Bright spots glow strong in a vulnerable regional economy
A view of the Brattleboro skyline, looking north from “Malfunction Junction.”

Bright spots glow strong in a vulnerable regional economy

In the midst of rapid change, entrepreneurs and policymakers alike look toward an elusive goal: creating a broad-based economy that can keep workers employed and sustain communities in Windham County

BRATTLEBORO — The average commute time for workers who live in Windham County is 24 minutes - just one clue that people here live in one town and drive to another for work.

The rural nature of the county means that people who live here find that their families' employment and consumer spending have an effect on the region as a whole.

Vermont's southeastern-most county nestles into a tri-state neighborhood that includes New Hampshire and Massachusetts. The three states also share the Connecticut River; Vermont and Massachusetts, the Deerfield Rver.

The county, with a population of 43,609, lags behind its neighbors - and the state - on multiple key metrics.

According to census data, the county's median household income is almost $7,000 less than the rest of the state's. The poverty rate at 14 percent is higher than Vermont's average poverty rate of 11.9 percent.

Windham County's median household income also lags behind Franklin County in Massachusetts and Cheshire County in New Hampshire. The neighboring counties also have lower poverty rates.

It's possible that Windham County may have a few more years of recovery ahead before strong change takes root, especially when it comes to wages.

In 2014, private-sector wages across all sectors in Windham County totaled $778.3 million. The next year the wage total peaked at $830.9 million. By 2017, that total had dropped to $785.6 million.

Despite some of the challenges the region faces in an economy that struggles to pay livable wages across the board and pays, in general, less than its neighbors, people spoke with optimism for the future and respect for their fellow Windham County residents.

And there are bright spots in the data to back up the optimism.

According to the 2018 annual report of the Brattleboro Development Credit Corporation, which describes itself as “a private, nonprofit economic development organization that serves as a catalyst for industrial and commercial growth throughout Southeastern Vermont,” the number of businesses located in the county is at its highest since the Great Recession of 2007-08.

Meanwhile, 44 companies expanded, and 14 stayed, opened, or moved to the county, according to the BDCC. The organization reported that it helped create 724 new jobs in the county's manufacturing sector.

According to data from the state Department of Taxes, 1,157 retailers in Windham County paid sales tax in 2018, compared to 1,246 in 2014. But despite that 7 percent drop, overall sales-tax receipts in the county are up 2 percent.

But the gross sales on which the taxes were charged have fallen from $1.48 billion to $1.12 billion - just under 25 percent - over the past five years, though the DOT cautions that this statistic “may or may not include sales subject to exemptions” - products like clothing, drugs, and food.

Following is a broad snapshot of our complex and contradictory Windham County economy through the lens of multiple players at multiple levels: a seasoned entrepreneur in the next phase of expansion; an economic development agency charged with boosting the overall economy in general and industry in particular in the shadow of losing the Vermont Yankee nuclear power station; a community struggling with the whiplash of an ill-fated bold attempt to create a luxury playground for wealthy second-home owners; and a regional planning agency that is worried about the capacity of our towns to meet future economic expansion in the most basic of ways - water and sewer.

Deliberately choosing a neglected piece of downtown

Last year, Mocha Joe's Roasting Company purchased the former Cultural Intrigue building at 35 Frost St. in Brattleboro. Since moving in, the coffee company has renovated the space to operate as its business offices, its space for storage of green coffee, for roasting, and soon, for education. The company also rents to two businesses: Recycle Away and the new Hatch Space, a woodworking studio spearheaded by Tom Bodett and Greg Goodman.

Kora Skeele, Mocha Joe's sales and marketing manager, said that moving to Frost Street was a deliberate decision on the part of owners Pierre and Ellen Capy.

Ellen Capy said that the company, which has owned and operated the Mocha Joe's Café at the corner of Main and Elliot streets for more than 20 years, has reinforced its commitment to staying downtown.

The company has also resolved to meet standards of reducing carbon emissions and the heavy sharp scent of roasting coffee, which is not as pleasant as the smell of coffee when it is brewing.

Capy said that she hopes the activity in the new facility from all three enterprises - and from their new neighbor, Whetstone Station Brewery's tasting room - will attract more people to Frost Street, a mix of the arts, peer recovery support, industrial, and residential.

Conversely, the new activity on Frost Street means more employees and customers walking down Flat Street back to Main Street, stimulating the downtown economy.

Both Frost and Flat streets were totally under water after the Whetstone Brook flooded the area during Tropical Storm Irene in 2011, Skeele said.

“Anything that bolsters this part of town is important,” she said.

