What's The Plan For The 'Pit' In The Middle Of Newport?

Jul 5, 2019

A development project gone wrong. A community living with the fallout. And an uncertain path forward.

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This month on Brave Little State, VPR’s people-powered journalism project, we head to the Northeast Kingdom to answer this listener question:

"What is the plan for the pit in the middle of Newport?" — Jill Raymond, Northeast Kingdom

The “pit,” as Jill calls it, is a block of demolished buildings in the center of Newport’s downtown district. 

The backstory is complicated: The buildings here were razed in 2015 to make way for a mixed-use redevelopment project dubbed the Renaissance Block. The project was one of many ambitious developments in this region spearheaded by two men, Bill Stenger and Ariel Quiros.

At the time Stenger, a Newport resident, was the CEO of Jay Peak ski resort, and Quiros, a Miami businessman, owned Jay Peak and Q Burke Mountain Resort. The men funded their development projects — hotels and condos at the ski resorts, and Jay Peak’s $25 million water park — using federal EB-5 money. The EB-5 immigrant investor program recruits foreign investment in areas in need of economic revitalization by offering a fast-tracked path to legal residency for investors and their families.

So what happened to the Renaissance Block? It was never built. In 2016 Stenger and Quiros were accused of fraud and misappropriation of more than $200 million raised from foreign investors — a complex scheme that has been called the largest fraud case in Vermont history.

And Jill is wondering: What can be done?

Interactive: Slide the vertical bar to compare a rendering of what the Renaissance Block was supposed to look like with a photo of the area today. On a mobile device? Tap here.

There is much, much more to the EB-5 scandal than we are able to cover here, but suffice it to say that amid the fallout, this empty block in Newport has become both a character in the story,  and a physical embodiment of it. Coverage of the case rarely fails to mention the “giant hole,” or the “massive hole,” or the “gaping wound.”

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Welcome to Newport

Before we get to Jill’s question, here’s a bit more background on Newport itself. It’s a city in a very northerly part of Vermont’s Northeast Kingdom, about 10 miles from the Canadian border. It’s got a small population — about 4,300 people — and it’s on a big lake, called Lake Memphremagog.

Brave Little State got a tour of downtown from Julie Raboin, of the city council, and planning commission member Colleen Moore de Ortiz.

“We are going to take a little journey up and around the street,” Moore de Ortiz said. “We’re going to do a walking tour of downtown Newport, including the pit, the famous pit, and we are going to see a lot of the strengths of our community, in addition to that one little, ginormous weakness.”

“Or challenge,” Raboin interjects. “It’s not a weakness, it’s a challenge.”

Part of the reason there was so much excitement about a development project here is that Newport isn’t the most prosperous city. According to recent Census estimates, the median household income here is $38,576 — about two-thirds the statewide median of $57,808.

The downtown is a patchwork of historic buildings and local businesses. Though not every building is occupied.

Local businesses line one side of Main Street in downtown Newport.
Credit Liam Elder-Connors / VPR

Our first stop is in front of the Northeast Kingdom Tasting Center, which is across from the demolished block.

“This project was started in anticipation of the success of the EB-5 projects, and here it is,” Moore de Ortiz said. “Sadly, for us, the anticipated boom of disposable income that was going to influx into our community with the EB-5 didn’t actually materialize.”

“So they’ve struggled for quite some years” Raboin added. “There was a restaurant that was begun by a local couple, and unfortunately after about a year, year and a half, it folded.”

(The Tasting Center later clarified that almost of all of its spaces are currently leased, but the center has had to lower its rents to keep occupancy up.)

Just up the street is Dusit Thai Cuisine, which Moore de Ortiz says is faring much better than its neighbor, and the Memphremagog Arts Collaborative. Up from there is the Newport Natural Market and Cafe, where we’d actually met our question-asker earlier in the day.

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Jill's curiosity

It was Jill Raymond’s idea to meet here at the cafe.

