hill country observerThe independent newspaper of eastern New York, southwestern Vermont and the Berkshires


News & Issues May 2016


Keeping the look of Vermont

State’s new anti-sprawl law faces early test in Rutland

C.B. Hall photoBy C.B. HALL
Contributing writer



The struggling Diamond Run Mall in Rutland, Vt., is visible atop a hill in the distance, across Route 7 from a meadow where developers want to build a new BJ’s Wholesale Club store. Opponents, including the mall’s owners, say the new store would contribute to urban sprawl.C.B. Hall photo

A proposal for a big-box retail development in Rutland is shaping up as an early test of a new state law aimed at limiting roadside sprawl in Vermont.
Real estate developer Saxon Partners wants to build a BJ’s Wholesale Club store as well as two restaurants and a gas station on the west side of U.S. Route 7 in Rutland Town. The 20-acre project site is currently open land at the south end of a more than half-mile stretch of strip development that extends along the highway from the Rutland city line to the southern junction of routes 7 and 4.

Critics point out that there are already several large commercial spaces sitting vacant in the area – most notably across Route 7 at Diamond Run Mall, which has lost two of its three anchor tenants within the past 18 months. Building another shopping plaza, they say, will needlessly add to visual blight and environmental degradation – and will violate the spirit of the state’s new anti-sprawl provisions.

Those provisions were set down in 2014 when legislators rewrote Act 250, the state’s environmental permitting law. Among other things, the new provisions require that new construction “not contribute to a pattern of strip development along public highways.”
The BJ’s Wholesale project, however, is proposed for a parcel that was already approved for development before the new law took effect -- for another retail project that was never built.
And supporters say the BJ’s Wholesale project will provide new jobs, economic activity and tax revenue for the town.

At its heart, the dispute is a matter of “how a town gets to grow,” in the words of Don Chioffi, a longtime town Select Board member who lost his re-election bid in March.


Unlikely alliance
The Rutland dispute presents a classic example of development and economic interests facing off against environmental protection. But the issue of curbing sprawl is just one factor in a unique set of circumstances at the proposed BJ’s Wholesale site – including the struggles of the mall directly across the highway

The property also carries some complex historical baggage.

When Diamond Run Mall was built in the 1990s, its developer, Damian Zamias, provided a conservation easement, to be managed by the Audubon Society, on 15 landlocked acres that Zamias had purchased across Route 7 from the mall site. This arrangement mitigated environmental disturbances created by the mall’s construction. The 15 acres are now owned by BAI Rutland, the successor to Zamias as Diamond Run’s owner.

That acreage enters the picture because the Audubon Society, to reach it, has rights to access across the land that intervenes between it and Route 7 – the 20 acres on which Saxon wants to put the BJ’s store.

Another developer, Mid-Vermont Properties, acquired the 20 acres in 2005 for a planned “Rutland Commons” retail development. Mid-Vermont got an Act 250 permit in 2009, but its plans went no further, and now the company is selling the acreage to Saxon Partners.

In addition to the BJ’s store, which would cover more than 1.7 acres by itself, the new project includes two restaurants, a gas station, underground storage tanks for about 60,000 gallons of fuel, and a parking lot.

Rutland County Audubon Society President Marv Elliott said his organization, which cooperated with Mid-Vermont Properties on its Act 250 review in return for a promised financial contribution that never materialized, has found common cause with the Diamond Run Mall owners in opposing the BJ’s project.

They are facing off against numerous local politicians and business leaders, in addition to Saxon and BJ’s themselves.

But it is the broader scope of the BJ’s plans – including the placement of a gas station on the border of wetland -- that prompted the Audubon Society to fight the project.

“To say, ‘There’s never going to be spills, it’s never going to happen to us’ -- no clear-thinking person will ever believe that,” Elliott said.

A spill, he added, “would be a major disaster. It’s all downhill to the Otter Creek.”


Legal challenges
Saxon and Mid-Vermont applied in 2014 to the District 1 Environmental Commission, which administers Act 250 in the Rutland area, for a limited review of their project. The review concerned Criterion 9L, the new anti-sprawl provision added to the state’s environmental review law. Before the revised law took effect two years ago, Act 250 did not give the state’s environmental commissions any direction to consider projects’ effects on sprawl.
The new language essentially requires that new projects outside existing settlements not contribute to strip-and-sprawl development. Saxon and Mid-Vermont wanted to resolve that issue before applying for a review under the rest of the Act 250 permit criteria.

In April 2015, the District 1 commission ruled that the BJ’s Wholesale plans did not differ from the Rutland Commons plans to the extent that Criterion 9L should act as a constraint. The commission viewed the addition of the gas station and restaurants, never a part of the Rutland Commons project, as “infill” within existing strip development. The 2014 statute sought to encourage infill, or increased density of development within already developed areas.
But in May 2015, BAI, the Diamond Run Mall owner, appealed the commission’s ruling to the Environmental Division of the Vermont Supreme Court, arguing that the commission should not have separated its review of Criterion 9L from a comprehensive Act 250 review. BAI subsequently offered to drop its opposition to the BJ’s Wholesale project in return for a $500,000 payment from the developers – an offer the developers rejected.

In November, Saxon’s director of retail development, Gene Beaudoin, asked the Rutland Town Select Board to “do what it can to get the owners of the Diamond Run Mall to drop their opposition to the proposed BJ’s,” according to the board’s meeting minutes. But the board, though it has consistently supported the BJ’s project, declined to get involved in the dispute with the mall owners.

So the legal wrangling continued. At a teleconferenced hearing in early April, lawyers for BAI and Saxon failed to reach agreement on the appeal and two related cross-appeals, and the court set a trial date for September.