Also nearby: the New England Youth Theatre, Cersosimo Lumber Company's Brattleboro Kiln Dry subsidiary, the Turning Point of Windham County recovery center, and multiple residential buildings.

“When you pull different and important pieces of a town together, and have them work together, it creates a sense of community and reminds us of the different roles we all play in a town,” Skeele said.

She added that purchasing the new facility represents the next business chapter for Mocha Joe's. The company expects to expand its wholesale business, for starters.

A large number of wholesale clients across New England and New York State “are the bread and butter of our business,” Skeele said.

Mocha Joe's serves customers from small local cafés to larger retail operations such as the Brattleboro Food Co-op and King Arthur Flour in Norwich.

Because the company wants to serve small independent businesses along with its larger wholesale clients, “We span the spectrum very intentionally,” Skeele said.

That said, the local market is mostly saturated by coffee operations - including Mocha Joe's - which is one reason the company seeks new markets, Skeele said.

Pierre Capy has told Skeele that one of the reasons he believes the company has lasted is because he never allows it to become stale.

In that spirit, later this summer, Mocha Joe's will also announce a new branch of their business, Skeele said.

The company will also step into the educational arena with workshops at the annual Strolling of the Heifers weekend in June.

The classes will include a brewing demonstration, a roasting demonstration, and a class on “cupping,” a process for grading coffee.

“We're looking to spread the love and spread the coffee knowledge,” Skeele said.

Connecting the dots in a regional economy

The ripple effect of lost wages from the closing of the Vermont Yankee nuclear power plant is just starting to spread.

Although the plant stopped producing power at the end of 2014, the lost wages from 600 jobs with an average annual salary of $100,000, are only just being felt.

Adam Grinold, executive director of the Brattleboro Development Credit Corporation, explained that Entergy, until recently the plant's owner, stepped down its staffing levels over a few years. As it laid off its employees, it provided them with substantial severance packages.

These measures buffered the economic impacts, he said.

The business sector with the most growth over the past decade in Windham County is value-added and specialty food production.

“Value-added food is a bright spot for sure,” Grinold said. “Over the past 10 years it has seen absolutely, by far the largest growth.”

This sector has also contributed to the greatest number of new jobs in the area, he said.

One of the strengths of the value-added food sector is the ability for entrepreneurs to start small and local, then gradually grow as they move into new markets outside the region, Grinold said - markets that are key to bringing in new dollars.

He likened a local economy to the water in a community swimming pool. If all summer kids splash water around, jump in and out of the pool, and then the sun evaporates some of the water, eventually the pool will empty. To keep the pool's water topped up, fresh water must be added regularly.

The same is true for a local economy, he continued: New dollars from outside the community must flow in to refresh the supply.

Grinold said the community should not lose sight of the manufacturing sector as a whole, which comprises approximately 13 percent of the regional economy.

The organization is still collecting data around wages in the area, but early signs point to them increasing - “although not broadly enough or fast enough for some,” he added.

Grinold has also seen an uptick in the region's “quit rate,” which he takes as a mark of employee confidence in the job market, and job mobility.

When a region's economy or job market is stagnant, he said, employees tend to hunker down and not change jobs. When their confidence increases, then the “quit rate” does as well, he said.

Grinold said the region has also completed a number of successful business transfers and expansions that he sees as positive for the economy.

For example, according to Grinold, a subsidiary of Berkshire Hathaway has purchased Sonnax Transmission Company in Rockingham. Alterra Mountain Company, the new owners of Stratton Mountain Resort, continue to make solid capital investment in the ski and recreation area on the mountain.

Grinold hears from business owners that they struggle with the high costs of doing business in Vermont - and that an even bigger challenge is finding employees.

BDCC has responded to the second challenge by creating a series of workforce development programs, with many geared toward high school students.

It's important that students are exposed to different careers in this region and also supported in their education to build the skills necessary to enter those careers, Grinold said.

By aligning education and business, the BDCC can help create a pipeline to jobs so young people can stay here and thrive here, he added.

But it's one thing to have a job. It's another to have a community that supports employees in the areas of housing, child care, and access to transportation, he continued.

And in all these areas, the region also struggles with finding enough supply to meet demand.

For example, a healthy vacancy rate for housing is considered to sit around 5 percent, he said. Brattleboro's rate on a good day is 1 percent. This pressure keeps demand for housing - and, therefore, costs - high.

Add in that the town has little buildable land, and the cost of creating new housing often is more than what the market will support, Grinold said.

“It creates a status quo that's hard to break,” he observed.