“It’s got a lot of great food. I’m enjoying my carrot cake here,” Jill said after settling in at a cafe table, “and it’s right across the street from the pit.” 

From here, the view of the so-called “pit” is mostly a chain-link fence covered in green netting. There are few spots where you can see trees growing up.

“It looked like a war zone for a while, and now it just kind of looks like the earth took back over the area,” Jill says.

Jill has lived in the Northeast Kingdom for 11 years. She remembers when this block was demolished, in 2015. 

“We were all very excited about that, because the area needed the new revitalization,” she recalls.

Our question-asker Jill Raymond says she worries most Vermonters have forgotten about the demolished block in Newport, and says the ongoing uncertainty about the future of the block is taking a toll on the community.
Credit Angela Evancie / VPR

What was here previously was called the Spates Block — it held a mixture of businesses and apartments. A local paper, the Barton Chronicle, called it “a col­lec­tion of build­ings that have seen bet­ter days.”

“When the demolish day came, it was very exciting. I mean I have videos of it,” Jill says. “And then … nothing happened. The EB-5 scandal started and there was never any money left to fix our downtown.” 

Again, this redevelopment plan, dubbed the Renaissance Block, was one of many very aspirational projects that Bill Stenger and Ariel Quiros cooked up for this area. But the property was seized and put under receivership when the SEC accused Stenger and Quiros of embezzling investor money. 

This happened in 2016. And a lot more has happened since then. There have been civil charges, and class-action lawsuits, settlements — and then, in May of this year, U.S. Attorney Christina Nolan announced that a federal grand jury had filed criminal charges against Stenger, Quiros and two of their associates. The charges were in connection with a different project in Newport. But where did Nolan chose to hold her press conference? Right in front of the hole. 

“We thought it was important to do this in the place in Vermont that was most shook, most rocked, most affected by this fraud,” Nolan said at the press conference.

Now, the giant hole in the middle of town might be top-of-mind for prosecutors and residents. But our question-asker Jill says she worries most Vermonters have forgotten about it.

“I really just wanted to ask this question to remind people that we still have a pit in the middle of our town,” Jill says. “I can’t be upbeat about it. I wish I could, I wish I was having a fun interview about something exciting, telling you to come and ski our wonderful slopes or go out on the lake. But the pit’s a pit.”

The other reason Jill asked? She says the ongoing uncertainty about the future of the block is taking a toll on the Newport community.

“I do think that the pit not getting fixed and us not really even knowing how to fix it has impacted our sense of self as a town,” she says. “And it really bothers me that we don’t know who owns it, who’s in control of it, what the community could even try to do to fix it … You know, can we take it back? Can we do something with it?”

Who's going to sell it?

First things first. We do know who owns the pit: a man named Michael Goldberg.

Goldberg is the court-appointed receiver in the EB-5 case. He’s an attorney based in Florida, where the first civil charges were filed against Quiros and Stenger. 

Being the receiver means Goldberg is in charge of the businesses and assets tied up in the case — and that includes the block in Newport, as well as the Jay Peak and Burke ski resorts, and many other properties. 

Needless to say, he’s a busy guy — and this empty block isn’t at the top of his to-do-list. 

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We put Jill Raymond’s question directly to Michael Goldberg: “What’s the plan for the ‘pit’ in the middle of Newport?”

His reply: “Still unknown at this point. My plan is to sell it. Whatever the subsequent purchaser’s plan is I don't know.”

Goldberg told us that he’s currently marketing the property, “but we're also looking at other possible ways to dispose of the property that I really can't discuss. But, you know, the property is for sale.”

And what’s the value of it?

“The value will be what somebody is willing to pay for it,” Goldberg says. “I'm not trying to be cute in any way. Since it's a one-of-a-kind property, [the] appraisal is listed somewhere in the $2 million to $3 million range.”

So that’s who’s going to sell it: Michael Goldberg, the receiver. But who’s going to buy it? 

