Head out on the highway, looking for investments

Published in The Boston Globe

By Hilary A. Niles
GLOBE CORRESPONDENT

Don’t think “Shark Tank.” Compared to that venture capital reality TV show, Road Pitch is more like a “dolphin tank,” says Debby Pearson, co-owner of Green Mountain Harley Davidson in Essex Junction, Vt. Road Pitch is friendly and takes its time.

_DSC0735
Liz Holtz, of Liz Lovely gluten-free cookies, pitches riders at the Vermont Granite Museum in Barre on Aug. 3. Holtz won for delivering this venue’s best pitch. She will go on to compete at a pitch-off in October for $4,000 in prize money and a year’s worth of mentorship from the Road Pitch Riders. (Photo by Hilary Niles.)

Pearson is one of about 45 entrepreneurs and investors who, for five days this August, are touring the state on motorcycles to get pitched by about 50 local startups. Now in its third year, Road Pitch is the brain child of Cairn Cross, cofounder and managing partner of Vermont-based venture capital firm Fresh Tracks Capital.

While financial investment is the ultimate goal of the trip for his business, Cross says it’s only one way Road Pitch fosters Vermont’s “entrepreneurial ecosystem.” Another is through feedback. Even if that means gently directing business owners back to the drawing board.

Rider and engineer Jeff Finkelstein says his peers on the trip try to be helpful, not aggressive. “You don’t want to dissuade someone from their passion. But on the other hand, you hate to have someone venture down a path that you think may be fruitless,” Finkelstein said.

The riders are brewers, solar innovators, educators, financial planners, software developers. Their collective net worth likely exceeds total wages in many of the cities and towns where they’ll stop: $112 million (Randolph), $27 million (Hyde Park), $2 million (Lowell). Some are looking to invest. Most offer suggestions. All come along to enjoy a good ride. One day, one of them may cut a check or join a company’s team of advisers.

Most Road Pitch events are followed by casual downtime, where pitchers and riders can mingle and network. (Photo by Hilary Niles)
Most Road Pitch events are followed by casual downtime, where pitchers and riders can mingle and network. Here, college students Max Robbins and Peter Silverman chat with a rider after their pitch at the Grand Isle County Courthouse. (Photo by Hilary Niles)

In the meantime, incremental progress and ripple effects signal to Cross that Road Pitch is working.

In Bennington, local organizer Brian McKenna said just the event of Road Pitch rolling into town has given his community something to prepare for, and that in itself creates meaningful traction.

McKenna and other volunteers helped aspiring entrepreneurs from the Bennington area hone their ideas, then chose five teams to pitch the riders Tuesday morning. He said one of the biggest success stories from the day was a company named Pool Shark H20, which developed a digital log book for companies to track pool maintenance. McKenna said owner Scott Trafton, like a lot of locals with potentially scalable businesses, came in knowing a lot about their respective fields, but not much about the business of business.

“Business models, pricing, client acquisition — these are things that a regular Joe who’s just trying to start a business doesn’t anticipate having to answer from a potential investor,” McKenna said. Using the same same feedback form riders would use during the pitch sessions, McKenna gave them a road map. And drawing on each other’s experiences (because some locals are seasoned) the group grew together. McKenna said in the course of one month, Trafton’s pitch underwent the kind of transformation Bennington needs more of.

That’s exactly the evolution Cross hopes to catalyze. After all, the more business acumen permeates the state, the more investment opportunities Road Pitch eventually will surface.

Red Flags Preceded Fraud Allegations at Jay Peak

Published in The Boston Globe

By Hilary A. Niles
GLOBE CORRESPONDENT APRIL 21, 2016

MONTPELIER — The news was stunning: Two of Vermont’s most prominent businessmen, Jay Peak Resort owner Ariel Quiros and president Bill Stenger, were accused last week of securities fraud and misuse of more than $200 million raised from investors since 2008.

But red flags had been waving for years over their use of a controversial federal program that grants US residency to foreigners in exchange for job-creating investments.

Bill Stenger surveys construction developments at Jay Peak Resort. © Hilary A. Niles

Some of the warnings dated to 2012, when an immigration attorney involved in Jay Peak’s securities deals publicly severed his relationship with the developers, implying their financial disclosures were misleading.

