The Filene's Bills: Greasing the Skids for Burlington

Two years have gone by since the legislature, urged on by Gov. Dean, began to slip various thinly disguised subsidies into legislation to support the location of a big new Filene's Department Store in downtown Burlington. Now is a good time to take a look at the results.

The Filene's fun began when Sen. Cheryl Rivers and Sen. Helen Riehle secured adoption of the "Filene's Amendment" to Act 60 in 1997. Their amendment exempted from the sales tax "sales of building materials within any three consecutive calendar years, in excess of one million dollars in purchase value, incorporated into a downtown redevelopment project." In other words, only a big corporation ready to spend a million bucks in building materials got the tax exemption, and only if it built where the local politicians said, like on Church Street in Burlington.

But apparently that wasn't enough to secure Burlington's happiness. The following year the legislature passed Act 120, popularly known in Montpelier as "the Filene's Bill". This act created a new state board composed of eight state employees and one city official. This Downtown Development Board approves applications from towns to get in on the downtowns gravy. The approved towns or cities receive various planning and assistance grants. They go to the head of the line for coveted community development block grants. Owners of buildings in approved downtown districts qualify for extensive tax credits for building rehabilitation, and for training and hiring workers who were previously on welfare.

To qualify for the Board's designation, the law says that a town or city must show among other things that it is in compliance with all state sewage disposal requirements, and that it "has dedicated a portion of any unallocated reserve capacity of the sewage and public water supply for growth within the proposed downtown district."

On January 6 Burlington sent its first team, headed by Mayor Peter Clavelle and City Treasurer Brendan Keleher, to the initial meeting of the Downtown Development Board. Their goal was to secure a quick designation, and to get a commitment for as much as possible of the new Downtown Development Fund.

But a potential difficulty appeared in Burlington's application: Burlington had declined to dedicate unallocated water and sewer reserve capacity to accommodate growth. No matter! Burlington's application whizzed through the Board like salts through a heifer. As for Burlington's request for a commitment of turn over to Burlington 62% of the expected revenues to the fund for the next ten years, no problem. Done. Apparently slightly abashed for having looted the Fund for the next decade, Mayor Clavelle helpfully suggested that the "legislature should be convinced to appropriate more" to replenish the fund for other less influential towns.

Rutland's turn came at the February 22 Board meeting. Rutland, with the state's most celebrated downtown renewal project, was not willing to tie up its sewer and water capacity any more than Burlington was. Its spokesmen made the point that if Burlington was eligible for designation without reserving capacity, why not Rutland.? No, said the Board, Rutland (with no Filene's planned) doesn't qualify. Counsel solemnly reminded the Board that "no reserve, no designation". At this point the minutes show that "the Chair reminded the Board that it cannot go against the statute", a thought that would have been highly pertinent when her Board ignored the law and gave away the store to Burlington a month earlier.

Then there was St. Johnsbury. The details are a bit complicated, but St. Johnsbury received conditional designation only when the Agency of Natural Resources, obviously under some pressure to stop finding reasons why the act was unworkable for any town without a Filene's in it, agreed to enter into a new regulatory deal postponing the town's sewage system compliance for four more years.

So here's the bottom line on the "downtowns bill" so far. Burlington, a city that got away with dumping its sewage plant effluent into the Class B Lake Champlain waters for 17 years without a penalty, again got what it wanted without meeting the requirements of the law. Rutland refused to meet the requirement that Burlington avoided, and was sent away empty handed. A state agency had to finesse St. Johnsbury's non-compliance so the Board could avoid the embarrassment of rejecting yet another non-Filene's application. Towns which refuse to be drawn into this regulatory whirlpool for the modest benefits remaining will have to go to the rear of the line in competing for the state CDBG grants. The reform of what is perhaps the major problem facing downtown redevelopment - state regulations like the Labor and Industry building code - continues unaddressed.

The "Filene's amendment" and "the Filene's bill" have clearly succeeded in letting other Vermonters subsidize Burlington and Filene's. And that's good for Burlington and Filene's. As for the rest of the state's towns, held to a more stringent standard, the Downtowns bill has become "a big hassle with a small payoff", to paraphrase one town official.

That's the kind of thing that is highly likely to happen when the governor and legislature rush through poorly thought out legislation designed to mask from public view its main purpose: subsidizing one politically powerful city government and one large favored corporation.

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May 1999