Who's going to buy it?

Brave Little State headed to the Newport municipal offices to talk to some people asking the same question. One of them is City Manager Laura Dolgin. 

As far as Dolgin is concerned, if you want someone to buy this thing, don’t call it a “pit.”

“We can call it a pit all you want. Where's that gonna get you?” Dolgin told us. “And if we're a community and we're in this together then call it the Main Street Development or call it a development site … It's Main Street and it's a development site. So keep it simple and keep it positive.” 

Dolgin had been on the job for eight months when the EB-5 scandal broke open. And she’s fully aware that selling the property is up to the receiver, Michael Goldberg. She says she doesn’t talk to him that often, but he has a fine relationship with Newport.

We asked Dolgin if the city has any preferences in terms of how the property is sold — as one big parcel, or bit by bit?

“That would be the control of the seller, so ... we wouldn't be able to influence that,” she replied. “That would be, basically, if I can be blunt, none of our business."

“If and when Mr. Goldberg chooses to sell that property, and if and when there is a buyer, then our zoning rules take over.”

Until that happens, Laura Dolgin and Newport Mayor Paul Monette say the city is working to attract developers to the community as a whole.

“So, OK, we have this empty block on Main Street. But we have lakefront. We have a beautiful Gardner Park. We have recreational trails that are coming in,” Dolgin points out.

City officials say development efforts at locations other than the demolished block, like the city's waterfront on Lake Memphremagog, will help make the block a more appealing purchase for potential developers.
Credit Liam Elder-Connors / VPR

“We have this intersection right out here that we received … [an] $85,000 grant, downtown transportation grant, to improve this intersection right out here,” Monette adds, gesturing out the window of Dolgin’s office to Main Street below, “for walkability and realigning the intersection.” 

Several times during our interview, Laura Dolgin gestures to her desk as proof of how hard she’s working to improve the city. It’s covered with stacks of paper: development plans and grant proposals. 

One of the documents she shows us is Newport’s Waterfront and Downtown Master Plan, which was finished last year.

We read it closely after our interview, and the plan for the block is vague. It calls it a “vacant lot” and recommends “infill development.” But in the key actions put forth for this area, the plan says “TBD” and that “these projects are contingent upon funding and finding developers.”

In any case, there seems to be a disconnect between the city’s work to attract developers, and residents like our question-asker, Jill.

When asked how municipal leaders are communicating how the future of the block fits into their larger vision for the community, Dolgin responded:

“We have a group of people in the city of Newport who are insatiable. Insatiable. And we’ve been contending with that since 2000-whenever. And as far as the community going, ‘No, nothing's happening, nothing's happening’ ... Look at my desk. I don't know how to respond to that because we're doing our jobs on a daily basis. We’re having our meetings. If these people are feeling like there’s more that we should be doing then come visit me and tell me what onion layer I haven’t pulled back yet.”

Monette interjected: “I think part of it is, they don’t think things are moving because we don’t tell them everything we talk about. And if I'm meeting with a potential developer — which I have met with a couple people — they swear me to secrecy. I’m not going to go blab something out there that I've met with, you know, this particular person. I mean you don't announce anything — I'm a firm believer you don't announce anything until the ink is dry. I think we learned that with the EB-5. You don't announce anything until the ink is dry.”

The city is not alone in working to develop the block; their partners include the regional planning commission and the state government. But so far, those efforts haven’t yielded any concrete projects.

“I think the most important thing is, nobody has said, ‘We are going to develop a building on that property with you,’” says Ted Brady, the deputy secretary for Vermont’s Agency of Commerce and Community Development.

“There isn't a list of people that have committed to doing anything,” Brady says. “You know, so, in order to get to that next step somebody needs to be willing to say, ‘We're in.’”

The state’s not going to be the developer for a project, but Brady says they’ll likely be a funder and potentially rent space in a new building. There are also funds from a settlement the state reached last year in a civil case against Bill Stenger and Ariel Quiros.