Construction delays mounted, and a crucial real estate deal was canceled for lack of payment. Investors complained that Quiros and Stenger had changed the terms of their payouts.

Other alarms rang later, heard only within state government: An approved business plan didn’t pass legal muster. Jay Peak withheld information about a key business partner. Quiros and Stenger resisted the state’s requests for documentation.

But state officials overseeing the visas-for-investment program largely allowed the Jay Peak executives to proceed — a testament to the developers’ promise of much-needed spending in Vermont’s most economically challenged counties and the strong political support from two governors and Vermont’s congressional delegation.

“You had a sense something wasn’t right here, just on the questions we weren’t getting answered,” said the state’s commerce secretary, Patricia Moulton, whose agency runs Vermont’s immigrant investor program. She eventually became suspicious of Jay Peak.

Quiros and Stenger’s designs were as audacious as the fraud they are accused of committing. In 2012, the duo unveiled a half-billion-dollar plan for Vermont’s Northeast Kingdom. It would sweep from the Jay Peak ski resort, near the Canadian border, to the newly acquired and renamed Q Burke Mountain.

Jay Peak would build a biotechnology campus, window manufacturing plant, mixed-use hotel, conference center, and marina known as Renaissance Block.

Q Resorts, Jay Peak’s parent company, wholly owned by Quiros, even took over management of the Newport State Airport

in a flurry of promises that saw the facility renamed Northeast Kingdom International Airport.

But only expansion of the ski resorts came to pass. At the airport, international flights have yet to land or take off.

Development money was to come from the federal EB-5 visa program. EB-5 offers permanent residency to foreign investors and their family members if at least 10 jobs’ worth of economic activity can be attributed to an investment of at least $500,000 in a qualified US business.

The investment offerings are exempt from the federal securities registration that’s common for stocks and bonds, but otherwise subject to federal and state securities laws.

Vermont’s EB-5 office has worked with about a dozen developers since 2006, but none more than Jay Peak. Quiros, who is based in Miami, and Stenger raised more than $350 million from over 700 investors in at least 74 countries, according to an April 12 lawsuit filed by the Securities and Exchange Commission.

Neither man could be reached for comment.

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. © Hilary A. Niles
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. © Hilary A. Niles

Vermont runs its EB-5 program through an entity owned and operated by the state. It’s an unusual setup adopted by only one other state, Michigan. Hundreds of other regional centers, as the EB-5 offices are known, are for-profit outfits.

Even at a news conference to announce allegations of “massive” fraud leveled by the SEC and the state, Governor Peter Shumlin promoted the added assurance that state oversight affords.

Yet compliance with securities laws appears to have been an afterthought.

Moulton, the state commerce secretary, said that until Vermont financial regulators got involved in 2015, about a year after the SEC began investigating, the regional center conducted no systematic, independent, third-party reviews of projects’ business plans.

“We can all sit back now and say there are probably 18 things we should have done. But we were not required in our position as a regional center to do that level of analysis. We’re required as a regional center to market projects,” she said.

Moulton said this is a weakness in the whole EB-5 system, and one Vermont corrected after bringing in financial regulators. She said the commerce agency’s due diligence previously amounted to a review of applicants’ business plans and the reputations of their principals. With Jay Peak, Bill Stenger carried the case. The longtime president of the iconic ski area was a known entity in Vermont well before Quiros bought the operation in 2008.

And with Jay Peak, as with other projects, state officials mostly took the word of attorneys who had drafted the securities offerings, Moulton said.

The econometric forecasts on which job-creation projections were based — the heart of EB-5 — were taken at face value, even though they were paid for by developers. Market analyses also were trusted, but never verified beyond EB-5 approval by US Citizenship and Immigrant Services.

That federal green light remains the only required business plan review in the EB-5 process.

In 2012, Doug Hulme, an immigration attorney who had worked with Jay Peak, cut ties with the resort over alleged financial misrepresentations. Hulme issued a news release saying his company, Rapid USA Visas, “no longer has confidence in the accuracy of representations made by Jay Peak.”

But Hulme himself was the cause of consternation in the state EB-5 office, because Rapid USA at the time was improperly marketing itself as the state regional center, Moulton said. The state chalked it all up to “sour grapes,” Moulton said.

No financial audit of Jay Peak was performed.

