On December 14, 2016

Study to crunch numbers on downtown Rutland hotel feasibility

By Adam Federman, VTDigger

RUTLAND — A $30,000 grant will help explore the feasibility of building a 128-room hotel, conference center and pedestrian shopping plaza along the Evelyn Street corridor in downtown Rutland.
The Rutland Redevelopment Authority will use the money from the Vermont Community Development Program to hire a consulting engineer to assess the project’s viability and potential costs.
The idea of building a hotel downtown has been bandied about for years, and a market analysis conducted in 2013 concluded that such a project would be sustainable. The report, prepared by PFK Consulting out of Boston, looked at two sites: one at Center and Wales streets owned by the Mitchell family and the second on Evelyn Street across from the Amtrak station (just north of Walmart).
The Center Street location, which includes a gravel parking lot known as the Pit, has been vacant since the historic Berwick Hotel burned to the ground in 1973. Another downtown hotel, the Bardwell, closed its doors in 1980 when it was purchased by the state and turned into affordable housing for seniors and the disabled. Since then the city center has been without a landmark hotel.
“The whole thing goes back before my time,” said Brennan Duffy, executive director of the redevelopment authority, who has been in that position for five years. “It’s been a dream of mine and the RDA.”
The proposed 128-room hotel would be a partnership between the city of Rutland and John Kalish, a local developer and attorney. In June, Kalish signed a lease option on a half-acre of city-owned land that would be included in the development. The Board of Aldermen has also moved to facilitate the project by approving a tax stabilization plan for the hotel and agreeing to close Evelyn Street to motorized traffic.
One of the main obstacles cited in the 2013 market analysis was the city’s high tax rate. PFK said there appeared to be sufficient demand for a downtown hotel but “the atypically high estimated property tax expense imposed by the city of Rutland results in insufficient cash flow to support financial viability.”
The board’s tax stabilization resolution passed in 2013 was a response to that finding.
According to Kalish, who acquired and renovated the Killington Mountain Lodge last year, a five-story top-tier hotel in downtown Rutland would cost around $18 million. The hotel would have 3,000 to 5,000 square feet of conference space, a full service restaurant, and possibly a rooftop bar and lounge with panoramic views. Kalish said the hotel would be geared toward work and leisure travelers.
“I think this hotel conference center will really provide an economic stimulus and it’ll become a social hub for our community,” Kalish said. “It’s a win for the city and a win for the vast majority of downtown businesses. Hopefully it’ll be a win for us.”
The city and state will be key partners, Kalish said, although his management company will be responsible for capital investment in the project. “But we’ll be looking to various sources — third-party lenders, the city and state — whoever has the ability to loan,” he said.
The developers would like to start the permit process early next year.
Kalish said he was already in touch with two hotel franchises and that both were very interested in the venture. He also said he is involved in a third hotel project but was not at liberty to discuss it.
Duffy believes the project has great potential but said it’s far from being a done deal. In many ways the Community Development grant will help determine if the estimated costs are within reason and if there are any other obstacles that could potentially derail the effort.
“There are a lot of things that could occur to not make this happen,” Duffy said.
The consulting firm will conduct traffic studies and soil analyses of the proposed site. According to Duffy the Evelyn Street site once served as a rail yard, and there may have been a gas station service area there as well. But the key component will likely be estimated costs, said Duffy.
“Is this financially feasible?” Duffy asked. “Can we make it work on the city side and the private side?”
A complicated patchwork of property owners and other businesses could also complicate matters. The 6-acre Evelyn Street site is partly owned by Brixmor, a commercial real estate company that leases the Wal-Mart shopping plaza and parking lot. TD Bank also has a drive-through on the proposed site that would have to be incorporated into the hotel or relocated.
“We have reached out and talked with representatives of TD Bank,” said Duffy. “They understand the importance of having a hotel downtown and the importance of the project to the region and city as a whole.”
Tara Kelly, planning director and zoning administrator for the city, said there are few restrictions on development in the downtown business district. “It’s not about whether or not it can happen but about the form it takes,” Kelly said.
Ralph Nimtz, founder of NBF architects in Rutland, which has worked on a number of historic buildings in the area, said the downtown has long needed a hotel. Nimtz, who recalls the devastating Berwick Hotel fire in 1973, said ideally any new development would be complementary or at least “sympathetic to the historic nature of downtown.”
NBF restored the façade of Green Mountain Power’s Innovation Center on Merchants Row — an old art deco building — and Nimtz said there are always compromises when putting up new buildings or renovating old ones. “You do the best you can to respect the past,” he said.
Kalish said the development team has presented a prototype to the city. He said there’s still discussion about whether the hotel would be five or six stories and if it would include use of modular components, which could speed the construction process.
Kalish said it would probably take at least six months to acquire the necessary permits if the project moves forward. Construction would take between 10 and 12 months.


Photo courtesy of Rutland Redevelopment Authority
A hotel and conference center is proposed on Evelyn Street at the base of Center Street and just to the north of the  Walmart shopping complex, pictured center foreground.

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