Even if the court agrees with the district commission’s finding on Criterion 9L, Saxon would still have to go back to the commission for a review under Act 250’s other criteria.
Beaudoin said the protracted legal process is hurting the town.

“I feel badly for the town of Rutland, which wanted this project, recognizing that it’s 100 new jobs,” Beaudoin said, adding that the town also stands to lose up to $400,000 in local-option sales tax revenue if the BAI appeal prevails.


Rutland sprawlEmpty storefronts
Opponents of the project point to the fact that much of the retail space is empty at the mall, which lost its JCPenney and Sears anchor stores within the past two years. They question the region’s ability to support another major new retailer. At a minimum, they say, new businesses should be steered into existing empty retail spaces. In addition to the mall vacancies, there is at least one large commercial space available at the adjacent Green Mountain Plaza.

“Diamond Run Mall deserves to have its empty space occupied by stores like BJ’s that would bring welcome revitalization to the region,” Elliott, the Audubon Society president, wrote in a December column in the Rutland Herald.

BJ’s had in fact considered locating at the mall before deciding on its current planned site. But the company’s standard is a stand-alone big box, rather than an anchor store at a mall. The chain, which operates some 200 outlets in the Northeast, declined the space that was being offered at Diamond Run and turned its attention to the 20 acres across Route 7.

Although BAI and the Audubon Society have been vocal in opposing the current plan, a number of other community leaders, including the Rutland Region Chamber of Commerce, are supporting it.

In addition, 13 state representatives, most from the Rutland area, introduced a bill in the Legislature in March that would have eased the way for developers grappling with Act 250’s new anti-sprawl provision around the state. The bill, which died in committee, would have allowed developers to demonstrate that the proposed land use has passed muster with the municipality in question “in lieu of” satisfying Criterion 9L’s anti-strip-development provision.

“It could also potentially impact . . . the entire old Route 4 corridor between Center Rutland and West Rutland,” the bill’s chief sponsor, Rep. David Potter, D-Clarendon, said in an e-mail, noting another local example of the provision’s reach.

“There is also pushback on the 9L provision in other regions of the state,” he wrote.


Sprawl as a town center?
For its part, Rutland Town Select Board has supported the BJ’s Wholesale project unanimously. In December, the Rutland Herald quoted Joe Dicton, then the board’s chairman, as saying the town’s “ultimate goal” is “to have the mall and BJ’s and all our vendors succeed.”

Chioffi, who was on the board when Diamond Run Mall was built in the 1990s, was quoted in the same article as saying “we went the last mile … to make sure they could have the opportunity to be in business in the town of Rutland. I think we’re trying to do exactly the same thing to make the BJ’s project become a reality.”

In testimony before the environmental commission in January 2015, project engineer Nicole Kesselring said the town’s Select Board, in a meeting the evening before, had made a “declaration” that the area of the development was considered “their town center,” according to a report on the Web site vermonttoday.com. The minutes from the Select Board meeting in question contain no reference to such a declaration, however, and Joe Zingale, the town administrator, said he was unaware of any such declaration being made. Kesselring would not comment for this story when contacted by phone.

The Act 250 revision that includes the new Criterion 9L language encourages development in “new town centers,” defined by Vermont law as areas “planned for or developing as a community’s central business district, composed of compact, pedestrian-friendly, multistory, and mixed use development that is characteristic of a traditional downtown, supported by planned or existing urban infrastructure, including curbed streets with sidewalks and on-street parking, stormwater treatment, sanitary sewers and public water supply.”

Zingale confirmed that no such infrastructure exists around the BJ’s site. The part of town that most resembles a traditional downtown is the Center Rutland area, three miles to the northwest.


Keeping Vermont special
The mall, meanwhile, is reported to be planning a major restructuring of its buildings, and that may prove the saga’s denouement.

“There’s been some pretty confirmed rumors that have been vetted out that there are plans for a restructuring of the mall,” Chioffi said in a phone interview last month. “The word was out that the intention is to tear down the entire Sears building.”

That raises the possibility that Saxon would challenge the Act 250 permit BAI, as Diamond Run’s owner, would be seeking. The two sides might then have an incentive to abandon their respective legal challenges, allowing both projects to proceed.

The outcome of the case will in any event go a long way toward defining how Criterion 9L will be applied – or manipulated.

Kate McCarthy, the director of the Sustainable Communities Program at the Vermont Natural Resources Council, said stopping sprawl is a major goal of the Act 250 revisions that include the new Criterion 9L.

“The overall purpose is to keep Vermont from becoming like the rest of the country,” McCarthy said. “It’s an opportunity we have, and it’s not too late.”

She did not express any position on the BJ’s Wholesale development, though she said the case is exceptional because an Act 250 permit had already been issued in 2009 to allow development of the site.

McCarthy said the state’s nine district environmental commissions have yet to deny a development application because of the new Criterion 9L. She pointed out, however, that the existence of the new anti-sprawl provision has discouraged developers from proposing projects that might not meet the new standards.

In Bennington County, District 8 Environmental Commission Coordinator Warren Foster said that, since the Act 250 revision, no cases had arisen that created controversy in view of Criterion 9L. Two new hotels applied for permits for construction in Manchester, but the anti-sprawl provision didn’t come into play because they will be located within what’s considered the town’s urban core. The Wal-Mart expansion in Bennington, he said, was approved many years ago and is not subject to further review.

But for future development, McCarthy said the new goal is to stay within already developed areas.

“If the development is proposed for a place where we want development, like our city downtowns and our villages, it automatically meets 9L,” McCarthy said. “I really see 9L as a way to say yes to development that’s in the right places. Whether BJ’s is seeking in Rutland to open its doors in one of those places remains to be seen.”