BRATTLEBORO—At 8:46 p.m. on April 17, 2011, the Brattleboro Fire Department received a box alarm call from Main Street’s iconic Brooks House. Soon afterward a tenant called to report smoke in the building.
The calls marked the beginning of a five-alarm fire that not only spelled the potential destruction for the downtown’s historic signature landmark, but for the economic and aesthetic life of Brattleboro as well.
On that dreadful night, light and smoke were visible from Interstate 91, several miles away. As spectacular flames shot into the sky, firefighters from 23 area companies worked through the night to save the building.
By daylight, the shell of the 1871 building with its famous Mansard roof — where Rudyard Kipling once played poker with his cronies — still stood. No one had been hurt. But 13 retail stores had been burned out, 60 affordable apartments were gone, and the building was near collapse.
The cause of the fire proved to be a staple penetrating an electrical wire above a ceiling. The fire had smoldered for a day or two before it was reported.
The Brooks House is Brattleboro’s largest commercial building. It anchors the south side of Brattleboro’s downtown on the corner of Main and High streets. First a luxury hotel, it had been in the Chase family since the 1970s. At the time of the fire it was owned by Jonathan Chase.
Its importance to the town — its apartments, retail space and offices, and its regal, red brick Second Empire stylishness — cannot be overemphasized. From Gov. Peter Shumlin to the Preservation Trust of Vermont’s Paul Bruhn to the person on the street, everyone hoped that the building could be renovated and restored.
Bruhn described saving the Brooks house as “absolutely imperative.”
“Brattleboro has one of the most urban, most dense downtowns in Vermont,” Bruhn said. “The buildings along the main street are uniformly taller than the buildings on Church Street in Burlington. In most places in Burlington and Montpelier, most of the buildings tend to be three stories tall. And in Brattleboro, they’re four and five stories tall. It makes for a very dense urban space. It makes downtown Brattleboro different. It’s its own place.”
One of the first things Chase did after the fire was to call Robert Stevens, the founder and president of Stevens & Associates, a Brattleboro engineering and architectural firm.
Making the call came naturally. There has hardly been a building project in Windham County in which Stevens hasn’t had a hand. He’s worked on Brattleboro Memorial Hospital. He did the structural design for the Putney General Store twice — first when it was rebuilt after a fire, then when it was destroyed by another fire. He was the civil engineer for Brattleboro’s Transportation Center and the Brattleboro Food Co-op and for the expansion and renovation of Leland & Gray Union High School in Townshend and Brattleboro Union High School.
He has worked with the Windham & Windsor Housing Trust almost since its inception.
“I think it’s fair to say that without Bob’s vision and tenacity and commitment the Brooks House would have been lost,” Bruhn said.
An experienced hand
The Brooks House fire was not the first time Stevens had been called in after an historic Main Street building went up in flames. In December of 2004, after the Wilder Block burned down, Stevens and the housing trust renovated and restored it with stores, offices, an art school, and affordable apartments.
Stevens is part of a relatively new movement called New Urbanism that seems almost perfectly designed for downtowns in Vermont — it seeks to create urban communities built on walking instead of driving.
According to the charter of the Congress for the New Urbanism, the movement seeks “the restoration of existing urban centers and towns within coherent metropolitan regions, the reconfiguration of sprawling suburbs into communities of real neighborhoods and diverse districts, the conservation of natural environments, and the preservation of our built legacy.”
Some of the principles of New Urbanism are, first and foremost, walkability — most things should be within a 10-minute walk of home and work. Then, connectivity — an interconnected street grid network. Then, diversity — a mix of shops, offices, apartments and homes on site; mixed housing; quality architecture and urban design; traditional neighborhood structure with a public space at the center; increased density; green transportation.
The charter explains all of this is intended to lead to a higher quality of life “well worth living” and to “create places that enrich, uplift, and inspire the human spirit.”
