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City seeks more compensation for Northlands

From an economic development perspective, (Northlands Job Corps is) clearly not the highest and best use (of that property).
— Alderman David Austin

VERGENNES — Two decades ago the U.S. Department of Labor (DOL) said it would no longer compensate Vergennes for hosting Northlands Job Corps, despite a 1978 agreement that the DOL and the property owner — the state of Vermont — would do so. 
Last month Vergennes officials launched a new effort to convince the state to do more for the city.
They argue that Northlands serves a regional good, and not the city in particular. The center is an economic engine that employs between 100 and 120 people, who provide career training for, house and feed up to 270 economically disadvantaged young people. City officials add that even taking into account its fiscal benefit to Vergennes, the services the city provides outweigh those pluses. 
“It’s well known there are activities in Vergennes we’re not compensated for,” said Alderman David Austin at the council’s March 10 meeting.
When the Northlands Job Corps Center, or NLJC, is full its student population is equal to about 10 percent of the city’s population, and it has been a steady source of calls to the city’s police department — 234 in a four-year period ending on Feb. 22, according to Police Chief George Merkel. 
To be fair, the department is also regularly called to city schools, but the additional caseload requires time that Merkel said extends far beyond just the initial call, and that number does not include off-campus incidents involving Northlands students.
“These calls only reflect calls we responded to on the NLJC campus,” Merkel wrote in an email. “Also, as in the past, the number of incidents we handle at the NLJC and the time it takes to properly investigate the incidents has always been an issue.”
The relationship between the police department and the private firms that contract with the DOL to operate the job-training center has gone through ups and downs over the years. The current private operator is a firm called Education and Training Resources of Kentucky, or ETR. Merkel was asked where things stand now. 
“The level of cooperation between the current center operator overall has not been bad,” the police chief said.
But Merkel was upset about a recent incident in a campus dorm in which a city officer and a Vermont State Police trooper both required medical treatment after inhaling smoke from an unknown substance, possibly salvia.
“We have concerns about the way an incident has been handled and the nature of the incident. This concern has been voiced to the center director,” he said at the time.
Center Director Michael Dooley returned calls and emails promptly, but declined an interview saying policy required him to forward questions to the DOL’s Boston office. In the past 25 years, center directors have answered the Independent’s questions about campus operations and number of Vermonters served at the NLJC.
The answers to some of those questions could help gauge Northlands’ impact on Vergennes. If there are fewer students and more Vermonters, there is arguably less impact and more of a local good. Northlands directors over the years have stressed as a goal recruiting more Vermont students to the only Job Corps center in the state. 

CITY COMPENSATION
The issue of compensation for Vergennes is thorny and rooted in history.
In the first 20 years of Northlands’ operation, Vergennes received payments from the DOL — passed through the contractor to the state (the property owner) — equal to about 10 percent of the city’s non-sewer budget. Those terms were agreed on in 1978 in the three-way deal among city, state and DOL officials that allowed Northlands to take over the former Weeks School for troubled youth. 
But in 1999 DOL lawyers ruled the payments — then totaling about $106,000 a year — were an illegal form of taxation on the federal government. In September 2000 talks between city and federal officials ended. Later that year Vermont’s Congressional delegation wrangled a one-time payment of about $587,000 that was intended to cover the next five years of the deal and cushion the financial blow to the city.
No one believes the DOL is likely to change its position.
On the state side of things, the Vermont Department of Buildings and General Services (BGS) did not immediately respond to phone requests for an accurate current lease amount. Gregg Harris, Assistant Attorney General for the BGS, forwarded the several leases that have been signed since 1978.
The most recent lease, inked in October 2013, called for an annual payment of almost $396,000, to be adjusted annually by the federal cost-of-living index. Making that adjustment starting the next year up to the present creates an estimated annual payment of $467,000 from the DOL to the state (technically the BGS).
According to Rep. Diane Lanpher, D-Vergennes, the state now gives the city about $107,000 a year in Payment of Lieu of Taxes (PILOT) funding for Northlands and the surrounding 272.5 acres of mostly open land that makes up the city’s northwest quadrant. Apparently some or all of that PILOT money comes from the DOL payment to BGS.

OTHER OPTIONS
City officials believe there are compensation options other than federal funding, and all involve persuading the state to make changes: offering more PILOT funding, transferring law enforcement responsibility to the state-owned facility to state police, and seeking a better use for the 66-acre Northlands campus — residential housing, a private school, or a business incubator center have all been suggested over the years.
Even before the extent of COVID-19 crisis was fully understood Lanpher was skeptical that Vergennes could persuade state officials to pay more. She cited the existing PILOT funding, and said that lawmakers dealing with a tight budget would “probably not” want to set a precedent of increasing local payments to communities hosting state properties. 
But looking at emergency response procedures and law enforcement coverage is a path that Lanpher is willing to pursue. 
“Maybe the state police should be the responders to the state property,” Lanpher said. “I had sent a message out that asked BGS to take a look at their lease to see what’s in there that references security.”
City Manager Daniel Hofman said in his native New York state police handle law enforcement for Job Corps centers based on state property, not local police.
Councilors at their March 10 meeting were also unhappy with the fact that any 911 call made from the Northlands campus shows up as originating from the center’s security office, not in the dorm or any other location of an actual emergency.
“There are problems with how they’re handling emergencies generally,” Austin said.
Hofman identified the emergency and law enforcement response issue as a way to bring the state to the table. 
“What’s going to put pressure on the state is getting the state police more involved over there,” Hofman said. 

NEW TENANT?
As for the future of the center, Lanpher; Matt Birong, the Vergennes area’s other Democratic representative in the House; and Addison County Economic Development Corp. head Fred Kenney all sat down with Austin and Hofman on March 9.
“We really discussed actual issues, problems we’re having with that property, and possible solutions,” Austin said. 
He said the group agreed Northlands might not be the perfect use for the campus and its 28 buildings, but the state would not just walk away from its lease, either. 
“From an economic development perspective, it’s clearly not the highest and best use,” Austin said, but added, “The state is not going to discontinue the lease unless there is another use.”
However, Austin said, Northlands could go elsewhere, noting either party could terminate the year-to-year lease. 
“There are any number of places that facility could fit into,” he said.
But Austin also acknowledged from a development point of view that due to the mediocre condition of the buildings it might require a public-private partnership to make a project work on the campus.
“From a cash-flow perspective it just doesn’t make sense,” he said. 
Lanpher stopped short of saying the state should or would actively seek a new tenant.
“They should constantly be taking a look at anything for all of our state properties’ best use,” she said.
On the other hand, Lanpher said the state should also be ready if the DOL terminates the lease. 
“I want us to be prepared that if the U.S. Department of Labor says they’re going to close, that we have a plan and can react in a way that’s at least in our best interest,” she said.
And Lanpher and Hofman agreed it’s not the best situation for Vergennes to have a tenant for the prominent property with essentially two landlords. 
“I think it would be better if you had a direct ownership being able to interact directly with the city,” Lanpher said.
Or, as Hofman put it, “It’s like we’re in a weird triangle.”

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