Not every project got a pass, though. The regional center did rescind agreements with other developers and has declined to work with at least one group it was “not comfortable with,” Moulton said.

The state does not appear to have applied such scrutiny to Jay Peak until early 2014, when a group of investors began complaining that Quiros and Stenger had converted investor’s equity shares in the resort’s Tram Haus Lodge to unsecured IOUs — without their knowledge or consent.

Prior to this, Moulton said, more-rigorous inspection hadn’t seemed necessary because there hadn’t been any visible problems.

“Projects were getting built. Jobs were being created. Money was being spent. There was nobody screaming and hollering, no question marks, until the first conversion of Phase I investors from equity into debt.”

After a brief suspension by the regional center, the state allowed Jay Peak to continue selling its EB-5 securities, with conditions set by the Department of Financial Regulation. Responsibility for compliance for all of Vermont’s EB-5 projects was moved to Financial Regulation, which exercised its subpoena power to demand over 300,000 documents from Jay Peak. Its investigation is one the commerce agency had neither the resources nor the authority to conduct. The resulting charges against Quiros and Stenger largely mirror the federal charges by the SEC.

Shumlin, who is finishing his third two-year term, deflects questions about whether Vermont’s EB-5 center should have been reformed sooner. He cited its structure as a legacy of prior administrations. “We made the change when we made it, and we found what we found,” Shumlin said by e-mail.

Traffic-Stop Race Data Remain Elusive in Vermont

Published by Seven Days

When they stop motorists in Vermont, cops don’t just collect licenses and registrations. As of September 1, 2014, all police officers in the state must record the race of every driver they pull over.

image courtesy Beachfront B-Roll
image courtesy Beachfront B-Roll

The new mandate for “roadside stop” data collection is just one step in a national movement to halt discriminatory law enforcement. “Throughout the country, there’s a crisis of legitimacy in policing,” said Burlington Police Chief Brandon del Pozo. “Part of that crisis stems from a belief that the police are biased in the way they use their discretion. And traffic stops are something that police have immense discretion over.”

But Vermonters are still waiting to see what the new statewide data collection reveals. That’s because, while technically public, the information remains largely inaccessible. In 16 months, no one has compiled the raw data — a necessary first step before analysis. In fact, no one even knows if all of law enforcement is complying with the mandate to collect the data in the first place.

// Read the full story

// Watch my WCAX television interview about the story

What Explains It: The Cost of Medical Supplies

Published in Vermont Business Magazine (print edition)

*

If you’ve heard that Tylenol in a hospital may cost 100 times more than it would if you bought the pills yourself, you heard right.

If you’ve read that hip replacements or cardiac surgery cost more at some hospitals than the procedures would at others, you read that right, too.

And if you know that private insurers pay more for services than Medicare or Medicaid, and that uninsured patients (except those on charity care) pay even higher rates for the same treatments, this may aid your understanding of the Tylenol phenomenon, which plays out in different ways on virtually every facet of health care costs.

Alternately referred to as cost-shifts or cross-subsidizations, the transactions leave charges for health care, including medical supplies, all but untethered from their line-item costs. Like a prism spinning in a window on a sunny day, what shows after financial models are applied to medical services looks like anything but the surface costs they’re comprised of. What’s refracted, instead, is a menagerie of ever-shifting, oddly shaped rainbows — but much, much less pretty.

Cost shifts and cross-subsidization

1chart_salnonsalThe so-called “cost shift” at the heart of much debate over health care reform typically refers to disparities among different kinds of payers. The theory is that private payers (mostly insurance companies, on behalf of their subscribers) reimburse hospitals at higher rates than Medicaid and Medicare, to make up for the government payers’ lower rates.

Not all economists buy the cost-shift theory of price variation among payers. Some studies in recent years indicate that wildly divergent reimbursement rates are more a function of marketplace competition and negotiating prowess, and less about private burdens amplified by government underfunding. Reimbursement rates, after all, vary not just between public and private payers, but also among different insurance companies servicing the same market.

But whatever the reason, one thing is clear: Different payers pay different rates for the same service.

A related transaction that’s undisputed, if not widely understood, is when hospitals up-charge for basic procedures to recover their losses from more complicated care. Such “cross-subsidization,” as it’s known, extends beyond services to the gamut of medical supplies, from pills to gauze pads to knee braces.