Stevens doesn’t just talk the New Urbanist talk; he’s walked the walk for years:
He’s been involved in the renovation and restoration of many historic Brattleboro buildings, including the Abbott Block, the Brattleboro Museum and Art Center (which used to be the town’s railroad station) and the Cutler Block on Main Street, a building which Stevens bought, gutted, and renovated for $800,000; he rents two stories to his company, while the street-level retail space is now home to Milagros Mexican Kitchen.
According to Craig Miskovich, attorney for Downs Rachlin Martin, and one of Stevens’ partners on the complex roller coaster ride that has been the Brooks House restoration, Stevens is “a strange mixture of tranquility and passion. He is credible and extraordinarily intelligent. He’s able to describe complex things simply and well.”
Stevens was already working for Chase on other development projects when he got the call.
“Jonathan said, ‘I just had this fire and the fire department is afraid the building is going to fall into the street. Can you come down here?’” Stevens said. “So the day after the fire we started working on the building. First we were trying to make sure it was stable. We threw everything into getting the building gutted and getting the envelope tied back together to keep the water out. And then Jonathan hired us to keep going with a design.”
Saving the Brooks House quickly turned into the project of a lifetime. Within a year of the fire, Chase saw that he could not finance the renovation. In a Hail Mary pass to save the building, Stevens and Miskovich, along with Ben Taggard, Pete Richards, and Drew Richards of The Richards Group, put together an investor group called Mesabi LLC to buy, restore, and renovate the downtown treasure.
The venture was nothing if not highly risky, with the potential for profit maybe a full 20 years down the pike.
“We knew exactly why Jonathan would not be be able to redevelop the property — to do so was a rather irrational economic decision,” Miskovich said. “With the rents one can get for commercial and retail space and residential space in Vermont downtowns, projects like this don’t make economic sense.
“But Bob and I saw a way forward that would have to take advantage of tax credits and a host of other programs. And we knew that if anyone could do it it would probably be us. So we pulled together a few other investors from Brattleboro and started the process of exploring that complicated financing structure.”
The financing involved relationships with “a bunch of investors who invest in subtly different ways,” Miskovich said.
Community members became shareholders, Miskovich said. The state of Vermont kicked in. Vermont Rural Ventures, a subsidiary of Housing Vermont, got involved. The Massachusetts Housing Investment Corp. helped Mesabi access New Market Tax Credits — federal tax credits available for projects in certain eligible population centers across the United States.
Finding a lender for this quixotic and “irrational economic decision” was difficult, but New Hampshire’s Mascoma Bank agreed, with conditions. Brattleboro Savings & Loan helped too.
Thanks to the Shumlin administration, both the Community College of Vermont and the Vermont Technical College have offices and classrooms in the new building.
Today, the Brooks House renovations are nearly complete. When everything is done, it will be an 80,000-square-foot, fully renovated, historic building consisting of 23 apartments 18,000 square feet of colleges, 4,000 square feet of office space, and 32,000 square feet of a mixture of retail, restaurants, cafés, and shops.
The restored former lobby leads to a new, two-story atrium, which connects to shops and a renovated plaza.
“And we put all this together with nothing more than a bunch of plans that Bob put together and Bob’s ability to convince everyone that this was an iconic building vital to the strength and well-being of the community,” Miskovich said.
“Brattleboro is wonderful for New Urbanism. We have a community in which you can live downtown, you can walk to the post office, to grocery stores, to hotels, theaters, art, restaurants, and we’re finding a lot of our tenants don’t know they’re new urbanists, but they really want to have a downtown experience,” he added.
The roller coaster ride
The Brooks House was built in 1871 by George J. Brooks, a businessman who made his money in California before moving to Brattleboro and building his huge hotel on property that had been cleared by another downtown fire. An article in the Vermont Phoenix (precursor to the Brattleboro Reformer) of April 5, 1872, described in detail Brattleboro’s newest downtown building:
“A veranda 90 feet in length fronts the center of the building on Main Street, beneath which is the main entrance... there is a wash room, a baggage room, a sample room, and one of the best features of the house, a gent’s reading room. In the basement are located the boilers by which the entire building is heated, also a billiard room. A ladies’ entrance is located on High Street.”
