Future success of town, businesses, development prospects assessed
By Polly Mikula
A lack of basic municipal infrastructure is holding the town of Killington back. That was the summary of a presentation by White + Burke Real Estate Advisors to the Killington Select Board at a special meeting, Monday, Nov. 29. Growth is lacking namely due to safe and reliable water, a road that can accommodate multi-modal transportation (buses, bikers, pedestrians) safely and efficiently, and affordable housing to accommodate workers, explained advisor Stephanie Clarke.
Because it lacks basic municipal infrastructure, a village at the base of Killington Resort is unlikely — as are many other needed developments.
That analysis shouldn’t surprise locals, as plans and promises for a village have gone unmet for decades.
The founder of Killington resort, Preston Smith, had plans for a village in the ’60s. In the 1980s and ’90s plans for a ski village started and stopped, again and again.
Many grew apathetic and cynical that a village ever would ever be built.
Then when SP Land Company took over from American Ski Company and filed a Act 250 permit in 2014 for a $133.4 million Phase 1 development, along with the conceptual Killington Village Master Plan, hope was renewed. But after 24-30 months of working with a top real estate developer, that deal fell through due in part to prohibitive costs related to lacking municipal infrastructure. A new effort with a national brokerage firm to find a qualified developer began in 2018, but only one development group came forward. That group tried to make the new development work, but February 2020, they too concluded that the project could not work unless there was a significant capital infusion to offset the upfront cost due to the lack of basic municipal infrastructure.
“The conclusion at this time is that without basic municipal infrastructure such as a road and water system, this resort village will not get started,” stated the draft TIF District and Financing Plan created by White + Burke Real Estate Advisors for the town of Killington.
Close to a ‘silver bullet’
But there is a way. Using Tax Increment Financing (TIF) the town of Killington plans to invest in the needed municipal infrastructure to eliminate the identified barriers to development. The town’s investment will ensure the construction of Six Peaks Killington (through a subsequent development agreement) and catalyze future growth including the construction of affordable and workforce housing on Killington Road.
The town cannot afford to do this without TIF. To fund these investments without it would effectively double the town tax rate. But with TIF and subsequent development agreements in place, the town will be able to invest $66.5 million in the needed municipal infrastructure — without raising taxes. Those investments in turn, will grow the town’s Grand List.
“Given the history of this project, the town chose to conservatively model the debt capacity with approximately 60% [of Phase 1] of the projected incremental value – approximately $300 million over the six-year build-out,” the draft plan states. “Before bonding for the infrastructure, the town will require development agreements with the developer and will establish this minimum taxable value needed to cover debt service.”
The city of St. Albans provides a success story for how the TIF program works in practice. Since the start of its TIF district in 2012, St. Albans added $65 million to its tax base while bonding $20 million for infrastructure, representing over 60% growth in the TIF district, according to real estate advisor White + Burke. And that all was accomplished without raising the municipal tax rate.
Such development in St. Albans had also seemed impossible to generate prior to TIF. The city had been stagnant for decades and all attempts at revitalization hadn’t significantly improved its prospects long-term. St. Albans City Manager Dominic Cloud said: “Everything that’s occurred in the last seven years has been talked about for the last 30 … TIF is the closest thing we have to a silver bullet.”
How does TIF work?
A TIF district must be initiated by a municipality with an application for public infrastructure required to encourage private property development submitted to Vermont Economic Progress Council (VEPC) for approval. Financially, incremental tax revenues generated by the private property development within the district are set aside to service the public infrastructure debt. The municipality must use a minimum 85% of the incremental municipal property taxes to service TIF debt and a maximum of 70% of the incremental education property tax.
Municipal water: problem & proposed solution
The problem: The town of Killington lacks a municipal water system. The development of Six Peaks Killington (the Village and Ramshead Brook Subdivision) and future development of affordable and workforce housing along Killington Road cannot be built unless there is a safe and reliable water system, according to the town’s analysis.
The alternative to a municipal water system for Six Peaks Killington is a private water system. This is not only cost-prohibitive to any private developer, but it is also not the preferred planning objective for the town, according to the draft plan.
Additionally, there are existing water quality issues including groundwater contamination from man-made sources along Killington Road (i.e., petroleum contamination and PFAs) and naturally occurring elements (i.e., radium, arsenic, iron, and manganese) which will be addressed with a municipal water system, according to the draft plan.
The solution: A study to construct a municipal water system, conducted by Aldrich + Elliot, recommended the town partner with SP Land Company, which owns a 240+ acre site located along Route 4. This site would provide sufficient water to meet the needs of the town and Six Peaks Killington, according to the analysis.
