SAM Magazine—Burke, Vt., April 6, 2016—In the employment-starved Northeast Kingdom of Vermont, a major development project funded by a program designed to create jobs has resulted in a loss of jobs and much squabbling between the state and the developers, Bill Stenger and Ari Quiros.

At the heart of the controversy is the $50 million Q Burke Hotel and Conference Center at the base of Q Burke ski area. The building is complete but is unable to open for business because the company hired to build the hotel, PeakCM Construction, is holding the certificate of occupancy until it is paid $5.5 million, the amount owed by the developers. The delay in payment initially came as a result of state regulators refusing to approve a portion of the total owed because they don't believe the expenses submitted are what the funds were meant to pay for.

Vermont's Agency of Commerce and the Department of Financial Regulation require Stenger to place EB-5 funds he raises into an escrow account managed by the state. Before any funds can be withdrawn to pay for the Q Burke project, the expenses must be reviewed by the two agencies, and only released after approval. This is the only such EB-5 project in Vermont under such tight management by the state.

According to Jerry Davis, CEO of PeakCM, Stenger and Quiros recently paid $900,000 they owed his company for November.

However, on Monday it was reported that state regulators froze the escrow account for the project until they get answers from Stenger and Quiros about what became of millions of dollars taken out of the project.

According to a report by the Burlington Free Press, in a Feb. 16 letter to Stenger, Susan Donegan, commissioner of the Department of Financial Regulation, writes that Stenger and Quiros, "have taken millions of dollars for construction management" from the project, yet have failed to show they paid for expenses they were obligated to cover. The state says it doesn't know where the money went.

Secretary of Commerce Pat Moulton, who oversees the EB-5 program in Vermont together with the Department of Financial Regulation, said this week the state has yet to receive the documentation regulators need to consider unfreezing the escrow account.

Stenger has assured the state that it will get what it needs. "We're going to provide them with all the substantiation they want," Stenger said. "We're working on that. There's infrastructure, there's a host of things we've done."

In the meantime, a project intended to boost employment in the region has contributed to job losses at the area. Q Burke cut 180 jobs at the end of March—45 of them full-time, year round positions—as a result of the lean winter and the Q Burke Hotel and Conference Center sitting idle while the funding impasse continues.

While Stenger has expressed frustration with the process, at least one member of the Q Burke team remains optimistic. Sarah Benedict, director of hotel operations for the Q Burke Hotel, penned a recent open letter titled “I stand with the Q,” in which she outlines her long history with the mountain and the area, and confidence in the property and its long-term future.

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