This blurb doesn’t even mention the two-story ballroom or the 80 “lavishly furnished” guest rooms, which are mentioned on the building’s Wikipedia page. Brooks lived — lavishly as well — and died of “apoplexy” (probably a heart attack) at 68 in the building that bears his name.
The Brooks House narrowly escaped demolition in the late 1960s and was renovated by Chase’s father, Norman B. Chase, into small apartments and retail space. The building was added to the National Register of Historic Places in 1980.
According to the town Grand List, the block, which sits on almost an acre of land, was assessed at the time of the 2011 fire at $2,355,500.
After the fire, Stevens and his firm set to work restoring the building.
“The first three months were a stabilizing effort,” Stevens said. “We were out there with about 100 workers. We did a design for the penthouse roof, which had collapsed. We said, Here’s the design — let’s get some trusses manufactured so we can put a new roof on there temporarily.”
They kept going with the architectural design. One discussion was about what kind of spaces the restored building should provide.
“Before, it was 60 small apartments up there,” Stevens said. “Jonathan knew that market, and knew he could be successful with that. We pushed him to think about different market sectors for larger units, and we studied that for him.”
In the end, the decision was made to build fewer, larger luxury apartments with higher rents — and to add a few rent-stabilized apartments as well.
“Diversity is a good thing,” Stevens said. “And Brattleboro’s downtown has not had diversity. There’s a preponderance of lower-end apartments in downtown.”
Stevens pointed out that after the Wilder building burned it didn’t make any economic sense to restore it until the housing trust came in with affordable housing. But the Brooks House was on a different scale. Stevens saw high-end apartments as a different — and New Urbanist — way to save the structure.
“It was too big a building for the housing trust to take on,” Stevens said. “It had too much retail space and too much office space. They’ve had their struggles with buildings that had a lot of retail, so they weren’t jumping on taking on that building as affordable housing. We did some focus groups and a market study and it became clear quickly that there was a market for people who wanted to have nicer apartments downtown.”
It cost Chase about $2 million to stabilize the building and begin the design process. But he said he couldn’t raise the capital to reconstruct and renovate without going into steep debt.
“Even with his insurance proceeds, he was at a time when he had owned the Brooks House long enough,” Stevens said. “It had been in his family. He had paid off the mortgage. He was closing in on retirement. He was looking forward to selling the building and retiring sometime soon.”
The insurance did not cover replacement value, Stevens said. The value of the building after renovation would be $8 million. The cost of the renovation project loomed at approximately $23 million.
“In the end, it didn’t make sense for Jonathan but it made even less sense for anyone else,” Stevens said. “Craig Miskovich was Jonathan’s lawyer. We — Craig, Jonathan and I — became afraid for downtown. We had this building with a significant portion of it gutted, not contributing to the town, and it didn’t make any economic sense to rebuild.
“If someone was looking at this project strictly from the standpoint of buying it, investing in it, and making a reasonable return on that investment by selling out, they wouldn’t do the project. There was no reasonable return on investment within seven to 10 years. There wasn’t with Jonathan with his insurance, so there certainly wasn’t somebody coming from outside. It meant the building would sit there for a long, long time.
“Craig and I didn’t want to see the downtown become deteriorated. We didn’t want to see a vacant building.”
They said they felt that a project this big could only be done by what Miskovich calls “a group of the willing.”
“If we could get support from some of these alternative funding sources, and get some seed capital and community support, and a local group who wasn’t only interested in the profit motive, maybe we could manage our risk so we wouldn’t go bankrupt with the project,” Stevens said.
“And we could help the downtown and make the building better than it ever was. So that’s what we set out to do.”
