The Hilton Corporation has terminated its planned Hampton Inn and Suites hotel project, which included a separate city-owned parking garage, that was to be built on the Capitol Plaza property in downtown Montpelier.
“We regret to announce that the combined Hampton Inn/Parking Garage project will not be going forward at this time. The Hilton Corporation has exercised its right to terminate the franchise agreement over concerns with the ongoing legal delays and lack of clarity around the construction timeline, and they see no other option other than to withdraw,” a news release from City Manager Bill Fraser’s office said.
According to the release, owners of the Capitol Plaza, the Bashara family, signed an agreement with Hilton in the fall of 2017, and hoped to build by late fall 2018. However, their plan was blocked by 12 Montpelier residents who appealed the Development Review Board’s permit. Ongoing appeals continued to delay construction. Capitol Plaza has been “financing the new hotel and related litigation to the sum of almost $1 million,” the notice further states. The case has yet to come to trial in the state environmental court.
Bristol attorney James Dumont, who represents the group of Montpelier residents appealing the Development Review Board’s permit, told The Bridge by phone on April 2 that the group was not responsible for delaying the project.
“The Basharas are very nice people, and they are hard working. I give them a lot of credit, but the press release from city hall is another attack instead of addressing the issues. What they say in the press release is actually false. They say they won every motion, which is false,” Dumont said.
Dumont described how it was a matter of finalizing paperwork and shifting actions in environmental court that held back the project. For example, Dumont wrote by email to The Bridge, “the city and Capitol Plaza did not sign a letter of intent until July 19, 2019. … The Development Review Board issued their decision in December of 2018 — without even seeing the key document. Thus, while by law we HAD to appeal within 30 days of the Development Review Board decision, the case could not make any real progress on the key issues until the city produced, for us to read, the letter of intent in late July.” This caused delays, he said.
Then, Dumont said, there was a back and forth about removing the garage from the Act 250 process, which led to the judge throwing out “the whole Act 250 case.” This took many months to resolve. Dumont further said his clients did not receive a final version of the plans until Spring 2020. And then, along came the COVID-19 pandemic in early 2020, which further slowed things down.
“You can’t blame us for any of the delay,” Dumont said. “Whoever wrote the press release either didn’t know the court record or was not telling the truth.”
While 57 percent of Montpelier residents approved the plan in 2018, the controversy caused a rift among citizens, which hurt relationships, pitting neighbor against neighbor, Dumont said.
In court rulings, most of the appellants were removed, but two — Les Blomberg and John Russell — were allowed to intervene in the zoning case under a separate provision. Blomberg and Dan Costin are the appellants of record for the Act 250 appeal. The appeals of the zoning permit and the Act 250 case have been combined into one court proceeding and had been scheduled for late summer, pending further delay.
The project coordinators obtained approvals from Montpelier’s Design Review Board, Development Review Board, the Act 250 panel, and state tax incremental funding from the Vermont Economic Progress Council. A $10 million bond for the garage construction was also approved by 57 percent (2,459–1,877) of city voters in November 2018.
To complicate matters, Capitol Plaza has become a Hilton-branded property, which means they cannot align with another chain to revive the project.
The city said it has put over $1,125,855 into the project and will need to use the approved bond to pay off this debt. That means the annual debt payments will come from the general fund (property taxes) instead of garage parking revenue, as planned. The hotel owners said they have invested a similar amount to date.
The city pursued the parking garage in conjunction with the hotel plan and the two projects were co-dependent. The garage would have contained 345 parking spaces and would have been built on land granted to the city by the Basharas in exchange for reserved spaces to be used for the 81-room hotel.
Sandra Vitzthum, one of the appealing group members, told The Bridge, “From the beginning, my concerns came from my love of Montpelier and its downtown. I love the Bashara family. And I had no quarrel whatsoever about their private garage proposal. I was excited about a new hotel coming to Montpelier. But when the garage took on a larger life, the city rushed and didn’t do their homework — both financially and with permitting.”
“The city is now out over $1 million and I can understand the officials’ need to excuse their behavior, but at the end of the day they rushed at the beginning and then refused to acknowledge that,” Vitzthum said.
Mayor Anne Watson had the following to say in the release:
“I speak for the council when I say that Hilton’s decision is disappointing. The city and the Basharas have won every substantial legal challenge put forward by the appellants. I’m proud of the fact that the city and the Basharas followed proper procedure and maintained a posture of listening and a willingness to negotiate throughout the process.
The city did its best to honor the will of the people on this project. We went forward with it because it was approved by the public. It’s disappointing that it had to be left as a result of the prospect of endless litigation. This is not how appeals and Act 250 are supposed to work. In an appeal, a project should have the opportunity to be evaluated based on its merits. Appeals are not meant to kill projects through delay, but that is what has happened here.
As a result of this decision, our downtown businesses will not have the benefit of future visitors that the hotel would have housed. This hotel was going to be a boon for our downtown, particularly once COVID restrictions are lifted and folks can travel again. We know that time is coming, but instead of a new hotel, as a result of this decision, this space will continue to be a surface-level parking lot.
Thankfully, unlike major projects that didn’t come to fruition in Burlington and Newport, Montpelier didn’t end up with a big hole in the ground. Instead we are maintaining a hole in our urban fabric. The big picture for us is that this was an unfortunate missed opportunity for our downtown.
I want to thank the Basharas for their commitment to Montpelier, for their continued investment in our community, and for being a great partner through this process.”
Tom Brown contributed to this story.