NEWPORT — Housing Our Seniors in Vermont (HOSIV) and Lakemont Retirement Community recently filed a lawsuit against several organizations regarding the Newport Development Grants.
The lawsuit claims that there was a conflict of interest within the committee that awarded a grant to the Northeast Kingdom Development Corporation (NEKDC), which received the largest grant from the Newport Development Grants fund.
The Vermont Agency of Commerce and Community Development, the Vermont Department of Housing and Community Development, Northern Community Investment Corporation, the City of Newport, Northeastern Vermont Development Association, and NEKDC were all listed in the lawsuit.
The program was created in the aftermath of the EB-5 scandal, which involved fraudulent activity surrounding the Jay Peak Resort Projects, which collapsed.
It provided grants to businesses and individuals intended to promote economic development in the city of Newport and the Northeast Kingdom region.
The largest grant award of $1,029,000 was awarded to NEKDC to purchase and develop a vacant undivided building for lease.
The plaintiffs claimed that NEKDC did not demonstrate realistic job creation or job retention, and they plan on leasing most of the building to Track, Inc.
The plaintiffs also argued that NEKDC was ineligible for the grant as it is not based in Newport, did not show realistic plans for job creation or retention, and did not meet the criteria for “shovel-ready” housing or projects affected by the EB-5 scandal.
According to the court documents, David Snedeker, who is not named as a defendant, is either an officer, director, or agent of both NEKDC and Northeastern Vermont Development Association (NVDA), both of which were voting members of the Newport Development Grant committee.
The plaintiffs argued that this potential conflict of interest may have influenced the committee’s decision to award the grant to NEKDC.
The plaintiffs sought a court order declaring the grant to NEKDC invalid, requiring the NDFG Committee to reconsider their application, and order NEKDC to return the $1,029,000 grant to the Newport Development Grants fund.
However, the court granted the motion to dismiss in part and denied it in part, stating that the plaintiffs failed to show that they have the right to challenge the NDFG Committee’s decision-making process and award.
The court noted that the grant program was not a formal bidding process and is not governed by the rules or statutes that the state has adopted for such processes.
Much of the substance of the motions to dismiss and for a more definite statement hinges upon the question of an “Actual Controversy.”
As per the Vermont Supreme Court, every petition for declaratory relief must be rooted in an actual controversy between the parties.
HOSIV and Lakemont Retirement Community may still seek a declaratory judgment regarding the terms of the grant proposal.
The lawsuit highlights the potential for conflicts of interest in grant awarding, and raises questions about the eligibility criteria for grant recipients.
The outcome of the case could have implications for the transparency and fairness of grant awarding processes in Vermont.