Mixed Signals for Airport Funding And Timeline

Broadcast on Vermont Public Radio

Dan Gauvin radios from his four-seat Cessna and aims for the sky. Gauvin lifts off almost every day. He had been running the Newport State Airport for almost decade when, in 2012, developers from Jay Peak ski resort took over management of the facility.

Northeast Kingdom International Airport Manager Dan Gauvin navigates his four-seat Cessna through a stiff crosswind over Coventry and Newport. Gauvin had been running the Newport State Airport for almost decade when, in 2012, developers from Jay Peak took over management of the facility.
Northeast Kingdom International Airport Manager Dan Gauvin navigates his four-seat Cessna through a stiff crosswind over Coventry and Newport. Gauvin had been running the Newport State Airport for almost decade when, in 2012, developers from Jay Peak took over management of the facility.

Jay Peak’s parent company, Q Resorts, kept Gauvin on to run airport operations. He’s seen a lot of changes since then. From 1,000 feet above ground, he points out some big ones: A thousand feet of fresh black-top caps the base of the airport’s north-south runway. Between it and a tiny white terminal building, construction vehicles criss-cross a new area for planes to park. Beyond that lies a massive new stormwater retention pond.

“The base of that’s the size of a football field, believe it or not. It’s 27 feet deep,” Gauvin says.

These and other infrastructure improvements were mostly paid for by federal grant money — a lot of it.

“$2.1 million is our usual program funding from the feds every year, and we brought in excess of $60 million in two years,” according to Guy Rouelle, who heads up Vermont’s Aviation Program.

A new federally-funded runway extension allows larger planes to land at the Northeast Kingdom International Airport. The developer, Q Resorts, is on the hook to deliver other improvements, but there's some concern about timetable delays.
A new federally-funded runway extension allows larger planes to land at the Northeast Kingdom International Airport. The developer, Q Resorts, is on the hook to deliver other improvements, but there’s some concern about timetable delays.

Almost half that has gone to the Newport airport, for upgrades designed in conjunction Q Resorts’ plan to put the airport on the map: They’d build a new and improved terminal with customs service for international cargo and passengers, bonded warehouses for use by import-export businesses, an assembly plant for small aircraft and more hangars for private plane owners.

This year, the Legislature even renamed the airport the Northeast Kingdom International Airport.

To date, though, it’s mostly the publicly-funded projects that have come through. Q Resorts, which also has projects in limbo in nearby Newport and East Burke, hasn’t yet delivered its end of the bargain.

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Lagging Health Insurance Exchange Glitches Leave Major Medicaid Improvements in Limbo

Broadcast on Vermont Public Radio

More than a third of Vermont’s population is enrolled in Medicaid. Their health care claims every year number in the millions, and those claims add up to well over $1 billion — on par with the size of Vermont’s General Fund, or even bigger.

But, like a lot of the state government’s technology, the IT system the Medicaid program runs on is really old: 30 years old.

It still works, but not very efficiently. Reports on those millions of Medicaid claims are vulnerable to human error, and producing them is time-consuming. So, the Medicaid Management Information System, or MMIS, is inefficient by modern standards.

It also doesn’t allow the state Medicaid office to be as effective as it could be in managing care for the roughly 225,000 adults and children enrolled in the program.

The IT upgrade intended for the Medicaid system already had faced years of delays before Vermont’s health insurance exchange effectively crashed straight out of the gate in 2014. And still the years add up.

Efforts to get back on track with Vermont Health Connect after its faulty rollout are consuming so much of the state’s resources that all other big health-related IT projects are on hold. That’s despite federal pressure to get them done.

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Huge Money, Small Oversight: State IT Spending In Vermont

$1 Billion+ ... The most accurate available information shows that the state could spend this amount on IT projects over the next five years.
$1 Billion+ ... The most accurate available information shows that the state could spend this amount on IT projects over the next five years.
Illustration: Amanda Shepard/VPR. Data source: Vermont Department of Information and Innovation.

story by Taylor Dobbs, data by Hilary Niles / Vermont Public Radio

The use of technology in Vermont state government went from a background concern to a political flashpoint throughout the troubled rollout of Vermont Health Connect, the state’s online health insurance exchange. None of the state’s IT projects receive the same level of public scrutiny, but information technology in state government is ubiquitous and makes up a significant — yet unknown — portion of the state’s budget every year.