“No one entity can fix all those issues,” which is why partnerships with the state and other organizations are important, he added.

According to studies completed by the BDCC, most people in Windham County live in one community and commute to another for work. This statistic reinforces for Grinold the importance of viewing the economy on a regional scale rather than town by town.

“No one town is strong enough to fight the economic forces that are barreling down like a train,” he said, naming an aging workforce as one example.

A healthy economy includes metrics such as wages, business profits, and gross domestic product, Grinold said.

But, he added, a healthy economy also includes a quality of place, strong communities, and activities that support people from childhood into their elder years.

By that yardstick, Grinold said, “Vermont is such a great place to be.”

Three seasons, working toward four

“Cautiously optimistic.”

People involved in building Wilmington's business base repeated that phrase when asked how they felt about the local economy of the area sandwiched in the mountains between Bennington and Brattleboro.

For several decades, the regional economy has revolved around the winter ski commerce from resorts such as Mount Snow and Haystack.

In 2011, Tropical Storm Irene's flood waters swamped Wilmington's downtown, and the area has rebuilt and recovered from that devastation.

The economic recovery from Irene is complete, according to those interviewed for this piece. Instead, they pointed to the ripple effects of the financial meltdown of the Hermitage Club as putting the town in limbo.

The club, launched in 2011 and named one of Inc. magazine's fastest-growing private companies before the tsunami of economic catastrophe that has included more than 80 civil actions in Vermont Superior Court and petitions for involuntary bankruptcy from three creditors, was described on its former website - now suspended for non-payment - as “a 1,400 acre private residential community” and “a four-season mountain luxury retreat which offers one-of-a-kind private ski access, a golf community and the benefits of membership in an exclusive club.”

According to documents filed in U.S. Bankruptcy Court for the District of Vermont, where three creditors this month have petitioned for an involuntary dissolution of the Hermitage Club and its associated companies, the club's assets, valued at $33 million, are spread over 838 acres in Wilmington and Dover.

The club's aggressive development, real-estate activity, and lavish amenities for wealthy members permeated the economics of the region - until they didn't.

The various corporate entities of the Hermitage and its founder, Jim Barnes, “are in default on obligations exceeding $17,000,000” since operations ceased in early 2018, according to the court documents.

Gretchen Havreluk, retained by Wilmington as the town's economic and community development consultant, said that the complex legal and financial situation has left multiple properties in town, and the surrounding area, vacant.

These empty properties are also tied up in the legal proceedings, which means in most cases they're also off the market, she added.

The Hermitage Club's members-only ski resort attracted high-end clients, Havreluk said, adding that the closures have reduced the amount of money coming into the valley overall.

Havreluk compared the revenue from the meals, rooms, alcohol, and 1-percent local-option sales taxes, pre- and post-closure. All of those revenues have dropped, she said.

In 2016, the state meals-tax revenue jumped from the previous year's $5.5 million to approximately $8 million. By 2018, however, the revenue dropped to approximately $7.462 million.

Havreluk said on the bright side, her office continues to take calls from entrepreneurs interested in opening businesses.

Wilmington has a project in the works to expand its water and wastewater infrastructure south toward the junction of Route 100 and Route 9. This project will serve, in part, the Deerfield Valley campus of the Southwestern Vermont Medical Center and the expansion of the J'Ville Brewery that would permit the business to relocate in a former barn from its current headquarters in Jacksonville.

“That area is a real mecca for economic growth,” Havreluk said.

Wilmington and Dover in many cases are bedroom communities for the larger towns to the east and west, Havreluk said. As part of many efforts to expand the economy, the Wilmington and Dover Bi-Town Economic Development Committee has charged a subcommittee with completing a housing assessment this summer. The assessment will look at current inventory, prices, and needs. This assessment would form the foundation of an implementation plan to bring more full-time, affordable housing to the valley.

“I feel that we are a community and that the Deerfield Valley as a whole really comes together and always makes it work,” Havreluk said.

Along with rebuilding its downtown after Irene, Wilmington has also worked to expand its one-season tourist economy into a four-season economy that supports both visitors and residents.

Most residents drive to Bennington or Brattleboro to work and shop, said Meg Staloff, the program coordinator for Wilmington Works, the town's designated downtown organization.

They do so because the local job market and stores don't serve all their needs, she said.

In part, the Wilmington and Dover economies aren't diverse enough at this point to serve its dual community of residents and visitors.

It would help to attract a few larger anchor employers in the industrial or health-care sectors, Staloff said.

In the meantime, she feels optimistic about the number of smaller local businesses launching this spring and summer.