At this early stage, Brady says the state is trying to bring together a group to develop the property.   

“We're making sure people know that there's literally millions of dollars in incentives to a private developer that might be interested in building something in downtown Newport,” he says. “And that's gonna take some time.” 

One challenge to any potential developer is the price of the block. Brady and others we spoke to think the receiver is asking too much for the property.

“Right now,” Brady says, “the receiver’s asking more than $2 million for that piece of property. Nobody's willing to pay more than $2 million for that piece of property.”

But, Brady says, the state won’t pressure Goldberg to change his price.

“I don't think the state’s in the business of strong-arming private landowners into selling something for something less than market value,” he says. 

What should it be?

Hypothetically, what could a future development look like? Ted Brady says, maybe a lot like what was initially proposed for the Renaissance Block.

“We think it looks like a public-private partnership that will develop a multi-use building that has commercial, retail and maybe housing,” he says. “But that's just our hypothesis right now.”

Public officials aren’t the only ones with ideas about the empty block. Paul Dreher is the former director of zoning and planning in Newport. He was city government when the Renaissance Block project was proposed. Dreher still lives in Newport, and his apartment looks out right over the empty block — which, by the way, has gotten a lot of national coverage. 

“I mean, I can't tell you how many times I've seen drone flights going over the hole from my front porch or back porch. My kids are like, ‘Daddy what is that thing up there?’ And it's someone from Wall Street Journal filming from above, or New York Times or Boston Globe.”

Dreher is part of a group of people who want to see the block redeveloped — and they’re not waiting around for the state or city to come up with an idea. Dreher says they’re side-stepping those entities and pursuing their own plans. 

“'Going rogue' is an OK way of putting it. And sometimes it's the only way that you get stuff done,” Dreher says.

Public officials aren't the only ones with ideas about the empty block. Former Newport Zoning Administrator Paul Dreher, who lives in an apartment building next to the empty block, is part of a group of people sidestepping city government and pursuing their own plans.
Credit Liam Elder-Connors / VPR

The idea that Dreher is pushing is to focus on small, piece-by-piece development. He says there’s no market for a single large project. So instead, break up the lot and start small.

“In the urbanist world ... we call it incremental development patterns,” Dreher says, “which is the way, historically, these villages and towns of the whole country — but in particular Vermont — grew: on an incremental pattern where, as there was a demonstrated need, the use arose.”

Another possibility for the site: It could become a park. The Act 250 decision issued for the demolition of the block requires the developers to turn the area into a park if the development falls through. According to a Memorandum of Understanding filed with the decision, that work was supposed to be completed by last May.

Greg Boulbol, the general counsel at the state Natural Resources Board, which oversees the Act 250 program, said he hadn't heard of that provision.

“This is literally the first time that it’s been brought to our attention,” Boulbob said when Brave Little State reached out to inquire about the park option. “So you’re frankly a bit ahead of us on this particular matter.”

Boulbol said the board will need some time to look into the issue. 

“I will certainly bring it to the attention of the board to see if this is something that they’d be interested in enforcing and if so, what that would look like,” he said.

However, Newport Mayor Paul Monette says a public park in that block is about the last thing he wants. 

“We've had people say that it should be grassed over into another public park. Well we already have a beautiful park, just down the street,” Monette says. “It's got to be something that's on our tax rolls, because that's prime property.” 

What's missing from the story

Back on our walking tour, we run into two women around the corner from the empty block. Nicole Stevens and Paula Broe. And it turns out that a park is exactly what they want to see in the empty block.

“I think it should be like a community thing. … Like, a park for kids and adults. Just somewhere to go sit and relax and be able to bring your kids,” Stevens says.

Broe voices her agreement, and adds, “There isn’t anywhere.”