Birth of Mesabi
After the Mesabi group was formed it took an option to buy the building for $2 million so that Chase could recoup his first year’s losses.
“It would be a wash for Jonathan,” Stevens said. “He was getting back the $2 million he put into the building after the fire. And he walked away with a little more than the insurance money. That was what the appraisers were saying the building was worth. It was a tenuous time.”
The group then began the funding process. They estimated that the amount they needed to spend to complete the design, gather permits, hire lawyers for each financial participant, and hire accountants to meet the tax credit funding requirements to purchase the property would total $500,000 to $750,000.
“We realized that between the five of us, we might have $500,000 to $750,000 invested before we even bought the building,” Stevens said. “And that’s with the risk that we might not be able to buy the building. Actually, it turned out to be closer to $1.2 million in the end.”
Each of the five partners had an equal share in the $1.2 million obligation, so it was “a challenging time,” Stevens said.
“I’m glad I didn’t find out what was going to happen if the project didn’t go through,” Stevens said. “Would my wife and I have to sell the house? There wouldn’t have been anything left of my assets, that’s for sure.
“It’s a funny thing: you decide you’re going to do something and you think you know what you’re getting into and you put your head down and keep working on it. We expected to go up to $750,000, but we went past that — but by that time we knew it was going to happen. There’s definitely an entrepreneurial spirit there. There was real risk. It’s not for the faint of heart,” he said.
Part of the $1.2 million was for the design, and as Stevens’ firm was handling it, at least he was being paid that way. And Miskovich’s firm was being paid for the legal work it was providing.
The group went after New Market Tax Credits, a complex financing vehicle established by Congress in 2000 to spur new or increased investments into operating businesses and real estate projects located in low-income communities. The NMTC Program attracts investment capital to low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax return, says the U.S. Treasury’s website.
These tax credits are only given to extremely secure projects, and the Brooks House made the feds nervous.
“It turned out, although we didn’t know it at the time, that all of the New Market Tax Credit projects had been done with single-purpose buildings,” Stevens said. “These were industrial buildings with one tenant, and the tenant was often the owner of the building, or one master tenant with a class-A tenant like the state.”
He described the Brooks House project as speculative at best.
“We had eight retail tenants who were not identified, a bunch of office tenants, and then 23 housing tenants. No single tenant. The feds looked at that and said, ’We’re not going to give you this money. It’s a great community project but it’s too much risk,’” he said.
But Mesabi got the money.
“The feds made some exceptions because it was a community project and also because we were able to get early commitments for many tenants,” Stevens explained.
The early commitments came about because the only lender the Mesabi partners could find was New Hampshire’s Mascoma Bank.
“We finally found a bank that said, ‘We’ll loan you the money if you put in all these guarantees like fund reserve accounts so you’ll never go bankrupt while we’re in second place — seven years — and pre-lease the building to 70 percent full,’” Stevens explained.
“My response was, Well, we’re all done. No way we can pre-lease. I don’t have anything to show people except drawings. The building is a wreck. How do I pre-lease 70 percent of a building? And do this all before we can close on the building and buy it and we’re already three-quarters of a million into this thing?”
But, he said, “This is the great thing about my partners. There’s a lot of skill sets and relationships in that group. We set about working to find tenants. We had already landed the colleges, which was huge.”
According to Michelle Le Clair, vice president and commercial loan officer for Mascoma, and the bank’s point person for the Brooks House project, Mascoma is one of the few banks that participate in this kind of historic renovation project.
“Our mission is to serve the communities we serve across Vermont and New Hampshire. These types of projects have a catalytic impact on the areas they serve. This one, in downtown Brattleboro, bringing together educational programs, housing, retail and office space, meets so many needs for the community. It aligns with Mascoma’s mission,” she said.
Friends in high places
Shumlin, a Windham County native with experience renovating Putney’s historic buildings, wanted to put the southern branches of CCV and VTech in the Brooks House even before Stevens and his group realized the benefits of the idea.