The Maple Leaf Tavern will open this spring in downtown, operated by two men who grew up in the area and have returned, she said.

A second brewery and tasting room is set to open in a historic downtown building, whose new owner intends to put residential units on the upper floors.

A kitchen store will also open in the downtown, Staloff said.

Beurremont Bakery has recently announced plans to expand beyond its bread CSA this summer.

The bakery will relocate in the Old School Community Center, which Staloff described as a bright spot in the town. The large decommissioned Wilmington High School building “needs a lot of work,” but has the potential to support the incubation of multiple small businesses, she said.

The Old School also supports community group fitness classes through 802 Fitness and Therapy and provides space to other community groups.

Wilmington has a lot going for it, Staloff said. It has a walkable downtown and a backbone of fiber-optic internet threading through the downtown. Staloff is working to get more businesses signed up for the fiber, which serves the Old School as well as the rest of downtown.

“Things are turning a corner,” Staloff said. “The snowball is just cresting the hill.”

But, she added, she also feels “the limbo” created by the Hermitage Club's closing.

“There's a lot to be done on all fronts,” she said. It takes effort to balance the seasonal ski economy with a four-season residential economy.

Staloff said the community moves forward piece by piece, small grant by small grant, and new business plan by new business plan.

“You look for the small steps and the small changes,” she said.

Protecting rural communities, expanding transportation

Christopher Campany, executive director of the Windham Regional Commission, defines a healthy economy as an environment where all community members have a sense of income security and businesses do well.

Many Vermonters, however, “need to piece together jobs” yet still live paycheck to paycheck.

In building the 2014 regional plan - currently under revision - staff found that an equal exchange of workers commuted to jobs across the region's tri-state boundaries.

In recognition of how Windham County's economy and community extends beyond the county's boundaries, Campany said, the WRC has developed deep partnerships with its counterparts in Massachusetts and New Hampshire.

Campany is concerned about the county's more rural towns such as Newfane, or Jamaica, or Halifax, many of which lack the public water and sewer infrastructure to add new housing or new businesses.

Without this infrastructure, “they really are frozen in time,” he said.

As the region grows, as Campany expects it will, these communities will need to expand themselves to absorb overflow from the county's larger towns.

Campany would like to see towns and the state build a plan to expand water and sewer. Most of the state's policies around things like clean water, energy, and economic growth hinge on developing land in dense chunks, a land-use strategy that preserves open space, discourages sprawl, and creates communities where residents can walk to essential services.

While water infrastructure might pose a challenge to the region, rail transport presents an opportunity.

Massachusetts is launching a pilot program to increase rail service from Greenfield this summer in an attempt to make train travel to New York City easier and more practical.

According to Campany, the new service will allow travelers to leave Greenfield early in the morning and return late the same night. He speculates that this program could evolve to bring commuter rail from Brattleboro to larger metropolitan areas. If this happens, then it could change how people live, work, and commute to and from the Windham region.

Campany hopes residents of Windham County never take for granted the sense of community and strong institutions that have been sustained by southern Vermont towns.

Other regions across the country are “trying to recreate what we've got,” he said.

Windham County communities offer “third places” where people congregate, dance, shop, and debate, keeping cultural organizations vibrant, businesses busy, and isolation at bay, he said.

Isolation can lead to health issues like opiate misuse, he said.

“These third places may not be about the economy, but about the sustainability of our area,” Campany said.

Aligning Vermont values with the digital economy

Campany isn't the only person with infrastructure on his mind.

In a visit to Brattleboro on April 18, state Attorney General T.J. Donovan spoke about increasing the state's investment in public infrastructure and aligning Vermont values with the 21st century digital economy.

“We're in an interesting spot right now in our history,” Donovan told an audience of Rotarians. “I go around this state and I think there's a palpable sense that we've got a bit of an identity crisis going on right now.”

“We're not really sure who we are in the 21st century,” he continued. “Are we the agrarian state of the 19th and 20th century, or are we part of the global digital economy - and can we retain our traditions and our values if we're part of that global digital economy?”

In Donovan's opinion, the state lacks the public investment needed to move forward. Instead, the state is “teetering” and debating affordability.

Donovan said he sees public investments as something that can level the playing field and help Vermonters “get ahead.” Getting ahead includes making sure people have access to clean drinking water, health care, good schools, transportation, and jobs, he said.

“And let's create an environment and an ecosystem so that people want to flock here and want to stay here,” he said. “It's not an either-or.”

“Let's also understand that we can retain our traditions and our values and be a participant in that economy,” Donovan said.

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