FOR IMMEDIATE RELEASE
February 5, 2021
Contact: Olivia LaVecchia
(802) 734-0617
Mayor Miro Weinberger Announces Settlement with Developer of CityPlace that Guarantees Reconnection of Lost Streets and Allows Developer to Advance Transformational Project
Settlement will result in the transfer of land for Pine and St. Paul Streets to the City at no cost to taxpayers, create additional security to ensure that new streets will be built at no cost to the taxpayers regardless of progress on development, retain benefits of the original development agreement, and continue to protect taxpayers from all financial risk
Burlington, VT – After months of negotiations, Mayor Miro Weinberger announced today a settlement with the developers of CityPlace Burlington that retains the benefits of the original development agreement, secures millions of dollars in public benefits, and ensures that the project can move forward. The Administration will present the settlement to the City Council for discussion at its February 8, 2021 meeting, and seek approval at the Council’s February 16 meeting.
If approved by the City Council, the agreements would be executed immediately but conditionally, and then placed in escrow before becoming effective in mid-May 2021 once certain conditions have been met. Upon successful completion of that process, the City of Burlington will drop its lawsuit, the land for the reconnection of Pine Street and St. Paul Street will immediately be deeded to the City at no cost to the taxpayers, and the legal relationship between the City and the developer will then be defined by an Amended and Restated Development Agreement.
The developer has been pursuing revised land use permits for the site since last fall with the Burlington Development Review Board. Settlement of the lawsuit will allow the developer to continue through the remainder of the permitting, design, and financing processes towards construction. (The developers of CityPlace Burlington will communicate separately all details about their project plans and timeline).
“With this settlement, the City is holding the developers of CityPlace Burlington accountable for the past while also creating a path for the project to move forward,” said Mayor Weinberger. “This settlement ensures that the City will achieve the long-held and transformational goal of reconnecting our downtown through St. Paul and Pine Streets at no cost to taxpayers. I appreciate the sustained effort that the development team, including the new local partners, put in to reaching this detailed agreement, and I wish them well in their ambitious plans. The developer’s success will mean hundreds of new homes, jobs, and activity in the heart of our city, which will in turn be a success for all of Burlington.”
Settlement Delivers Reconnected Public Streets and Other Public Benefits
A central component of the settlement agreement is that it ensures that St. Paul and Pine Streets will be reconnected through the former mall site. The settlement agreement addresses this in two key ways:
- The developers will transfer to the City, at no cost, the land on which the reconnected St. Paul and Pine Streets will be built, which the developer has appraised at $4.3 million. This land will be transferred to the City as soon as the settlement is completed.
- The City will receive a guaranteed, legally enforceable contract, paid for by the developers, to reconnect the St. Paul and Pine streets at no cost to taxpayers if the developers do not succeed in starting to build the project in approximately two years, or if the developers start but do not continue in keeping with established milestones. The value of this construction contract is estimated at $3.2 million. (Some street finishes would be built later outside of this contract to avoid the need to rip out newly constructed work. If the project does proceed as planned, then the City will reimburse the developer for the streets, including all finishes, from the Waterfront TIF district, which uses increment generated by new revenues from the project – not taxpayers).
In addition, when the project moves forward, the settlement requires the developer to repay $150,000 a year in lost property taxes to the City’s Tax Increment Financing (TIF) district that have resulted from the project’s unanticipated delays. These payments have an estimated value of $300,000-$450,000 depending on when the construction begins.
Settlement Retains the Benefits of Earlier Development Agreement: Developer Can Move Forward With Transformational Project at No Financial Risk to City
The settlement includes an Amended and Restated Development Agreement between the City and the developer, which includes numerous changes but preserves the essential structure and terms of the current agreement.
These key pieces include:
- All risks of construction and development will remain the responsibility of the developer, and taxpayers will continue to be fully protected from these risks. This means that the developer will not be reimbursed from the Waterfront TIF District until the components of the project are complete and incremental tax revenue begins. Further, the TIF debt will not be issued in the first place unless the developer provides secure funding to cover all of the City’s borrowing costs until the project is delivered and certain timelines and conditions are met.
- The amended development agreement will renew the developer’s commitments to affordable housing and local employment opportunities. It also renews the developer’s commitments to minimize the use of fossil fuels to the greatest extent practicable, and states that the developer will make a good faith reasonable effort to incorporate into the project a renewable primary heating system sized to meet at least 85 percent of the project’s heating load, including by funding detailed engineering design.
- The original development agreement outlines the terms of the tax increment financing for the project. The settlement includes revisions to these terms for two reasons: 1) the revised, smaller development and schedule is expected to produce approximately $8-10 million of TIF investment instead of the original estimate of approximately $21 million, and 2) State law has been amended to require that debt for the TIF district be issued by June 30, 2022 instead of the prior year.
- As a result, the settlement requires the developer to pay the costs of carrying any debt until the project is built and generating tax increment, and includes a number of provisions if the developer does not meet the conditions for the issuance of TIF debt by June 15, 2022. If the developer completes the street improvements on schedule then it will be entitled to reimbursement from the TIF proceeds, but only after paying certain of the City’s related costs. In the event that there is additional revenue to the TIF district, the agreement would still create the opportunity for additional public infrastructure on the blocks surrounding the site.
Statements of support
“This is truly fantastic news, and of particular note is the assurance that the new downtown street connections will be completed,” said David White, the City’s Director of Planning. “The restoration of the street grid in the heart of the downtown has been a dream of the City for decades. Not only does a street grid significantly improve traffic flow, but it also doubles the opportunity for street-level activation within two blocks of the Marketplace and leading towards the lake.”
“After a long journey, I am confident we have arrived at a place where we can begin anew with real and certain optimism that this start will end with an amazing project that will fulfil many of the community’s needs – in particular, the now-certainty of the reconnected Pine and St Paul Streets, along with downtown housing and retail,” said Karen Paul, City Councilor for Ward 6. “I am deeply appreciative of the vision of the local partners Dave Farrington, Al Senecal, and Scott Ireland in partnering with Devonwood and to Don Sinex for understanding that in Burlington, we take pride in local enterprise. Together, and with the support of our community, this project will serve to enrich and invigorate our downtown for generations to come. As an accountant with years in finance, the settlement forged by the Mayor with the support of the City Council, our legal team, and the developers of the project is a win for the City and our taxpayers. The land transfer, the guaranteed contract to reconnect the streets at no cost to the taxpayers, and the repayment of lost property taxes are all aspects of the settlement that we can all enthusiastically support. I look forward to working with the developers collaboratively and to seeing this project come to fruition.”
“The Burlington Business Association welcomes the news that Mayor Weinberger and the developers of CityPlace have reached an agreement,” said Kelly Devine, Executive Director of the Burlington Business Association. “The project again has a path forward. Almost a year into this pandemic, there is light on the horizon for both this project and Burlington. We need the housing, we need the people, and we need our streets back. We now have hope for new, thriving mixed use blocks in our downtown. Thanks to the Mayor and the CityPlace developers for all their hard work and perseverance. Thank you for putting Burlington’s future first.”
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