Maybe you’ve been there. The numbers don’t work, but your vision enjoys strong public- and private-sector support.
Five years ago, such was the case for the dream of a new campus for the Community College of Vermont that would anchor downtown Rutland.
The building vision
The vision was evident when the state of Vermont issued a request for proposals for what is known as a “build-to-suit lease” for a new Community College of Vermont campus in downtown Rutland.
The requirements for the campus included more than 30,000 square feet of space for 24 classrooms, lecture space, administration, labs and large assembly space, in addition to on-site and secured parking.
A large new building in or near historic downtown Rutland would have a major positive impact on a struggling local economy. Local officials, the Downtown Rutland Partnership, and current and potential students were enthusiastic.
Multiple organizations submitted a response to the state’s RFP, among them DEW Construction Corp. of Williston, Vermont and Keene, New Hampshire.
Mike Francis, CPA, chief financial officer and principal of DEW Construction and DEW Properties, described the challenges: “There were three lots involved on West Street. The old Stewart’s store and gas station property was contaminated from an underground gasoline storage tank, which would require removal of contaminated soils and then a seal underneath any new building as a vapor mitigation system. There was an old church contaminated by mold, but still listed as an historic site, and an old apartment building that needed to be torn down. One block up on Center Street where parking would be needed, there were two buildings with land in back.”
Dealing with either a brownfield or a registered historic site can significantly increase construction costs. In a city with a booming economy, such a project would appraise at its projected cost of remediation and construction and be able to attract adequate financing.
In Rutland in 2011, the proposed campus cost the same as it would in a more prosperous city ($8.5 million), but it was appraised for significantly below its construction cost ($6.9 million), which created a significant gap in financing despite the use of Recovery Zone Facility Bonds, a Vermont Economic Development Authority loan, and DEW Properties’ equity. Traditional lending is limited when standard loan-to-value ratios are not met.
Closing the financing gap: Vermont Rural Ventures
DEW’s Mike Francis recalls this was their first project partnering with Vermont Rural Ventures to use a New Markets Tax Credit allocation.
“It works like a source of equity that makes the numbers work. ‘But-for’ the $2 million investment from Vermont Rural Ventures, the CCV Rutland campus would not have happened. We did it again a couple of years later for the Barre City Place, which tells you what we think.”
By any measure, the heart of Rutland looks different five years later. Today more than 1,000 students a week pass through the doors of CCV. A visitor can walk from CCV down West Street to Merchants Row and around the block and find a new transportation hub, Small Dog Electronics, Green Mountain Power Company’s Energy Innovation Center, Phoenix Books, Wonderfeet Kids Museum, and many other local businesses.
Financed in part by Vermont Rural Ventures using a New Markets Tax Credit (NMTC) allocation, the CCV campus has fulfilled its vision as an anchor building and helped to attract other businesses downtown.
Beth Boutin is senior investment officer of Vermont Rural Ventures, a community development entity that uses New Markets Tax Credit allocations for community investments throughout Vermont. Vermont Rural Ventures is a subsidiary of Housing Vermont.