Amy Vaughan is Director of Revenue, Finance and Reimbursement at the University of Vermont Medical Center. When asked to explain the relationship between a hospital’s costs and the charges passed along to patients, she laughed.

“Well, it’s —,” she stopped and tried again. “That’s complicated,” Vaughan said.

Vaughan explained that medical supplies get marked up not just to cover the regulatory overhead associated with each one, but also to help make up for what the other cost shifts and cross-subsidizations don’t.

In the case of the Tylenol phenomenon, made notorious in the 2013 TIME Magazine article “Bitter Pill” by Steven Brill, the drug costs patients outrageously more than it costs hospitals not only because there’s a lot of work and red tape associated with administering it. The hospital also up-charges one patient’s Tylenol, for example, because it’s losing money on another patient’s psychiatric services. 

Specific profit-drivers and loss-leaders vary from hospital to hospital, and their algorithms are far more complicated than to imply a one-to-one ratio anywhere within the mix. But the concept is simple: Hospitals mark up medical supplies to help make up for losses elsewhere in their business models. This rings true in profit- and non-profit facilities, alike.

Cory Gustafson, Director of Government and Public Relations for Blue Cross and Blue Shield of Vermont, said it takes a paradigm shift to understand the proposition.

“It doesn’t make sense when it’s lined up against our own common sense of supply and demand,” Gustafson said. But pricing in a highly regulated environment like Vermont isn’t determined by classical free market principles, he said. This is, in part, because hospitals are obliged to provide complex services on-demand, even when the demand for those services is not sufficient to sustain the business. 

A small hospital’s emergency room is a good example, Gustafson said. “The community needs that ER, so (the hospital) ends up needing to make revenue in other places to subsidize it,” he said.

This is why BCBSVT, in its rate negotiations with hospitals, doesn’t fixate on how much it’s asked to pay for a knee brace, for example. The insurer agrees to pay the price it does because it knows the knee brace is carrying part of the facility’s overall financial weight, he said. Making sure the hospital is adequately funded is the insurer’s way of making sure the whole health care system is there when members need it.

Cross-subsidization: seen, not touched

2chart_nonsalcats-revised2The fact that you can’t hold a rainbow doesn’t make it any less real. Likewise, cross-subsidization is a very definite part of the health care cost equation, though its exact size and shape are all but impossible to quantify.

Vaughan said she doubts the UVM Medical Center could even figure out how much of its hospitals’ revenues are comprised of reimbursements for medical supplies, because reimbursement for services is so divorced from any system of line-item charges. 

The UVM Medical Center and Central Vermont Medical Center, the health network’s two hospitals in Vermont, are both designated by the Centers for Medicare & Medicaid Services as “prospective payment system” hospitals. This means billing — at its most basic level for inpatient care — is based not on the cost of specific services provided to any particular patient, but on that patient’s diagnostic code. (Reimbursement works somewhat differently for some of Vermont’s smaller, more rural hospitals.) 

For example: Imagine if two patients, we’ll call them Ginger and Fred, both had the same health care plan with the same insurer, and were admitted to UVM Medical Center for an appendectomy the same day. Ginger stays only three days, while Fred stays six (but with no complicating factors that result in a second diagnostic code). Ginger and Fred’s insurance company would pay the hospital the same amount for both patients, even though clearly more medical supplies (and labor) would have been used in the process of caring for the patient who stayed twice as long. 

Vaughan cautions that such an example is an oversimplification, but it gets the point across: The hospital may clear a profit from Ginger’s payment, but lose money on Fred’s treatment. Either way, its budgetary goal is not for each service to pay for itself, but for all payments to cover the cost of all services, with some left over to reinvest in the organization’s people, programs and facilities. 

“We look at it in totality,” Vaughan said. “We’re looking at covering (our costs) at the global level, not from a line-item level. We’re not saying whenever we do X procedure, we need to cover X cost.”

The Green Mountain Care Board, with regulatory authority over hospital budgets, likewise focuses on the forest, not the trees. Mike Davis, GMCB Director of Health System Finances, said the board’s priority in hospital budgeting is to curb overall cost growth, not to micromanage spending.

“Whether medical supplies are going up 15 percent or down 15 percent, we don’t try to manage at that level,” Davis said. However hospitals piece together their budgets to stay within certain targets for overall growth is up to them, as long as quality of care is maintained, Davis said. 

