The property at the intersection of State and Elm streets in downtown Montpelier is what real estate insiders call a “million-dollar corner.” The building at 41-45 State Street, just a short walk from the Statehouse, is a downtown icon. The four-story brick structure, which dates back to 1874, is listed on the National Register of Historic Places. For much of the 20th century it housed the Capital Savings Bank and Trust Company, later the Chittenden Bank — many Montpelierites still call it the latter.
The interior of the building has been restored to better-than-mint condition. The lobby is dominated by a gleaming, silver-steel vault, cleaned and polished to look like a museum piece. According to property manager Kevin Casey, decades-old industrial carpet and tile were torn up to reveal the bank’s original rose-marble entryway and Brazilian mahogany floors.
Other selling points include exposed brick walls, art-deco sconces, wooden ceiling fans, custom-built leather booths with heated seats, and counters made from the Capital Savings Bank’s original glass deposit-slip cases. Downstairs, a red-velvet smoking lounge, which Casey jokingly calls the “Irish mafia room,” features original Marx Brothers film posters and other vintage décor salvaged from an old Chicago movie house.
In short, it’s prime commercial real estate in the heart of Montpelier. So why has it sat vacant for five years? According to local businesspeople, it’s not because of the high rent — between $4000 and $5000 per month. They blame the 66-year-old landlord, Jeff Jacobs.
Remember the guy who tried to put a McDonald’s in a historic downtown building and wanted to outfit it with a three-story fryer vent? That was Jacobs. He was also the man who tried to sell the city of Montpelier the airspace over the north branch of the Winooski River for $495,000. The for-sale sign still hangs on his building. It reads: “Rights to build a deck across this river, the width of this building, to the other side.” Thus far, no takers.
“He reputation definitely precedes him,” says Jacob Grossi, owner of Burlington Records and a former chair of the Montpelier Downtown Community Association (now Montpelier Alive). From 2005 to 2010, Grossi ran Riverwalk Records, a Jacobs-owned property, at 10 State Street in the capital. “There are tons of entrepreneurs surrounding Montpelier who would do fantastic with a storefront there,” he says. “But a lot of those businesses are afraid to come in because they’ve heard about ‘big bad Jeff Jacobs.’”
With more than a dozen historic properties in his portfolio, Jacobs is one of the largest private landowners in Montpelier. In 2009, he tried to open a several-hundred-seat beer garden on his vacant lot at 66 Main. Both the city and the neighbors objected to the plan, and the project fell through. The building that housed the now-defunct Black Door Bar and Bistro also belongs to him.
In fact, there’s a widely held perception in Montpelier that nearly all the vacant buildings in town are Jacobs’. Mary Hooper, Montpelier’s four-term mayor, refutes that, but nonetheless admits that she, too, is puzzled by Jacobs’ real estate strategy.
“It totally bewilders me why it makes sense to leave buildings vacant for years,” Hooper says. “Having full buildings is very important to our community.”
Love him or hate him, it’s hard to do business in Montpelier without dealing with Jeff Jacobs. Not surprisingly, few people will talk on the record about a man who wields so much wealth and power in town, even if they no longer rent from or work with him. But even one of his harsher critics admits, “Within the capitalist framework, he’s a genius. He completely works the system to his benefit.”
One person who has experienced Jacobs firsthand is Bob Watson, owner of Capitol Grounds, a coffeehouse and café at 27 State Street. For seven and a half years, beginning in 1998, Watson leased Jacobs’ space in the Chittenden Bank building and sank thousands of dollars into the space. Nevertheless, in 2006, Watson moved his business immediately next door to its current location, at 27 State Street, a much smaller and less impressive space.
Why? The primary reason, Watson says, was Jacobs.
According to Watson, he and Jacobs had a verbal agreement for five years that Capitol Grounds could use the basement below the café as storage space. At the time, the basement was unfinished and, Watson claims, in “deplorable” condition. Essentially, it was unrentable as a separate property because it had no egress except through Watson’s business.
When his five-year lease came up for renewal, Watson claims Jacobs tried to include in the new lease an extra $500 a month for use of the basement, in addition to a rent hike.
“He had us over a barrel,” Watson recalls. “We couldn’t just up and leave. We’d put thousands and thousands of dollars, and time and energy, into that space. That was our blood.”
Despite those investments, Watson and his wife decided to not renew and, instead, rented the café space on a month-to-month basis, a setup most retailers abhor. Watson paid Jacobs the extra $500, plus 5 percent annual increases in rent, and reluctantly began looking to relocate.
Moving Capitol Grounds less than 50 yards away was “like starting all over again,” Watson says. For the first two years it was touch and go financially, and he wasn’t sure the café would survive. It’s only because of the loyalty of longtime customers, he says, that the business thrives today.
Watson emphasizes that he doesn’t want his remarks to sound like “sour grapes.” However, immediately after he vacated the property, Jacobs put a “for rent” sign in the window, which is still there and reads, “espresso, aperitifs, breakfast, pastries, coffee shop, bakery, lunch, dinner, sidewalk seating” — in other words, an exact description of Capitol Grounds.
“Jeff says it’s ‘just business,’” says Watson. “Does that sound like ‘just business?’”
Glenn Sturgis, owner of Capitol Copy & Shipping Center in Montpelier, had a similar experience. Sturgis rented space from Jacobs for about 15 years. At the time, his business was a Mail Boxes Etc. franchise, until UPS bought out that company. Sturgis got out of his franchise agreement and established an independent company.
In February 2010, Sturgis moved out of Jacobs’ storefront at 45 State Street — which he describes as “about as good a place as I could be” — and into his current location at 32 Main. Why move a thriving business into a smaller, less visible storefront? Sturgis admits he had “issues” with Jacobs, but relocated primarily because the rent was 60 percent lower.
