Downtown Rutland is poised for major change

News of Walmart’s exit coupled by planned developments, including a downtown hotel and theatre expansion, has sparked talk of opportunity

By Kevin O’Connor/VTDigger

Thirty years ago, in the fall of 1994, Rutland City leaders eagerly awaited news of final plans for the cornerstone of their long-germinating downtown revitalization efforts: A new $20 million corporate headquarters for the state’s then-largest electric utility, Central Vermont Public Service Corp.

They didn’t anticipate the bombshell headlines about to hit.

The utility would drop what it determined to be a prohibitively expensive project that November, the Rutland Herald went on to report. That led municipal officials to turn to a surprising Plan B: Walmart, the big-box chain the National Trust for Historic Preservation had tagged “Sprawl Mart” the year before when it listed Vermont as one of its 1993 “Most Endangered Historic Places.”

The country’s biggest retailer had stores in every other state when Rutland City leaders offered what few other Vermonters would: An invitation to operate — but only in an existing, soon-to-be empty downtown anchor space instead of the new Diamond Run Mall under construction two miles south in neighboring Rutland Town.

The smaller-than-average Walmart would open and thrive in the city’s center in 1997. The Goliath of a mall, six times larger yet plagued like its peers nationally by financial problems, would eventually shrivel and shut down by 2019.

Then, this fall, local leaders were jolted by another explosive headline. Walmart is planning to leave its Rutland Plaza anchor location, it announced in September, and build a threefold-bigger “supercenter” with a grocery store and pharmacy at the site of the former mall.

The chain anticipates it will need at least two years to complete the local and state permit process and construct a new store for a projected move in 2027. That’s both bad and good news for Rutland City leaders eyeing the change — and the chance to develop their next Plan B.

“Rutland is a city that is built for 30,000 people and it’s currently being sustained by about 15,000,” Mayor Mike Doenges said in an interview. “I have a growth mindset right now, so when we hear Walmart say, ‘We’re going to move out,’ although it may put us on our heels, I think we have a real opportunity. My inclination is to lean forward and say, ‘OK, what do we need to do next?’”

‘Rutland hasn’t been cutesified’

When Vermont Life magazine profiled Rutland in 1988, it began by opining, “Although it has many historically important buildings and has always figured prominently in Vermont’s colorful past, Rutland is not a quaint and comely town with a picturesque center.”

“Rutland hasn’t been cutesified,” the late Herald reporter and longtime resident Yvonne Daley wrote in the piece. “Rather, it’s a working-class community with a strong and diversified ethnic heritage.”

Shut off from interstate highways and seemingly forever in the shadow of Vermont’s largest city of Burlington, Rutland nonetheless can boast a history as the state’s capital from 1784 to 1804 and, rising as a rail crossroads after the Civil War, its most populous municipality for one brief shining moment in 1880.

Rutland returned to second place on the state census by 1890 and remained there for a century. The city was about to dip to third place (it’s currently fifth after Burlington, Essex, South Burlington and Colchester, but still the biggest community outside of Chittenden County) when Walmart opened in 1997.

That year, Oprah Winfrey named the Rutland-inspired novel “Songs in Ordinary Time” — penned by Mary McGarry Morris, a 1960 graduate of the city’s Mount St. Joseph Academy — as her latest Book Club selection. Soon, the television host’s nearly 20 million viewers were reading a gritty drama set in 1960 that painted a less-than-flattering picture of a hardscrabble community past its prime.

Local leaders, wincing at that depiction, hoped a revitalized downtown would help people turn the page.

‘The nature of retail has shifted’

Walmart’s 1997 debut capped a decade-long effort that also ushered in a new adjacent supermarket and nine-screen cinema, the nearby Asa Bloomer state office building, and Amtrak train service to New York. It also introduced the Rutland Redevelopment Authority and Downtown Rutland Partnership management and marketing organization.

“We have to be bold enough,” then-Mayor Jeff Wennberg told Vermont Life, “to plan our future.”

But three decades later, much of that progress is now in the past.

Lyle Jepson, executive director of the recently combined Rutland Region Chamber of Commerce and Rutland Economic Development Corporation—the new entity is called the Chamber & Economic Development of the Rutland Region—is based in The Hub CoWorks building, which once housed stores.

“The nature of retail has shifted,” Jepson said in an interview. “What we expect has changed.”

People who once shopped downtown now can find greater selection online, he noted, leading to not only the closure of smaller businesses but also Walmart’s desire to relocate from its current 76,000-square-foot space to a coming 170,995-square-foot one.