The Green Mountain Care Board collects categorized spending projections from all of Vermont’s hospitals, so the rough outline of each facility’s equation is visible. Medical supplies, including pharmaceuticals, account for almost 10 percent of Vermont hospitals’ overall budgets. At individual hospitals, that proportion ranges from less than one percent at Mt. Ascutney Hospital and Health Center, a rural Critical Access Hospital, to 13 percent at the UVM Medical Center, a Level 1 Trauma Center. Davis cautioned that these numbers are a good place to start, but reporting nuances among hospitals complicate direct comparison.

Among the complications: Different hospitals have different overhead and different payer mixes to compensate for. Plus, the Board’s reporting instructions include general definitions for medical or surgical supplies sold, drugs sold, and other related expenses — as granular as it gets, he said. But each hospital may apply these definitions somewhat differently, and the Board has never conducted a reporting audit, he said.

Teasing apart the dollar value of cross-subsidized medical supplies also is complicated by a proprietary veil: Each hospital and insurance company negotiates reimbursement rates separately, and privately. Insurance companies get a discount off the full-price charges, but neither hospitals nor insurers want their competition to know how much (or how little) it’s worth.

The art of the bargain

3chart_medsuppercenttotalIt’s up to the Green Mountain Care Board to make sure hospitals and insurance companies set fair rates that keep health care reliable, hospitals solvent and health insurance affordable. Inside the hospitals, it’s up to supply chain managers to find good deals. 

Charlie Miceli, C.P.M., Vice-President and Network Chief Supply Chain Officer at the UVM Health Network, said medical supplies procurement has evolved from a back-office function to an integral part of the network’s financial strategy. 

“It’s not just three bids and a cloud of dust anymore,” Miceli said. “In the old days, you just went for the lowest bid. You were on a hamster wheel of repetitive, non-critical processes.” 

Today, Miceli said, physicians and nurses are pulled into the procurement process and even into bargaining sessions, both to get them invested in savings and for their expertise. He said in some cases, “procurement stiffs” can only get negotiations so far, but practitioners who work with the supplies in question can push a good deal across the finish line.

The UVM Health Network also has signed on with several “third-party decision support providers.” Miceli said the cost of these contracts is more than offset by the savings they facilitate through specialized consulting, analytical tools and group purchasing power. 

The UVM Medical Center buys about 30 percent of its medical-surgical supplies through a consortium of 116 academic medical centers that comprise about $52 billion of annual buying power. The University HealthSystem Consortium’s benchmarking data show that UVM Medical Center just makes it into the top one-third of all academic medical centers for price competitiveness on med-surge supplies. Miceli said the benchmarking data help his team identify where they could be getting better deals by giving them a sense of the prices being paid by others in the hospital’s peer group. 

And with four hospitals under its umbrella, the UVM Health Network claims a group purchasing power of its own. 

“We’ve taken over $6 million out of the system,” Miceli said, just by contracting together for a few high-ticket items, including cardiology, orthopedic implants, imaging services and pharmaceutical distribution. 

Miceli said the network is about two years away from having all its supply chain management aligned on one computer system, and that it’s already taken over supplies ordering and delivery for almost all its primary care clinics, as well. 

“Maybe you can get two more appointments in per week, because you don’t have to count sutures or supplies to order,” he said. Their strategy with supply chain management is not just to save money, but time. “It’s the time that’s even more scarce,” he said. 

The health network’s growing heft also helps when it gets into procurement negotiations with medical supply companies, many of which are undergoing their own rounds of consolidation that let them throw new weight around the bargaining table. But it can only get them so far. Case in point: One of the only major national suppliers of IV solution, Hospira, was recently bought out by Pfizer. Not interested in leveraging the product as a loss leader, as Hospira had done, the new owner — with a mandate for shareholder return, not affordable community health — is making up for lost profits. 

“I understand what they’re doing,” Miceli said. But he said the hit to UHC members alone is about $600 million from the Hospira acquisition and a change in another company’s distribution of key cancer-fighting drugs. “(A)t the end of the day, we’ve got to figure out something else. That’s why supply chain management has risen from a back-office function like it was when I started in the ’80s,” he said.