A Vermont Public Radio investigation has found that it’s nearly impossible for Vermonters to know how much of their tax money goes toward IT operations in the state, how successful IT projects are in meeting state needs, or how well state agencies follow defined protocols for state contracts.

Using available records, interviews and dozens of documents released in response to multiple records requests, VPR built a comprehensive data base of IT projects across state government. The documents and interviews showed:

  • Despite efforts to improve transparency, there is no way for state officials or the public to track the total amount of money spent by the state government on information technology. The most accurate available information shows that the state could spend nearly $1 billion or more on IT projects over the next five years.
  • The state has increased oversight for IT projects in recent years, allowing the Department of Information and Innovation (DII) to monitor and even cancel projects from the time a department launches the procurement process to the finished product.
  • Although increased oversight provides more opportunities for DII officials to identify problems with an IT project, there’s still no way to know how successful these projects are in meeting their stated goals.
  • Specific protocols for state purchasing have been in place since 2008. Yet the state agencies tasked with ensuring those protocols are followed have never used their authority to audit compliance, making it difficult to know if agencies are following best practices as defined by the state itself.

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Jay Peak loses trust of first EB-5 investors

2651 words / by Anne Galloway and Hilary Niles / VTDigger.org

A group of immigrant EB-5 investors are incensed that Bill Stenger, president and CEO of Jay Peak Resort, seized ownership of the Tram Haus Lodge and turned their half-million dollar equity stakes in the property into IOUs.

Investors had no knowledge of Stenger’s actions until five months after they were executed.

Bill Stenger (foreground, right), president and CEO of Jay Peak Resort, presides over the ribbon-cutting ceremony at the immigrant-funded Stateside Hotel and Baselodge. Photo by Hilary Niles / VTDigger

Stenger and his partner at Jay Peak, Miami-based Ariel Quiros, dissolved the company on Aug. 31, 2013, turned the investments into unsecured loans and “waived” investors’ legal rights, according to documents obtained by VTDigger. Stenger says he sent an email to investors with the promissory note on Jan. 24 of this year, but he did not mail official, paper copies until May.

After the investors sent letters of complaint to Stenger and the state, Jay Peak agreed to change certain terms of the IOU in a take-it-or-leave-it offer earlier this month.

In an interview, Stenger said he did not need to consult with the 35 limited partners in Jay Peak Hotel Suites, LP, before he dissolved the company, because Jay Peak had the legal right to do so under the limited partnership agreement with the investors.

Stenger said he regrets not communicating better with both investors and state officials, and he takes full responsibility for the “big mistake.”

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Q Empire: The man behind the Northeast Kingdom’s biggest plan

3332 words / VTDigger.org

Ariel Quiros is the entrepreneurial force behind Jay Peak ski resort and the $600 million Northeast Kingdom Economic Development Initiative – one of the largest development projects ever attempted in Vermont.

Though the project is high profile, Quiros is not. The international tycoon, though sometimes seen, is seldom heard.

Ariel Quiros whispers to Gov. Peter Shumlin during a press conference at Jay Peak’s Stateside Hotel and Baselodge. Photo by Hilary Niles/ VTDigger

The first generation American stands out at press conferences for his mystique: When he’s not got the ear of the governor, Quiros is most often seen standing uncomfortably before a crowd with pursed lips, staring silently and expressionless, at nothing in particular, through ice blue eyes.

Quiros quietly presides over an integrated set of projects that together constitute the largest private investment Vermont has ever seen: expansions at Jay Peak, development of the newly renamed Q Burke Mountain ski area, the mixed use Renaissance Block planned for downtown Newport, the future site of a biotech firm in the same town, and the promise of a new and improved Newport State Airport in Coventry.

“I make the vision,” he says quietly, a touch of gravel in his voice after 20-plus years of smoking.

His accent, clearly from New York, is also infused with the Puerto Rican and Venezuelan accents of his mother and father, respectively. He speaks three languages and his English borrows sometimes a tense from Spanish or a cadence from Korean, his wife’s native tongue.

He just sees things, Quiros says. He gets a vision for what can be, ignores all obstacles, and surrounds himself with people who can make it happen.

And they do, which is why Quiros likes to keep to himself. Business risk is thrilling, but trust is a precious commodity for a millionaire. Quiros is generous with friends, but says he hasn’t fought for all he’s built to give it away, much less have it taken.