“I mean, the park and that’s it,” Stevens continues, “But it’d be nice to [have] other places. A lot of the apartments don’t even have backyards, let alone a front yard at all.” 

At this point, Colleen Moore de Ortiz, the planning commission member, kicks into community organizing mode, and invites the women to an upcoming meeting. 

By now we’ve turned off Main Street. Moore de Ortiz and Julie Raboin, the city councilor, have shown us around a couple more spots: an art gallery, a recovery center. And their message is clear: Around the edges of this empty block, things are happening. Newport is about more than the so-called pit.

City council member Julie Raboin, left, and planning commission member Colleen Moore de Ortiz in front of the empty block. "Anybody who invests, it's going to have to be a very generous benefactor," Raboin says.
Credit Angela Evancie / VPR

While we heard different ideas about the development of the block in pretty much every interview we did, there was a through line: that in the reporting of the EB-5 scandal, Newport’s story was largely left out. That the people in the city were defined by the failure of this project.

We heard this from Paul Dreher: “Somehow this 300-feet-by-300-feet of street frontage has become the blight of Newport, or the end of Newport. And that's a terrible narrative to live with. That's a terrible narrative for my children to be raised in.” 

And Colleen Moore de Ortiz: “I have to say I have been pretty resentful ... because I hear a lot of news coverage about EB-5, but I don’t hear  — I hear about reparations to the investors, but I don’t hear a lot about reparations to the citizens of this community.”

And our question-asker, Jill Raymond: “I respect that people lost their money and I respect that the investors had expectations that didn’t come through. And I’m also really angry and upset that nobody cared about what happened to our town.”

Eventually we end up at the back side of the demolished block with Moore de Ortiz and Raboin. We stand by the chain-link fence and a “No Trespassing” sign. And you can hear the women trying so hard to be positive about the situation here. 

“I really, actually, find it quite a beautiful site,” Moore de Ortiz says. “It’s got, like, greenery growing everywhere — like, it almost looks like an ancient Greek ruin, which I find really beautiful.”

“Those buildings were not just ugly,” Raboin adds, “but they cast shade on the other side of the street.”

But they’re also realistic. 

“With our small population, it’s hard to make a business feasible, or even several businesses,” Raboin acknowledges. “So anybody who invests, it’s going to have to be a very generous benefactor.”

As we were walking over, we’d asked Julie: Say another developer comes along, with grand plans and deep pockets. Given what happened last time, would the community be wary?

“Perhaps,” Raboin said — but ultimately, what choice would Newport have? 

“It’s not like we’re going to wait around and pick between three best offers, you know?” Raboin said. “If one thing comes along that works for us, meets zoning and seems like it’ll work out, we’re in. I’m in.” 

Jill's reaction

We got back in touch with Jill to share the answer to her question: At this point, there’s really not a plan for the demolished block.

“Oh, that doesn’t surprise me,” Jill said. “I was hoping, though.”

She continued: “I wished and hoped that something would come through, I wished and hoped that people had stuff happening and that nobody was looking, so nobody was reporting it, and that we’d find out that something was going to happen at some point. But I also was pretty skeptical that that was possible. The whole “not-it” thing is kind of dissatisfying, but I’m not surprised.”

Whatever does end up happening in that block, Jill says she just hopes the community gets a heads up.

“I would hate for us to all of a sudden [have] it get sold and there’d be no communicating to the community and no clear messaging,” she says, “and then all of a sudden something’s happening and we don’t know what it is.” 

Update 1:30 p.m. 7/9/19 This post has been updated to include links to the Act 250 decision and MOU that called for the creation of a "park-like" space in the empty block if the development is not completed.

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Brave Little State is a production of Vermont Public Radio. 

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Editing this month by Mark Davis. We have engineering support from Chris Albertine and digital support from Meg Malone and Elodie Reed. Special thanks to Anna Ste Marie.

Our theme music is by Ty Gibbons; other music in this episode was by Blue Dot Sessions: