This is the first in a two-part series on the concentration of property ownership in the city of Burlington and its impact on the rental housing market and services. Part II take a closer look at the nonprofit sector.
BURLINGTON — While consensus is often hard to reach in Vermont’s largest city, there is nearly unanimous agreement that Burlington’s tight housing market represents a crisis.
Despite the city’s efforts to encourage the construction of more housing in recent years, rents remain unaffordable for residents in Burlington. Large gaps persist between the average rents and what renters earning the mean wage can afford, according to a recent study.
A VTDigger analysis has found that property ownership is concentrated in the hands of a few nonprofit institutions and private individuals.
The University of Vermont and UVM Medical Center control 20% of property in the city. The university owns $680 million in properties and the hospital has $398 million in real estate holdings.
In the private sector, a handful of the city’s most prominent families control a significant amount of property valued at tens of millions of dollars.
VTDigger compiled its analysis by using the city’s grand list and property database, and cross referencing that information with a list of corporations on file with the Secretary of State’s Office. The number of property totals is the number of parcels each individual or institution owns in the city’s property database.
Private sector
The top 20 private-sector property owners in Burlington own 4.3% of all property value in the city, just under $233 million in total value. Because many of these property owners are landlords with a high quantity of rental units, the percentage of housing controlled by these individuals is much higher.
A recent report from the National Low Income Housing Coalition showed a large gap in the Burlington metropolitan area between renter’s wages and the fair market rent in the region.
The mean renter wage in the region is $15.10, which makes the rent affordable at the mean rental wage $785. But fair market rent for a one-bedroom apartment is $1,202.
A renter earning the mean renter wage in the region would have to work 61 hours a week to afford a one-bedroom apartment at fair market rent. A worker earning minimum wage would have to work 86 hours a week to afford that one-bedroom apartment.
Thirty-four percent of individuals living in the Burlington metro area are renters, according to the report.
Jas Wheeler lives with two other people in a two-bedroom apartment in the Old North End that costs $1,800 per month.
Wheeler, who uses they/them pronouns, moved to Burlington in 2014 for a job and relationship from Cleveland, where Wheeler lived in a two-bedroom that cost $625 a month.
“I’ve found it really difficult to get ahead here solely due to the cost of my rent and what the cost of my rent has been over the last four to five years,” Wheeler said.
Wheeler works in social services, and said wages do not line up with Burlington rents. They said like many others in the late 20s to early 30s age range, they would like to purchase a home but were finding it difficult.
“I’d love to be … able to buy a house and not be stuck in this rent cycle, and I can’t because it’s difficult to save when your rent is out of control,” they said.
Wheeler said it was also difficult to navigate the housing market as a trans person of color, and that their partner, who is white, has had to take the lead in the housing search.
Some familiar owners
Familiar names topped the list of Burlington’s biggest property owners.
The Handy family owns by far the most property value of private individuals in the city, with $48.8 million on 60 parcels of property.
Most of these properties are under the banner of the Handy’s “Sisters and Brothers Investment Group,” which consists of Anthony, Charles, Joan, Joseph and Laura Handy.
Joe Handy did not reply to repeated requests for comment for this story.
The Pomerleau family owns the second highest value total in the city, with $26.3 million in property, primarily commercial real estate.
Burlington developer Erik Hoekstra, who is a principal with Redstone Development, owned the third most in property in Burlington, with 10 parcels worth $23.2 million.
Hoekstra and Redstone own a number of apartment buildings in the city, including the recently opened Pine & Flynn building. Redstone also owns the apartment building at 247 Pearl St. and the Clarke Street Apartments, among others.
The Donath family, led by Frank and Joan Donath’s ownership of buildings, are fourth in total property value at $14.1 million in 17 parcels. The Donaths own a handful of houses near UVM.
Hotel Vermont co-owner Jay Canning places fifth in property value, with $13.4 million, primarily due to the $12.7 million value of the Cherry Street hotel.
Many of the same 15 leaders in property value also top VTDigger’s analysis of the number of properties owned.
Stu McGowan owns the second highest number of properties with 31, but holds the 12th-highest amount in property value, with $10.4 million. The Eastman family, primarily the late longtime Flynn elementary teacher Rolfe Eastman, his wife Viraj and daughter Shanti, owns just under 30 parcels of property, primarily in the area of the New North End’s Appletree Point on Lake Champlain, for a total value of approximately $6 million.
Michael and Jill Diemer are third in total number of properties, which appears to be attributed to the fact their buildings, located near UVM, seem to be broken up into many parcels. The Diemers own $6 million in property in Burlington.
Bill Bissonette
One of Burlington’s biggest landlords is Bill Bissonette, who owns and manages over 300 units for a total of $10.3 million in property value. He ranks sixth in number of parcels owned and 14th in property value.
Bissonette was born and raised in the Old North End and graduated from Burlington High School in 1973. He entered the business world by purchasing a duplex in 1977 before purchasing Al’s French Frys on Williston Road in South Burlington with his brother Lee in 1983.
Bissonette says that during the 1970s and ‘80s, he was one of the few people willing to invest in the Old North End.
“A lot of older people that I might have known were wanting to get out of real estate, and there weren’t a lot of qualified investors that would come to the Old North End,” Bissonette said.
Bissonette’s purchases were seller-financed, and he would pay the sellers the purchase prices plus interest over a period of 10 to 15 years. This structure meant the payment was spread over a period of time, not all in the outright sale.
Primarily, Bissonette increased his property counts by purchasing homes through word-of-mouth transactions with older neighbors.
“People would buy their buildings and start renting,” Bissonette said. “Certainly throughout the ‘80s, and ‘90s, people weren’t looking to buy single-family homes in the Old North End, they just didn’t want to live here.”
But as the Old North End has become more popular for families, young professionals and college students — in part because of its proximity to downtown and Lake Champlain — Bissonette said, property values have risen.
“I didn’t buy real estate on a speculative position, I didn’t speculate that this was all going to come and turn around,” he said. “We just bought it because it made economic sense, and it gave us a little diversity from our restaurant.”
For years, Bissonette primarily rented to low-income residents using federal Section 8 vouchers. But he said federal cuts to housing vouchers in the earlier part of this decade have forced him to pivot to renting to higher-income young professionals and college students.
“They didn’t have the funding to subsidize all these vouchers they had out, they got cut back,” Bissonette said. “So then I said, ‘You know what? I can’t rely on this business model anymore. It’s not going to work.’ ”
Without the vouchers, longtime low-income tenants could no longer afford to live in his properties. Bissonette said in two years he pushed out 40 people who had lost their government vouchers.
Bissonette then started rehabbing his properties, he said, and raising rents. He said he believed many of his former tenants now live in Champlain Housing Trust housing.
Chris Donnelly, the director of community relations for the Champlain Housing Trust, said Bissonette’s transition out of providing housing for residents on federal vouchers has had an impact on the affordable housing market in the city.
“It’s one thing in a whole market of change but certainly when there are fewer options for people, that’s going to have an impact,” he said. “Maybe that’s contributed to more people looking to us for housing or having a harder time finding a place.”
Local housing activist Charles Winkleman has studied the housing market and said Bissonnette’s decision had made it more difficult for those with Section 8 vouchers to find housing in the city.
“I think it’s pricing so many people out of the Old North End, and even quickening the gentrification that is happening there,” he said.
Bissonette said it would be interesting to see how the city’s housing market changes as more housing comes online in the next five years, especially with the major Cambrian Rise and CityPlace developments.
“I understand that long term, this will change and this market will soften,” he said. “If the market changes and owners want to come in, we have a product that we could sell knowing full well at any time the market may change.”
Despite controlling millions in property, Bissonette said his lifestyle has not changed much despite his success.
“I drive a Volkswagen, I don’t have a lot of needs,” he said. “We enjoy what we do. I think we’re pretty good at it.”
Stu McGowan
Color is the word that best describes Stu McGowan. From the colorful houses he owns throughout Burlington’s Old North End to his bright green hair, McGowan stands out in a crowd.
The longtime Old North End resident owns the second highest number of properties — 31 — in the city for a private individual, according to VTDigger’s analysis. The total property value he owns is $10.4 million, which places him 12th in property value among private individuals.
McGowan owns the brightly painted houses throughout the Old North End, for a total of 78 units, and prides himself on never raising rents and renting to lower-income residents.
McGowan moved to Vermont to study at UVM, but didn’t immediately stick. He dropped out in 1982 for a year, moving back home to New Jersey, and then floated around Europe for six months.
Eventually he found his way back to Vermont in 1984. He met his wife, Joan Watson, moved to Intervale Avenue in the Old North End and completed his degree at UVM.
“We knew we wanted to live in a neighborhood that was having a lot of difficulties, because our philosophy is that if you want to make change, you have to live there,” McGowan said.
The Old North End was “drab as hell” at the time, McGowan said.
“There was no grass, there were no trees, there was just dirt everywhere, the buildings weren’t well taken care of, the whole nine yards,” he said. “But the people were awesome, and still are.”
There, he raised two biological children and seven other children who found themselves in need, and built up a company that made videos by and for children.
McGowan threw himself into the community. He became the president of the Parent Teacher Association at H.O. Wheeler School, a cub scout leader and the lead umpire in the Old North End Little League, which he has been for 30 years.
Using profits from his video company, McGowan decided to get into the housing business, buying and improving homes in the Old North End — and, of course, painting them bright colors.
McGowan says he was dedicated to ensuring that the neighborhood’s low-income residents could still live in the houses he refurbished.
“Everybody in the business was like, ‘You’re an idiot. You’re gonna make these places nice and then run into those dirt bags,’” McGowan said. “I was like, basically, ‘(cool it), man’; they’re not dirtbags, the people I’m renting to, they will take care of them. And that is exactly what happened.”
McGowan has a strict policy of never raising rents on his tenants, and said he was leaving around $92,000 on the table each year by charging his tenants less than the market rate.
Donnelly said McGowan has had a positive impact on the Old North End.
“There’s a landlord that has followed the social mission and also done well by himself,” Donnelly said. “If we had more Stu McGowans, I think we’d be much better off.”
Up until the 2008 recession, McGowan said he was able to take advantage of low interest rates and increasing property values to continue to purchase and renovate other properties. And during the recession, McGowan took advantage of a slowing housing market by doubling his efforts.
He’s since handed over day-to-day management responsibilities of his properties to his sister and her husband, stopped purchasing property, and has started working on a new project — a social responsibility website called shareyourself.org.
The Old North End has changed drastically since McGowan first moved in. McGowan says the Old North End is “diversifying,” not gentrifying, as New Americans, young families, college students and young activists move into the traditionally working-class neighborhood.
“All of this change came about in large part because of this progression that happened, and we’re small enough that it could happen quickly,” McGowan said. “I do not call it gentrification. I don’t think it ever will be. I think what’s freaking people out is that the rents are high.”
Burlington’s housing crisis is fueled by a straight-up supply and demand issue, McGowan said.
“There has to be some acceptance on all sides that if you want lower rents, you have to dramatically build more housing, of all kinds,” McGowan said.
While the creation of new units would lead rents to drop and hurt his bottom line as a landlord, McGowan said he thought the creation of new housing was essential in keeping Burlington affordable.
“I’m willing to bleed a little, what else are you going to do?” McGowan said. “Half of my kids can’t live here.”
Champlain Housing Trust
The Champlain Housing Trust, an organization dedicated to providing affordable housing, is another large property owner in Burlington’s nonprofit sector.
The housing trust owns 154 parcels in Burlington for a total of $32.6 million in property value, according to VTDigger’s analysis. The trust owns 156 buildings in the city with a total of 1,052 units, according to data provided to VTDigger.
The predecessors to the current organization, the Burlington Community Land Trust and Lake Champlain Housing Development Corp., were both founded during Bernie Sanders’ tenure as mayor and charged with producing permanently affordable housing for low-income Vermonters.
“What sets us apart from nonprofits around the country is that we have this commitment to keeping things affordable forever,” Donnelly said.
The two organizations merged in 2006 to form the Champlain Housing Trust. The organization now has 2,500 apartments and around 620 condos and single-family homes in its portfolio in Chittenden, Grand Isle and Franklin counties, Donnelly said.
Donnelly said the organization received about 2,450 applications in the past year for only 300 apartment openings. This means only one in eight applicants to the trust receive housing.
“I think we do great with what we have,” Donnelly said. “We can’t control the need.”
In general, Donnelly estimated that 70% of funding for most projects comes from federal funding sources, 20% from state funding sources and around 10% from local sources or debt.
While the organizations that have become CHT were mainly focused on building affordable housing at their inception, the organizations became involved in the landlord business in the late ‘80s and ‘90s in the Old North End because of concerns about gentrification.
At that time, Donnelly said, speculators were buying up homes in the Old North End, fixing them up, and then drastically increasing rents. This led the nonprofit to purchase properties in the neighborhood.
“Those are really ways for us to prevent displacement and gentrification,” Donnelly said. “If you think about people complaining about gentrification now, I just can’t imagine what it would be like right now if we hadn’t stepped in.”
The definition of what exactly qualifies as “affordable” has been debated. Under HUD definitions, the median income in the Burlington-South Burlington metro area was $91,600 a year.
According to HUD, a single individual making 80% of the median income — $51,350 a year — qualifies as low-income and an individual making 50% of the median income — $32,100 a year — qualifies as very low-income. There is also an “extremely low income” category for those making 30% of the median income, or $19,250 a year.
“Less than 80% is what we think of as our target market,” Donnelly said.
For example, at the new Laurentide Apartments at Cambrian Rise, there are 76 affordable apartments. CHT set the limits using requirements set by the different funding sources, Donnelly said.
At Laurentide, rents for two apartments are set at the “extremely low” income category (below 30% of median income or lower), 21 are set below the “very low income” category (50% of median income or lower), 45 are set at 65% of median income or below and eight are set at between 80% and 120%.
Winkleman said housing for a single individual making $51,000 a year should not be considered low-income affordable housing.
“They’re building units that include folks who are making that much,” he said. “When you look at the minimum wage is not even $15 an hour … we’re not investing nearly enough in perpetually affordable low-income housing.”
In the past five years, the private sector has stepped up its production of housing in the Burlington area to take advantage of the need in the region. While the production of more housing is good for the overall market, Donnelly said he was concerned that the percentage of affordable housing created has decreased.
“Now we’re only hitting 8 to 10% of what’s being built, when before it was more like 20%,” Donnelly said. “We should be building 40% of the market (affordable), but we’re not doing that. We’re not getting close.”
Burlington Mayor Miro Weinberger said CHT was “remarkably successful.”
“They’ve become a model in a lot of ways for how land trusts and affordable housing organizations have evolved over the last decades nationally,” he said.
Unlike other nonprofits such as the University of Vermont and the UVM Medical Center, the Champlain Housing Trust pays property taxes on its properties despite its nonprofit status. In 2018, the trust paid around $1.1 million in property taxes to the city.
“Because we are a member of the community, and our tenants access all the services other people in the city access, we should pay property taxes,” Donnelly said.
Additionally, the trust often sets up for-profit corporations to enter into partnerships with investors, often banks or insurance companies, which allows it to get access to capital to build housing in return for tax credits.
The trust also pays the city in lieu of taxes for a handful of its properties that serve people who would be homeless otherwise, Donnelly said.
From Donnelly’s perspective, raising the minimum wage and more state and federal investment into housing would help address the region’s housing woes.
Ernie Pomerleau
The Pomerleau family owns the second-highest amount of property value in the city among private individuals, at $26.3 million. The Shelburne Road Shopping Plaza is the Pomerleaus’ most valuable piece of real estate in the city and is valued at $14.6 million. Only half of the plaza is located in Burlington.
Ernie Pomerleau, 70, the CEO and president of Pomerleau Real Estate, is a prominent figure in the community as an active philanthropist and political donor. Most recently, he has been an outspoken supporter of F-35 basing at Burlington International Airport and of the CityPlace Burlington development.
Tony Pomerleau, the family patriarch died last year. Raised in Newport, Pomerleau built a real estate empire in the Burlington area and was also a noted philanthropist.
“We feel committed to this community,” Ernie Pomerleau said. “It’s been good to us, and we’re trying to be good to it.”
Tony Pomerleau moved to Burlington in the 1940s and started investing in supermarkets. He got into a handful of other businesses, including beer distribution, wholesale distribution, car sales and bowling alleys.
Eventually, he created a real estate and insurance company, which grew into the commercial real estate company Ernie Pomerleau now runs out of the prominent Follet House on College Street overlooking Lake Champlain.
Pomerleau said retail currently makes up the bulk of the company’s portfolio, with more than 2 million square feet of space owned and operated, primarily in Vermont. The company also has holdings in upstate New York and Florida.
The company also has some residential, office and industrial holdings, such as Magic Hat brewery.
“We’ve been very conservative, very methodical,” Pomerleau said. “We don’t take huge risks, we manage what we do, we’re not big speculators.”
While the internet is leading to changes in the retail market, Pomerleau said the company has been flexible in the types of retail tenants it rents to.
“You’ve got to be pretty adept,” Pomerleau said. “For example, I had a J.C. Penny move out, and turned it into a Planet Fitness. I had a video store that went out, changed it to a Feldman’s Bagels. I had a bowling alley go out, I put a brewery in.”
The Pomerleaus remain the leading owner and operator of supermarkets in the state, and their supermarket expertise and a generally strong Vermont economy played into their success, Pomerleau said.
And in Vermont’s small towns, supermarkets are a necessity. Waterbury, Bristol and Johnson are three towns with supermarkets owned by the Pomerleau family in the center of the community.
“If you look at the importance to a small town of a supermarket, a small market would bring 10,000 people a week, while a Family Dollar might bring 1,000,” he said. “This is what I do. I know supermarkets.”
Burlington has also been able to weather economic recessions, Pomerleau said, in part because of the region’s strict building regulation. Pomerleau said while these regulations slow growth, they also prevent oversupply.
The region’s economy has also been stable due to a diverse market with consistent economic draws — tourism, higher education and health care.
“Assuming your market continues to go, we will continue because of that lake, because of that airport, because we’re the hub of all legal, retail, tourism, hotels,” Pomerleau said. “We will be OK. The colleges pump into that, the hospital pumps into that.”
Takeaways
Donnelly said that Burlington is a city of neighborhoods, and land ownership in the city should be viewed through the lens of those neighborhoods.
For example, the New North End and South End primarily feature single-family homeownership while downtown and the Old North End feature primarily renters.
While a lot of land is controlled by relatively few individuals and institutions, Donnelly said it was important to consider the use of that land. For example, he said by founding CHT, Burlington decided to take a different path than many other municipalities.
“You really have to look at what the makeup of those few are,” Donnelly said. “What kind of resources are people extracting from the land, is it lots of wealth, is it lots of rent for private gain, or is it an opportunity to preserve the ability for people to live in the community?”
The fact that much of the city’s rental housing, especially in the Old North End, is in the hands of a few large landlords allows landlords to charge high rents, Winkleman said.
“It allows a few folks to price things out however they want,” Winkleman said.
The makeup of the city — and who decides that makeup — varies by neighborhood, Winkleman said.
“In areas of the city that are largely homeowners, those homeowners are deciding what they want those areas to look like, and areas in the city that are largely renters the landlords and developers decide what those neighborhoods should look like,” he said.
Weinberger said he has found it problematic that few entities in the city are trying to invest in creating new housing and office space in the city, with the exception of Hoekstra and Redstone, who have been building.
“There are not many different entities that have really figured that out, and that are consistently working to invest,” he said. “I’ve always seen that as a function of how complex and uncertain and expensive our permitting and land use processes are.”
The City Council is currently working through a number of housing-related policy changes following a Housing Summit this June.
Felippe Rodrigues and Christopher Remmel contributed data analysis and graphics to this report.