“For Walmart to be successful,” Jepson said, “they need to offer a complete experience, including a grocery store and pharmacy.”

Hal Issente, executive director of the Downtown Rutland Partnership, spoke to local business upon business upon the announcement of Walmart’s coming move. None have felt threatened by the big-box store, he said, as they specialize in merchandise — men’s suits at the three-generation family-owned McNeil and Reedy, for example, or classic and current literature at the local independent Phoenix Books — not sold by the discounter.

Instead, several expressed worry about the loss of what they consider to be downtown’s largest customer magnet.

“There are mixed feelings,” Issente said. “Businesses do see people go to Walmart and then come to them to shop.”

‘Everybody has their ideas’

Some locals want to replace the downtown Walmart with a chain, such as Target. 

“Everybody has their ideas,” Doenges said. “I’ve heard everything from ‘Make it an Amazon distribution center’ to ‘Move the library there.’”

That’s why the mayor is forming a task force of residents and government representatives to collect and consider suggestions.

“We want to be thoughtful about what comes next,” Doenges said of the larger picture. “What’s the next 30 years look like, and what do we want to try that can sustain the city?”

Two multi-million dollar developments

At the same time, developers are working on several other projects on nearby Center Street, which Rutland is aiming to redesign into a pedestrian-friendly counterpart to Burlington’s Church Street Marketplace.

The largest proposal is a $35 million, seven-story hotel building on the corner of Center and Wales streets, site of the Berwick Hotel from 1868 until a 1973 fire leveled it into a current parking lot known as “The Pit.”

Developer upon developer over the past half-century has proposed new construction there, only to be stymied by the prospect of brownfield cleanup estimated at $500,000 a decade ago and $5 million today, according to city figures.

This time, the local Belden Company has received a $700,000 state Community Recovery and Revitalization Program award for the 99-room hotel, which also would include 26 “market-rate” apartments.

Although Belden has just applied for a building permit for what the mayor will only say is a “major brand” hospitality chain (an artist concept includes a sign for Cambria), it’s aiming to open the property by 2027.

“If things continue the way they’re going,” Doenges said, “we’ll see a hotel within the next few years.”

Aerial lift extends over a parking lot with cars. Brick buildings and an American flag are visible in the background.

Across the street, the Paramount Theatre is undergoing a $6 million renovation and expansion to a playhouse that opened in 1914, moved to “talking pictures” in 1931, and returned after a 25-year closure and floor-to-ceiling restoration in 2000.

The 838-seat facility now offers more than 150 performances and programs annually. Its 60,000 yearly patrons, in turn, generate between $2.5 million and $3 million in economic impact, its management reported as part of the most recent Americans for the Arts’ national Arts & Economic Prosperity study.

With crews now adding more lobby, restroom, and conference space, “the numbers will only grow,” Eric Mallette, the Paramount’s executive director, said of a project set for completion by the end of 2026.

‘Headed in a growth direction’

To make all the proposals more attainable, Rutland City is applying for state approval to form a Tax Increment Financing (TIF) district so it can improve public infrastructure to draw private development that, in turn, would boost the municipal tax base and pay off the work.

Under the plan, for example, the city would help with the brownfield cleanup at “The Pit” parking lot that would allow construction of the hotel.

Local leaders hope to formalize the TIF district early next year and start infrastructure projects in 2026. They estimate that could spur the creation of 385 housing units and other private development totaling $63 million in increased property value and $3 million of additional general fund revenue over 20 years.

“But for the city putting in this effort,” advisor Stephanie Clarke told the Rutland Board of Aldermen at a recent meeting, “this development isn’t happening.”

“As much as I want to look at developing commercial entities throughout the city, without people here, it’s not going to work,” Doenges said. “We need to develop housing, too.”

In the meantime, A2Z Real Estate Inc. of Pennsylvania, owner of the Diamond Run Mall, is seeking permits for the new Walmart “supercenter.” And the Brixmor Property Group, operator of the downtown Rutland Plaza, is searching for a new anchor tenant.

“While we don’t have any new updates to share at this time, Brixmor is committed to attracting best-in-class retailers that will meet the needs of the Rutland community,” spokesperson Maria Pace said in a statement.

Walmart will continue to operate in its current location until the move.

“I look at it from an investment standpoint,” Doenges said. “You don’t want to invest in a company when it’s at its peak and maxed out. Rutland is headed in a growth direction. That’s when you want to invest because it’s less expensive now, and you get to reap the benefits for the next 15 or 20 years. My hope is that we can pitch Rutland on its potential and the opportunity that’s here.”