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Community fears history will repeat itself at Q Burke Mountain

3310 words / VTDigger.org

It’s the day before Q Burke Mountain opens for the winter, and Ary Quiros could just as well be preparing for battle as for business.

The new CEO is opening the ski resort for the first time since he started at the mountain the previous winter, and he’s amped. If Quiros, 36, can turn this chronically failing but beloved ski area into a stable business, he will succeed where prior, much wealthier, owners have failed.

The arc of history and local expectations give him long odds. But Quiros — and his staff — are determined.

Wearing a weathered, Army green jacket and frequently checking a watch face practically the size of his wrist, Quiros shuttles from one outpost of operations to another to check on his troops: snowmaking, ticket sales, kitchen, pub and cafeteria. Finances. Marketing. Housecleaning.

“It’s like being in the Army again,” Quiros says. The 12-year veteran of the wars in Iraq and Afghanistan is now a captain with the Vermont National Guard. He relishes intensity in the field, clarity of mission, camaraderie, and he applies his military leadership experience to Q Burke Mountain operations.

Ary Quiros served in the Army’s 101st Airborne Division in Iraq and held other posts in Afghanistan and South Korea before taking over as CEO of Q Burke Mountain ski area in Vermont. Photo by Hilary Niles/ VTDigger

“You take care of them,” Quiros says about both his military units and staff. “They watch your back, and you move forward.”

The responsibility to provide for and protect his staff weighs heavily on Quiros, perhaps even propels him.

And his military analogy for mountain operations is echoed by his father, Ariel Quiros, who purchased Burke Mountain in 2012.

Ariel Quiros says half a dozen buyers before him couldn’t close the deal because of the mountain’s high-profile history and reputation with banks and investors: Bankruptcies dating back to the 1980s. A bounced tax check to the town for $97,374.30. More bankruptcies. A public auction. Ginn Companies’ $675 million default with Credit Suisse bank.

“Boom boom boom, bombs away,” Quiros says. “Everybody’s shelling the mountain, all the banks, doesn’t wanna fund it. All the businessmen failed.”

Some of them, Quiros notes, possessed or managed wealth that far exceeds his own, built from international trade since the 1980s. Bernd Schaefers was a German movie producer who made “The NeverEnding Story” and “In the Name of the Rose.” Donald Graham founded investment firms that collectively manage upwards of $7 billion. Developer Bobby Ginn presided over real estate transactions across the country that also measure in the billions.

None of their business plans at Burke held. Some went down in flames.

And plans now are as grand as ever: to brand the mountain as year-round training grounds for elite athletes. Buildout is expected to cost about $108 million and will include four hotels, an aquatic center, tennis facility and indoor mountain biking park.

But this time, even more is at stake.

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Should Vermont loggers be licensed?

3041 words / VTDigger.org

Beverly Grout suspects a neighbor may have told the loggers that she and her husband Fred would be in the market to sell some timber.

She said the loggers, Ken Bacon Jr. and Ken Bacon Sr., knocked on the door of their home on a hill overlooking Barre back in June. Within days, the Grouts signed a contract.

“We didn’t realize who they were,” she said.

Fred, Beverly and Luke Grout (left to right) forced loggers off their property, and now must repair the damage that was left. Photo by Hilary Niles/ VTDigger

Left with 20 acres of damaged forestland and a blocked stream in Barre Town the Grouts wish they had known more about the Bacons’ track record.

The father and son logging team have a long legal history with Vermont environmental and criminal courts. Both men are under order to notify the state of when and where they’ll be cutting, but officials were not informed they were working at the Grout property.

“Unfortunately, they didn’t clean up thoroughly when they left,” Barrett said. Now two stream crossings are blocked, landings and fields that weren’t properly seeded are muddy, and knee-high ruts from machinery further contribute to soil erosion.

Attempts to reach the Bacons were not successful. A woman who declined to give her name, but identified herself as their secretary, said in a phone interview Thursday night that the father-son team from Barton are loggers who want to do the best timber management possible.

After asking the Bacons to leave several times, the Grouts say, they finally called the police in late August to force them off the property.

The Grouts say the Bacons harvested timber they weren’t supposed to, didn’t pay for all the loads they took and improperly dammed a stream with skidder bridges, which they subsequently left in place. The Grouts are left to clean up the mess or pay someone to do it — prospects they hardly can afford.