Mike Del Trecco, Vice-President of Finance at the Vermont Association of Hospitals and Health Systems, said the health care system is complex partly because of such shifting market forces as any business faces, but also because hospitals negotiate those market forces while delivering extremely specialized care to individuals with unique situations. The best way to manage that complexity, he said, lies in current efforts to reform health care delivery away from a fee-for-service system.

“You come up with an aggregate approach for paying for that population,” Del Trecco said. “The status quo is gone from our mind. It’s not even an option.”

Again, it’s a paradigm shift. One that’s already underway, where the concept of services comprised of line-item charges may mean even less than it does today.

DATA: Jobs in Vermont

Amid election-season rhetoric and political spin about jobs, this series of data visualizations documented labor statistics over time and across sectors, with both county-level detail and nationwide context.

I conceived and designed the series, wrangled and analyzed the data, and wrote accompanying explanatory stories.

Published on VTDigger.org in September 2014

* * *

STATEWIDE ALTERNATIVE UNEMPLOYMENT RATES, 2003-PRESENT

screen-shot-2016-12-14-at-6-36-52-pmThe unemployment rate changes depending on how “unemployment” is defined. Does it include long-term joblessness? Discouraged workers? Underemployed? A firm grasp of the different ways employment is measured is essential to understanding the meaning behind labor statistics.

This series of four visualizations explains and illustrates those differences. It starts by tracing the size of Vermont’s labor force alongside unemployment rates from 1976 to 2014, then delves into alternative unemployment measurements. Interactive graphs compare the state’s alternative unemployment rates over a decade, examine every state’s alternative unemployment rates over time, and contrast Vermont’s alternative unemployment rates against national averages.

// Read the full story here.

 

CENSUS OF VERMONT JOBS AND WAGES, 2003-PRESENT

stacked graph comparing the size of "SuperSectors" over timeFocusing on Vermont for the publication’s primary audience, this interactive tool compares both the number of people employed in various sectors over time, and the average annual pay those workers received.

This set of three visualizations automatically changes two detailed views as the reader hovers over or clicks on each sector in the main graph.

// Read the full story here.

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.”

// Read More

Analyst, economist weigh potential of IBM sale to Globalfoundries

1348 words / VTDigger.org

If IBM were to sell its computer chip-making unit to California-based Globalfoundries — patents and all, as the company is widely rumored to be considering — would the new owner of Vermont’s largest manufacturing plant even want to keep it?

Probably not, according to Len Jelinek, a semiconductor manufacturing industry analyst for the global information firm IHS.

IBM is Vermont’s largest private employer, with about 4,000 workers, and anxiety about the impact of the plant’s sale and potential closure is palpable.

Despite these feverish efforts to keep IBM in the Green Mountain State, there is little the state can do to prevent a potential closure of the plant. Global trends are driving behind-the-scenes negotiations between powerful industry players.

Job losses of IBM’s magnitude are easier to absorb over time, economist Art Woof acknowledged. Still, he said, the area’s financial engine is diversified and resilient enough that even such a “worst case scenario” would not kill the economy.

// Read More

Study shows 40 percent of Vermont children are not ready for Kindergarten

769 words / VTDigger.org

A new report on the health of Vermont’s children shows that 40 percent of the state’s children were deemed “not ready” for kindergarten in 2012-13. Almost one-third of third-graders read below grade level — a figure that jumps to 45 percent for children living in poverty.
The report, “How are Vermont’s Young Children?” published annually by Building Bright Futures, the state’s early childhood education advisory council, analyzes key factors that affect children’s health and academic success.

Children sang and played at the launch event for Let’s Grow Kids, a statewide public education campaign about the importance of early childhood experiences. Photo by Hilary Niles/ VTDigger

Vermont’s infant mortality and premature birth rates are very low, while the proportion of children with medical insurance is high, according to the report.

But two out of five Vermont kids under age 6 live in low-income households. And the number of children placed in protective state custody has increased 17 percent since 2002.

“Any business leader that does not think this is a huge business issue, candidly, they just haven’t done their homework,” Green Mountain Power president and CEO Mary Powell said Friday morning. She was speaking at Burlington’s Main Street Landing Performing Arts Center for the launch of a three-year, statewide public awareness campaign about early childhood development.

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.

// Read More

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.

// Read More