“The governor knew before we did that we needed to have an anchor tenant,” Stevens said. “He and the state had identified that they wanted to move their higher education institutions to downtown for good policy reasons. They’d done it in other communities. And in the 2012 State of the State speech, he announced that he wanted to see CCV and VTech in Brattleboro move into a downtown location.”
A search committee was formed to look for the right site for the colleges. In the end it came down to a vacant building on Flat Street — near a parking lot and the parking garage — and the Brooks House.
“It was all negotiations,” Stevens said. “The owner of the building on Flat Street thought he had a better place. He made his pitch to the schools and we made ours. He has a building which would have been stand-alone. Yes, lots of parking. But it would have been one tenant and they would have to do an addition.
“We said, ‘Look, that’s not really downtown. If you want to be downtown, the Brooks House is High and Main. We’ll put your sign on Main Street. You want to be integrated into the community. You want people to come through my lobby. I’ll have coffee for sale. I’ll have food. You’ll come down in an elevator. This is going to be so exciting. We want your students and your faculty to be part of the community — and this is the community.’”
The pitch glossed over the difficulty of parking near the Brooks House.
“Maybe there’s no parking, but there’s no parking near my office across the street and everyone gets here somehow,” Stevens said. “People park in the garage. What’s a block? So we were able to convince them. This is an exciting project and they want to be part of that excitement.”
The Shumlin administration put $2 million in the state budget for the school part of the Brooks House renovation. And CCV put a for-sale sign in front of its current building off of Putney Road. The Brooks House had to be ready to receive the schools by August 2014 — and it was.
“In July 2013, we finally got everything together and closed, and it was a huge sigh of relief,” Stevens said. “And then we started what is for me, who is the partner building it, the hard part. And the adventure now is putting together a huge old building with lots of structural problems and putting it back together in a way that manages a construction budget. We have a great team with Bread Loaf Corp. And half of my office is working on it.”
Surprises in the bones
Construction revealed a host of new problems.
“The building had been modified over the years,” Stevens said. “Stairs were put in here, walls were moved there; there were things we didn’t fully understand until we started renovating. So we’ve spent a lot of time trying to get the bones of the building solid and adding an addition in the back where the colleges are going to be.”
And then there is the most daunting task: filling the retail spaces.
“The rents are going to be the highest in town,” Stevens said. “The building has always had the highest rents in town, but now it will be a new building with a new façade and new equipment and the same kinds of rents. We’re hoping the new energy will make the businesses more successful.”
Stevens is very clear that it took a lot of people to make this project happen.
“I could never have done the Brooks House alone,” he said. “It took the collective effort of myself and all of my partners to work through the challenges of finding the resources and working through the numerous challenges.”
He added that, in the end, the partners benefitted from a committee of local business leaders who got together several times to give them advice.
Former Windham Foundation Executive Director Stephan Morse and real estate mogul and close Shumlin advisor Larry Cassidy met with the partners almost weekly.
“We also received loans from several community members and loan guarantees that were needed to get the bank lending. Also the Shumlin administration helped through the Community Development Block Grant. And the town helped, too,” Stevens said.
Taking on such a long-term, high-risk, and high-energy project with hugely complicated financing is not for everyone. The Mesabi partners say they are doing it for the love of downtown Brattleboro, but they still expect to profit in the end.
“The thing about real estate is if you hold on long enough, you usually do make money,” Stevens said. “So we think in the 20-year window we’ll probably be OK. We’ll be able to sell our investment and make some money. Our investment will be a worthwhile investment.”
Assuming that the building “leases up,” the cash flow will work out and the project will pay off its debt, Stevens said.
“And as you pay it off, if you take care of the building, the building will still have value. Not that I don’t worry about it, but you have to think that at the end of the day it will all work out. And you just keep working hard. If you don’t have faith, you’d never do this. Any smart person would walk away,” he said.