Remarks to VEPC

Dear Editor,

Editor’s note: The following letter is an adaptation of the testimony Art Malatzky gave to the Vermont Economic Progress Council (VEPC) on Jan. 27. VEPC is considering the town of Killington’s application to utilize future incremental municipal and education property tax revenue to finance debt, if approved by the voters and incurred for infrastructure to serve expected real property development with the Tax Increment Financing District that as established by the town on Jan. 4.

Thank you for the opportunity to speak this afternoon.

I am here to ask that the VEPC either request that the town withdraw its application or that the VEPC deny it in its entirety. There is so much wrong with this application that I do not have time to fit all the details into a seven-minute time limit so I will briefly state key reasons and follow up with written comments.

First, I’d like to note for the record that the legal notice announcing this meeting was published in the Rutland Herald and not, to my knowledge, in The Mountain Times, which is more widely read by local Killington residents. (If it was in The Mountain Times, my apologies for overlooking it.) Furthermore, the notice was not publicized on the town’s website and its TIF information link. This may meet all the legal requirements of providing notice under law but it certainly does not publicize nor encourage comments from town residents and taxpayers. (Note: It was subsequently pointed out that notice was printed in the Mountain Times and that the meeting information was on the town’s website. However, as of the meeting time, it was shown under Select Board and not under the TIF link as would have been expected.)

This application must be read in the context of White & Burke, which prepared the application, working for both the town and SP Land. That is a clear conflict of interest and, while the Select Board voted on May 18, 2021 to sign off on a conflict waiver, it cannot be denied that, at least initially, the single largest beneficiary of the millions of dollars of funds available through a TIF District would be SP Land. An impermissible conflict therefore exists, if not legally then in appearance.

With that as the starting point, one only has to dig into the document to realize that the town’s application does not pass the smell test.

We are told on page 10 that the development plan for SP Land’s ski village envisions an eight-year build out in four phases. Experience clearly suggests that this vision is strained, to say the least. Not only is it unrealistic to assume a two-year build for each phase, it is almost impossible given that there are no concrete plans currently presented for even Phase 2.

Plans beyond Phase 1 are even more suspect when one learns that E2M Partners, the backer of SP Land, is apparently winding down its business, saying on its website: “E2M Partners is no longer conducting advisory activities, seeking new investments, or raising funds for future investments.” Are members of the Select Board even aware that E2M is on the way out? Is this another case, as it was with the Snowdon Wells, where Select Board members are in the dark about material information that is readily available? (For those not aware, several Select Board members as well as the town manager were apparently surprised to learn at the Jan. 4 meeting that the Valley Wells were not the only source of water available to SP Land under their Act 250 permit.) SP Land says that if they use these well “their numbers don’t work” but how could the town verify this statement if they were not even aware of the wells in the first place?

Given that TIF is not supposed to be a “build it and they will come” process, we are presented here with a “build it and they will come, but we’re not even sure it will be built” proposition given the lack of concrete development plans for the multiple phases. Add to that uncertainty the fact that the application states quite clearly on page 19 that the plan assumes four issuances of debt for the four phases of work and it is assumed that the first two issuances of debt will initially be repaid with interest-only due to negative cash flow in the early years. In other words, revenues will not be able to pay for the bonds, both interest and principle, until at least Phase 3 is completed, and we are left with a plan full of holes large enough for the town of Killington to fall through.

One of the questions this morning was, “what are the top three risks this project faces?” Jim Haff basically dodged the question and provided a non-answer. There are obvious risks that the town simply doesn’t want to discuss, several of which I have just described.

Another questioner mentioned that the region of Woodstock, Bridgewater, Killington and Plymouth, if I heard that right, has among the highest unemployment rates in the state. If I heard that right, it comes as quite a surprise as it seems every business in Killington is looking for employees. Again, if I heard that correctly, perhaps the problem isn’t housing but, rather, skills?

The application states quite clearly at the bottom of page 18 that the development will not go exactly as planned over the next 10 years and the town will likely return to the VEPC with modifications.

That being said, and given the obvious issues with this application just noted, the town Select Board should voluntarily withdraw the application at this time and resubmit it when and if better information and more concrete plans are available. Barring that, the VEPC should reject the application in its entirety.

Art Malatzky, Killington