The Bacons’ secretary says the Grouts had initiated the relationship — not the other way around — but never informed the Bacons that the land was in Current Use. She says the men did nothing that wasn’t agreed to, paid the Grouts for every load, can’t be blamed for not completing a job they were kicked off, and are preparing to sue the Grouts for breach of contract for not being allowed to finish.

The Department of Environmental Conservation has launched an investigation.

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A post-mortem of Menck Windows’ Northeast Kingdom EB-5 Project

1420 words / VTDigger.org

Todd Bachelder will have to recalibrate his family’s vision for a new future — one closer to Springfield, Mass., than Newport, Vt.

The former site of Bogner skiwear and sporting goods in Newport, Vt., was planned to house the North American headquarters of the German window manufacturing company Menck. Plans for the immigrant-funded project fell through in September. Photo by Hilary Niles/ VTDigger

The CEO of Menck Windows said he and his wife were looking forward to moving from Maine to the shores of “beautiful Lake Memphremagog” in the Northeast Kingdom. Bachelder had been working with Jay Peak co-owners Bill Stenger and Ariel Quiros to establish the German window manufacturing company’s North American headquarters in Newport.

Stenger announced Sept. 13 that plans to bring Menck to Newport had fallen through because the parent company’s new equipment requirements would cut into the plant’s job creation projections. It turns out slow sales projections and facility constraints also played a role.

Menck still is moving forward to establish itself in North America: but not in Vermont, and not with EB-5 immigrant funding.

The EB-5 Immigrant Investor program, championed in Congress by Sen. Patrick Leahy, provides a two-year conditional visa to would-be immigrants who invest between $500,000 and $1 million in an American business. As long as 10 jobs are created directly or indirectly by that investment within two years — or, as long as 10 jobs’ worth of economic activity can be attributed to the investment — the visa turns into a green card.

Job creation and generally boosting economic activity is the program’s stated goal — and also, in Menck’s case, the hitch.

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Unemployment Trust Fund tapped for fraction of potential relief

2276 words / VTDigger.org

Vermont legislators agreed in May to offer up to $8.67 million in refunds and discounts to businesses that laid off workers in the wake of 2011′s disastrous floods.

But only 75 employers, among the untold eligible businesses hailing from every county in the state, applied for the unemployment insurance relief. Instead of giving breaks for a “worst-case” scenario of 11,247 layoffs, the state forgave at least partial charges on just 299.

On their July 1 unemployment insurance bills, 54 businesses accepted $264,178.53 in refunds.

“Really, that’s all? Wow,” said Steve Moyer, CFO of Woodstock Farmers’ Market.

20130830_Woodstock-Farmers-MarketThe retail business benefited from the program almost two years after temporarily laying off all of its 50 employees.

Like other businesses, the company’s unemployment insurance charges — the money that feeds the trust fund from which unemployment benefits are paid — presumably had gone up because they’re based partly on employers’ history of layoffs: the more layoffs, the bigger the bill.

But on top of other flood-related repairs, the insurance hike hindered their recovery, employers argued. Lawmakers agreed to cut them some slack.

After a partial refund and with a discount on its current unemployment insurance charges, Moyer estimates the market’s costs will increase by $90,000 over the course of three years.

“We got hit very hard with that cost,” he said. Had more relief been offered, he wonders if his business would have taken such a hit.

Moyer’s reaction embodies the conundrum policymakers wrestled with when they struck a deal in May to create the state’s Unemployment Insurance Disaster Relief program. Some legislators were reluctant to give employers any relief, while others wanted to offer more.

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Leahy proposal would alter EB-5 job creation formula

946 words / VTDigger.org

In a bid to shore up the controversial EB-5 Immigrant Investor Program, Sen. Patrick Leahy, D-Vt., has proposed a roster of improvements: stronger oversight, better reporting and streamlined reviews of business plans and visa applications, among them.

Jay Peak Resort co-owner Bill Stenger said that careful timing of their EB-5 funded construction projects creates full-time employment for the workers. Here, an empty ski slope in the background highlights Stenger’s goal to turn the ski resort into a year-round destination. Photo by Hilary Niles/ VTDigger

His revisions also would tweak the job creation requirement to define full-time employment not as someone working at least 35 hours per week, but by the equivalent of a full-time job, “regardless of how many employees fill the position.”

The changes would be written into a new statute that codifies and makes permanent what is now a pilot program. So-called regional centers help private businesses pool investments from would-be immigrants, at either $1 million or $500,000 apiece, depending on the regional center’s location.

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