Two high yield wells have already been drilled on this site. This significant flow provides sufficient water for the Six Peaks Village, Ramshead Brook Subdivision, and the Housing Projects A and B, according to the draft plan. There will be additional capacity for other properties to hook on, opening up opportunities for undeveloped or underutilized parcels on Killington Road.
The proposed project includes providing water from the valley wells to a new well house located adjacent to the wells. From the well house, the water will be conveyed approximately 4,000 feet along Route 4 to the high service pump station accessed by a new driveway from Route 4 and has been designed to fit the existing topography. The water may be treated at this pump station before being pumped approximately 1,450 vertical feet to a new storage tank with the capacity to store 750,000 gallons of water for domestic and fire flow, according to the draft plan. From the storage tank, water will be conveyed by gravity to the proposed water distribution system along Killington Road. Water will be distributed along Killington Road and a small stretch along Route 4 in four phases over a six-year period.
Aldrich & Elliot has estimated the cost to construct the water system at $33.8 million.
Killington Road: Problem & proposed solution
The problem: Killington Road is the artery that connects most businesses and residential neighborhoods in Killington, creating a linear town center. However, the road creates obstacles to future development including according to a report by Vanasse, Hangen, Brustlin, Inc. (VHB). Some include: high vehicular speeds, some dangerous turnoffs, poorly accommodated bus operations, lack of dedicated bicycle and pedestrian infrastructure including safe crossing locations, a lack of a deficient profile at northern project terminus and poorly graded and drained locations.
Capacity, safety, and multimodal access on Killington Road are critical to development. Six Peaks Killington will house residential homeowners and renters, host visitors, and employ service industry workers, office professionals, and maintenance staff. These users will have varying needs for transportation – some in cars, some on bicycles, some who will walk from nearby lodging or housing (especially when the workforce and affordable housing projects are built), and some who will commute by bus from nearby communities, according to the draft proposal.
Additionally, the town does not own the southernmost portion of Killington Road (nearest Killington Resort). This provides obstacles for town connectivity and integration.
The solution: The town adopted a Killington Road Master Plan in 2021 which contains specific corridor-wide enhancements that will increase capacity, improve the operations and safety for all users, and maintain efficient travel through the corridor. These improvements include adding an 8-foot shared use path along the west roadway, a 5- foot sidewalk along the east roadway, bus pull-offs, pedestrian crosswalks, intersection improvements, lighting and landscaping improvements, and the reconstruction of the lower portion of the roadway to eliminate the unsafe grade. As part of the reconstruction of Killington Road, upgrades will be made to the stormwater management system to better control flows and provide for enhanced treatment. These improvements will make the road more resilient, according to the draft plan.
Additionally, the intersection of Killington Road and East Mountain Road will be redesigned to include a roundabout. Road H and Old Mill Road will be upgraded to provide secondary access in the event the roundabout is blocked, according to the draft plan.
The town will also assume ownership from the Resort and SPLC the portion of Killington Road from the Lookout/Glazebrook intersection to Vale Road and East Mountain Road from its intersection with Killington Road to the Killington Grand Hotel plus the two secondary roads know as Road H and Old Mill Road, according to the draft plan.
Similar to the municipal water system project, the Killington Road project will be constructed in four phases over an eight-year time frame.
The total project cost for the road reconstruction is $25.74 million.
Housing: problem & proposed solution
The problem: The town of Killington needs affordable and workforce housing. Between 2010 and 2020, the town’s population increased by 73.5%, the largest percentage increase of any town in Vermont. Additionally, more than 600 existing housing units registered as short-term rental properties thereby eliminating them as long-term rental and homestead properties, according to the draft plan. In 2019, the median price paid for a single-family home in town was $258,000. In 2020, it increased to $439,000. These changes have disproportionately impacted people working for the ski resort and the hospitality industry. Killington Resort (the largest employer in town) as well as nearly all other businesses in town are struggling to find employees, partially due to the housing crisis.
The solution: The town has been proactively looking for sites along the proposed municipal water line, bus routes and with sewer access that would be suitable development sites for affordable and workforce housing.
The two sites — Housing Projects A and B — are both zoned for multifamily housing, according to the draft plan. Both have access to municipal sewer, but neither is serviced by municipal water since none is available in the town.
According to town planning consultant Lisa Davis Lewis, affordable housing trusts have informed the town that sites must have access to both municipal water and sewer for them to be viable housing sites.
“Without water there will certainly be no affordable housing development,” said Davis.
Davis clarified at the meeting Monday that affordable housing is defined as 30% of area medium income whereas market rate housing is priced to be affordable by the workforce — not for short-term rentals.
