Alarming Memorial Block Pre-Development Agreement up for City Council Vote on 3/11
CITY COUNCIL 3/11/24 AGENDA ITEM 8.2 – Memorial Block Pre-Development Agreement
Agenda Item 8.2 on the 3/11/24 Burlington City Council agenda (and buried in a 657-page agenda packet) asks councilors to approve a no-bid pre-development contract between the City and local developers Joe Larkin and Eric Farrell. There are several alarming provisions in this contract, as summarized below – the most disturbing of which is that it gives Larkin and Farrell full discretion to demolish Memorial Auditorium.
Preservation Burlington urges residents to attend the meeting either in-person or via Zoom and/or reach out to their councilors to ask them to
reject this Pre-Development Agreement as written
confirm what happened to the $1MM earmarked specifically for Memorial Auditorium’s stabilization (voter-approved bond in 2022)
The backstory:
In 2019, CEDO proposed the Gateway Block (now referred to as the "Memorial Block") development in order "to help close the Memorial renovation funding gap" and spur development on the block. At that time, the administration said it was committed to renovating Memorial Auditorium and in 2022 asked voters to approve a $1MM bond to stabilize the building – which they did.
It is unclear if any of that dedicated $1MM has been spent on the stabilization, even though it was a line item in the FY2023 budget. While a 2023 Capital Budget memo references some reallocation of GO bond funds, we have not yet had success identifying the specifics.
In November 2023, City Council approved a resolution/Letter of Intent that excludes any developer – other than Larkin and Farrell – from performing the due diligence needed to prepare alternate proposals for the development of this block.
Despite the City's earlier commitment to renovating Memorial Auditorium, the Pre-Development Agreement presented to City Council does not call for the renovation and restoration of the building. Instead, it says "The Memorial Block should include a Central Public Assembly & Activity Space to replace Memorial Auditorium" (emphasis added).
The Pre-Development Agreement also gives the developers the right to pull out at any time if they determine the project is not "feasible" or "viable," but it does not give the City that same right. The agreement also requires the City to use its best efforts to change the zoning if the developers determine the project is not "feasible" under existing zoning. The terms "feasible" and "viable" are not defined, but presumably mean “bankable” and “profitable.” But bankable at what interest rate, with what collateral and/or guarantees, and over what term? And how profitable with what degree of risk?
The Pre-Development Agreement requires the City to relocate the Burlington Fire Department, currently occupying the historic 1926 Central Fire Station, but does not identify a new location. (An earlier draft proposed a new station to be built on Pine Street – this was apparently rejected.) This is essentially putting the cart before the horse.
As with the CityPlace project, this Pre-Development Agreement does not contain any bonding requirement should the developers decide the project is "feasible" and decide to proceed. As the CityPlace project also showed, without a bond requirement, the developer has tremendous leverage to renegotiate terms once demolition is complete. Should the developer get cold feet or suffer a financial reversal partway through the project, the City may end up with another hole. A bond would avoid such a situation.