$20 million hotel project planned for downtown Rutland

A 100-room hotel is planned for the site currently occupied by the former Rutland Herald building on Wales Street in Rutland. (Robert Layman / Staff Photo)

A construction company is developing a hotel for the site occupied by the former Rutland Herald building in downtown Rutland. The parties to the sale confirmed Tuesday that DEW Construction, of Williston, has signed a $620,000 purchase agreement for the Wales Street property, which the Mitchell family retained when they sold the Herald in 2016. The new deal is contingent on the project being awarded a “New Market” tax credit by the state. “We’ve been told we will have funding in the 2019 funding cycle, which is expected in the first quarter of 2019,” Pete Kelley, DEW’s vice president of business development, said Tuesday. “That’s really the trigger.” Kelley said plans are still preliminary, and there is no design, but DEW anticipates a project budget of $18 to $20 million with 100-120 rooms in a three- or four-story building, likely a Marriott franchise. Kelley said the plan does not call for the hotel to connect to the downtown parking deck, but will have its own on-site parking. "I'm excited for jobs and to see something happen there, to see conversations wrap up into an actual, tangible project," said Alderwoman Melinda Humphrey, chairwoman of the Community and Economic Development Committee. "I think it's exciting to think about tourists and skiers being able to get off the train and walk to the hotel and take a bus to the mountain, keep some of those dollars here in Rutland," she said. The last downtown hotel was the Berwick Hotel, which burned down in 1973, leaving what eventually became the downtown parking pit. The Herald purchased that property, adjacent to its Wales Street offices, some time after the fire, but attempts to redevelop it through the years have been stymied in part by ground contamination with a cleanup cost estimated at $500,000 Kelley said the former Herald building would be demolished and the contamination in the parking pit would be cleaned up. He said developers would apply for state and federal grants to help with the latter process. The proposal will have to go through the Act 250 process. “We’ve invested a lot of time into this project already, and we’re very serious, but it’s not going to be an April start,” Kelley said, adding that the goal is to break ground in 2019, likely in summer. “A project like that is probably a 10-month duration (for construction) from start to finish,” he said. “Maybe because of the brownfield component it might be 11 months.” The project is not the first hotel proposed for downtown. In 2016, developer John Kalish announced plans for a 128-room hotel on Evelyn Street with a 5,000-square-foot conference center, 20,000 square feet of commercial space and a full-service restaurant. Kalish could not be immediately reached for comment Tuesday afternoon. "From what I've heard, plans did not seem to move forward in that location," Steve Peters, executive director of the Downtown Rutland Partnership, said of the Kalish proposal. Peters said wherever it goes, a downtown hotel would be a boon to other downtown businesses. "It makes a lot of sense and there has clearly been a need for some time on the downtown," he said. Development of the parking pit would mean the partnership would lose its venue for bands at Friday Night Live — '80s star John Waite is scheduled to close out the summer concert series there this weekend — but Peters said he was not worried about the event's future. "I think we could figure something out." he said. "We're having pretty good success. ... I think on the street's an option but we would need to consider all the requirements that go in, talk to the fire department. One thing at a time." Tyler Richardson, executive director of the Rutland Economic Development Corp., said a downtown hotel would be a boon to the regional marketing initiative, one aspect of which involves trying to convince tourists to relocate to the area, as well as to the downtown, and also to downtown businesses directly. "They'd have captive customers," he said. Richardson credited RRA executive director Brennan Duffy with doing much of the work paving the way for the project and connecting the developer to incentive programs. Duffy was not available for comment Tuesday. The DRP and RRA commissioned a study in 2013 that found there was a market for a hotel downtown, and the parking pit was identified as one of the potential sites. Kelley said DEW, which was the third-place bidder when the property went to auction last year, had been eyeing the site for some time. “It’s an underserved market,” he said. “The hotel stock on the Route 7 corridor has different levels of aging. The Hampton Inn is a nice property, but I think the market is looking for something downtown, within walking distance of the Paramount Theatre and all the other amenities downtown Rutland has to offer.” The sale price of $620,000 is slightly higher than the winning bid of $600,000 Rutland developer Joe Giancola submitted at the October auction. Giancola backed out of the sale several weeks later, citing contamination on the site and an inability to secure financing. DEW was the third-highest bidder. Rob Mitchell, general manager of the Rutland Herald and spokesman for his family in connection with the former Herald property, said after Giancola backed out, his family approached the second-place bidder — a Long Island investor whose name Mitchell said he could not remember — who again declined. "At some point early this year, we opened lines of communication with DEW," he said. "It kind of has worked out. ... What was really remarkable for me was the way a lot of organizations, from the RRA to the mayor's office, have stepped in to try to make this deal happen." Mitchell said the state initially told DEW the project would not meet the criteria for the tax credit, but the company resubmitted with the support of the community, which made the difference. "It shows the way Rutland is working together," he said. gordon.dritschilo@rutlandherald.com

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