The potential development opportunities within the proposed TIF District have been assessed and ranked on a three-tier analysis based on their stages of planning.
Tier 1 includes the most likely projects to proceed in the near term — those that are shovel-ready once the TIF district is approved and development agreements are created. The projected development of Six Peaks Killington is included in this tier.
There are no Tier 2 projects included in the draft of the TIF District Plan as those would be considered sites that are not yet permitted but have a developer or property owner that would be interested should the needed infrastructure come online.
Tier 3 includes projects where sites have been identified for their appropriate physical attributes and zoning but have not otherwise had any due diligence. The draft plan identifies the affordable and workforce housing projects within this tier.
Six Peaks Killington: planned and permitted development
The approved Phase I of Six Peaks Killington includes portions of Six Peaks Village and Ramshead Brook Subdivision. In total, Phase I of Six Peaks Killington includes a replacement lodge for the Snowshed and Ramshead Lodges, 31,622 sq. ft. of commercial /retail spaces, 193 residential units in the Village Core, and 9 single-family lots, and 46 duplex units at the Ramshead Brook Subdivision.
Housing Project A
Housing Project A consists of 70-acre site located on the east side of Killington Road and the south side of Route 4. Access to the site is off Nanak Way. An initial analysis determined that 111 housing units could be constructed on the site with approximately 25% of the units constructed as affordable housing units, according to the draft plan. The balance of the units would be constructed as market rate housing oriented toward the local workforce.
The site has an assessed value of $257,000. With the development of 111 housing units, the site could have an assessed value of approximately $8.6 million, according to the draft plan.
Housing Project B
Housing Project B is a 60-acre site located on the north side of Route 4 and the west side of Route 100. A preliminary analysis determined that approximately 55 units could be constructed with approximately half reserved as affordable units with the balance constructed as market rate rental housing oriented towards the local workforce. The site is currently assessed at $348,000. With the development of 55 housing units, the site could be assessed at approximately $3.8 million, according to the draft plan.
After the presentation by Stephanie Clarke and Gail Henderson-King of White+Burke Real Estate Advisors, the public was invited to ask questions.
The first few questions were directed at the tax implications for residents, and what risk the town may be taking with regard to getting “stuck” with the bill if the developer pulls out.
Clarke explained that Vermont towns are not allowed to “build it and they will come” like some other states that use TIF. Instead a TIF district plan has to have “lock-step development agreement that supports the minimum tax payment to cover the debt service,” she said. “If the developer backs out you still have the agreement and they’re on the hook.”
Long time resident, Steve Dushan, asked if the Six Peaks Village would ultimately hurt existing businesses on Killington Road.
Selectman Jim Haff flipped the question, saying rather that the lack of investment in infrastructure, “will be the death of our Access Road.”
“I’m tired of seeing taxes go up,” Haff continued. “Without it [public investment] we will die, the town will never attract the development needed.”
Haff added that in the 1990s ASC had proposed a 200,000 square foot retail village, but SP Land worked to change the bylaws so that it could scale back the project. “SP Land does not want to kill Killington Road businesses,” he said.
Jennifer Iannantuoni, a member of the planning commission who owns the Greenbrier Inn & Gift Shop on Route 4, said: “The more business at the top, the more we all will benefit. The village will do nothing but enhance business down Killington Road.”
Haff asked Clarke if Killington was unique in having a developer ready to build upon VEPC’s approval of its TIF district.
Clarke said “No, having a developer ready for the first project is the new era — it’s actually what the state is looking for to issue a TIF district.”
Clarke added that the state is very prudent and only gives out a limited number of TIFs; currently the capacity is two per county.
Rutland City has also retained White + Burke Real Estate Advisors in the hopes of creating a TIF district downtown.
All three developments — Six Peaks Killington and the two housing projects — are reliant on the water system and the road improvements to proceed. The investments proposed were designed to catalyze these developments specifically, according to the draft proposal.
Killington’s TIF proposal is unique. It has a linear downtown, which is different from any other existing TIF district in the state and it’s asking for significantly more investment than other TIF projects, Clarke said. “But you have a compelling story,” she added.
If all goes according to plan, the town will submit its TIF application after the public hearing on Jan. 4, then meet with VEPC over the next few months to introduce them to Killington and address any questions and concerns about the town’s goals. The town hopes to receive approval for its TIF district as soon as April. Then development agreements will need to be worked out between the town and private developers. The town hopes that municipal infrastructure work could commence in the spring of 2023.
“We still have a lot of work to do between now and then,” said Selectman Haff.
For more info visit killingtontown.com.