in the wake of investment fraud allegations earlier this year against the developers of the Renaissance Block project planned for a prominent Main Street location.
All that remains of that proposed mixed-use development, promoted by Miami businessman Ariel Quiros and local resident William Stenger, are the foundations from the razed buildings that previously stood at the site of the now gaping downtown block.
“It’s really an opportunity for the city to be proactive, and looking at an entire vacant block and figuring out if we should get actively involved or leave it to the whim of the powers that be,” City Manager Laura Dolgin said of the $20,000 grant.
Asked if purchasing the property was an option for the city, Dolgin replied: “It’s a little too early to say that.”
Michael Goldberg, the court-appointed receiver in the case, oversees the properties subject to the fraud allegations involving Quiros and Stenger. Goldberg could not be reached for comment recently.
He has said in previous interviews that he is working to sell the downtown Newport block and has had three or four prospective buyers since he became the receiver in April.
The grant application says the city anticipates a long-term process.
“The entire project will take years to actualize and will need the expertise of a professional firm far more involved than the city manager can produce or ask its partners to commit to given their regional responsibilities,” the application states.
The funding for the grant comes from an appropriation in the capital bill the Legislature passed last spring, which sets aside $1.2 million for the Housing and Conservation Board to “assist economically distressed downtowns in the Northeast Kingdom.”
Of that total, $1 million is held in reserve for St. Johnsbury, which is in negotiations about changes to the Corrections Department work camp in that community, according to Jennifer Hollar, the housing board’s director of policy and special projects.
That leaves $200,000 remaining, and the bill allows the organization to allocate up to 10 percent, or $20,000, of those funds for “predevelopment or planning activities.”
Dolgin said she is also working on an application for a $30,000 grant from the Vermont Community Development Program through the state Agency of Commerce and Community Development.
“My hope, and the way I designed it, is that as the first grant exhausts, the second grant would become available,” she said. “It would allow a continuous stream of work from the consultant so that hopefully by the end of it we’ll have some recommendation made on how to move forward.”
Best-case scenario, she said, would be a recommendation sometime after September.
“It’s really putting a way for the city to step back and analyze what was originally proposed, see if there’s any remnants of that makes sense given the change and status of the market,” she said, “and help us make a decision about how actively we want to assume control over that property.”
Steps taken
The grant application submitted to the VHCB outlines some of the activities the city has undertaken since the fraud allegations arose against Quiros and Stenger.
Those steps have included:
- In early May, city officials met with Goldberg and an interested developer from Chittenden County who has mixed-use commercial and housing projects in the Burlington and St. Albans areas. The developer discussed a mixed-use project with commercial space on the ground level and two to four stories of affordable housing above.
- In mid-May, officials from the city and the Northeastern Vermont Development Association met with Goldberg to discuss getting the data and plans that were developed for the Renaissance Block project so the information could be available to potential developers. “This information is being shared, with more expected,” the application states.
- In late June officials from the city and the Northeastern Vermont Development Association met with multiple funding agencies and organizations in Montpelier to share information and learn about what resources are available to the city, nonprofit organization or private developer for a Main Street redevelopment project.
Quiros and Stenger intended to develop the site with money raised from foreign investors through the federal EB-5 visa program.
The plan was to build a four-story, mixed-use development with retail and office space as well as a hotel.
The development was meant to provide long-term rentals for workers at AnC Bio Vermont, another project Stenger and Quiros had planned for Newport, but which never materialized.
State and federal lawsuits filed in April allege Stenger and Quiros misused $200 million from investors meant to fund a series of development projects in the Northeast Kingdom, including hotels, condos and the two projects in Newport.
The Securities and Exchange Commission lawsuit against Stenger — former CEO and president of Jay Peak — and Quiros — owner of Q Resorts, a holding company that includes Jay Peak — termed the biomedical center project they pitched “nearly a complete fraud.”
Block’s value
The properties that make up the vacant Main Street block are assessed by the city at just under $1.51 million, according to city records. The assessment for the properties has remained at the figure since before Quiros purchased them in December 2013 for $2.85 million, records state.
Asked why the properties’ value did not change when the buildings were razed, City Assessor Spencer Potter said the answer stems from the fact the city does not require permits to remove buildings.
As a result, he said, there is no “official trigger” to review or change the assessment.
“In the city there are hundreds of properties that have undergone changes without permits. That’s just one of the very visible ones,” Potter said of the Main Street block, located a short distance from City Hall.
“We obviously see it, but we see others, and my obligation is treat everybody the same. The fact that I see it doesn’t mean that I should react to it just because I see it,” he said. “Somebody that did the same thing and was not visible, they have to be treated the same.”
Once the developers had started building the Renaissance Block project, he said, that would have triggered a permit and another look at the assessments of the properties.
Newport is undergoing a citywide reappraisal, and Potter said he anticipates that the value of the properties making up the vacant downtown block will increase. Just how much is not yet known.