Within a week of Sturgis’ departure, a sign appeared in the window of his old store, advertising it as “perfect for a UPS store.” Sturgis saw it as a deliberate parting shot, despite his 15 years as a reliable tenant. A year later, Sturgis’ former storefront still sits vacant, even though local real estate agents say there’s a very strong commercial market downtown.
“Montpelier is in big demand,” says John Biondolillo, of BCK Real Estate in Barre. “The vacancies are primarily in buildings owned by one owner. That’s the only reason there are so many vacancies in Montpelier.”
Biondolillo won’t comment on whether Jacobs’ buildings don’t attract tenants because of his reputation, but Biondolillo admits he personally won’t do business with him. He does suggest, however, that because Jacobs owns so many buildings, he probably doesn’t need to discount his rents.
“Depending upon your perspective, I suppose that could be a good strategy,” Biondolillo says. “I know a lot of people in real estate who says that every month that goes by with a vacancy is a month you never get back … but most owners don’t have such a concentration of real estate in one town, either.”
Benjy Adler, who owns the Skinny Pancake restaurants in Montpelier and Burlington with his brother, Jonny, says that for a time, they were in negotiations with Jacobs to lease Capitol Grounds’ former quarters. The Adlers were well aware of Jacobs’ reputation around town but found the old bank space very attractive.
According to Benjy Adler, Jacobs’ asking price was slightly higher than they could afford, so they made him a counteroffer that was $600 lower. Jacobs’ response, according to the Adlers: Jacobs’ raised the rent $500 above his original asking price. (Kevin Casey, Jacobs’ property manager, denies that claim.) For the Adlers, it was reason enough to look elsewhere.
“When I heard that I said, ‘OK, clearly we’re not doing business together,” Benjy Adler adds. “That was enough for me to know I don’t want to get involved with this guy.”
What is known about Jacobs? He spends about half the year in Florida and Mexico. A native of Hartford, Conn., he claims he came to Vermont broke, worked on a farm in Cabot and taught school. In 1974, at age 28, he rented the future Black Door space for $100 a month and opened a bar-restaurant there called MJ Friday’s.
The following year, Jacobs reopened Charlie O’s, a bar that had a rough reputation and had been closed by the city for rowdiness and unpaid taxes. Jacobs bought the defunct saloon for $1100. With two liquor licenses, plus low-interest loans from the Small Business Administration, his real estate empire was born.
Today, Jacobs’ property-management company still maintains a second-floor office above Charlie O’s. Considering his all-business reputation around town, the office is surprisingly youthful, even playful. Cardboard cutouts of Elvis Presley and Austin Powers greet visitors at the top of the stairs, a sign of Jacobs’ reported love of classic films.
Inside, the office is decorated with movie-related tchotchkes and covers of 1940s pinball machines. Jacobs is rumored to be a collector of pulp-fiction memorabilia. Stuck to the bulletin boards are magazine and newspaper covers, including a Time magazine cover marking the fall of Saigon during the Vietnam War; New York Daily News covers announcing the deaths of Roy Rogers and Robert Mitchum; and a yellowed New York Post cover that reads, “Bring me the head of Sammy the Bull.”
A sign behind the desk reads: “Tyrannical, fascist pig boss desperately seeks a very hardworking malcontent. Must have low IQ and little or no knowledge of state labor laws and be willing to work for bread, water or candy bars.” Though the sign is an obvious joke, others who’ve heard of it say it describes Jacobs to a T.
Burlington Records’ Grossi describes Jacobs as a “misunderstood character” and speaks for many of his fellow Montpelierites when he observes, “I can’t say whether his reputation is worse than he is or better than he is, because I don’t know that much about him.”
Apparently, Jacobs wants to keep it that way: He didn’t want to be quoted for this story, citing his desire for privacy. Likewise, his two property employees at Montpelier Property Management — his son, Jesse, and Casey — also opted out.
No one who did talk — on or off the record — suggests that Jacobs has done anything illegal in his dealings with tenants. Neither the Montpelier Housing Authority nor Vermont Tenants, a statewide renters’ advocacy group, report systemic complaints about Jacobs or his properties.
Montpelier’s assistant city manager and delinquent-tax collector, Beverlee Pembroke Hill, also writes that Jacobs is “a very responsible taxpayer and is current on all his taxes.”
City Attorney Paul Giuliani, who’s held the job for more than 30 years, says that the city of Montpelier has had several legal run-ins with Jacobs over the years, including the flap over the proposed McDonald’s in the 1990s, which was shot down by the Montpelier Planning Commission. However, he can think of no major legal battles in recent years.
“He’s a tough negotiator, and he’s very convinced that his way is the right way,” Giuliani says. “But he takes good care of his property in Montpelier, I’ll give him that. Sometimes he’s a little demanding, but that’s the nature of the beast.”
Likewise, Montpelier’s planning and zoning administrator, Clancy DeSmet, who’s held that post for four years, says that Jacobs and his people have “done what they’re supposed to do as far as zoning goes.”
DeSmet recalls one minor dustup with Jacobs a few years ago. Jacobs applied for a permit to move a classic, 1949 diner car from its location in Jim Thorpe, Pa., to the vacant lot at 66 Main Street, across from city hall. The deal ultimately collapsed, however, because the lot lies in the floodplain. For aesthetic reasons, Jacobs didn’t want to jack up the diner, as the city required.
Like other large-scale property owners, Jacobs has had his share of legal issues. In September 2008, Vermont Attorney General Bill Sorrell announced that he’d settled a Consumer Fraud Act claim against Jacobs for his failure to maintain 12 residential properties in accordance with Vermont’s lead laws. Jacobs was hit with a $12,000 fine and was forced to do immediate lead abatement on all those properties.
For her part, Mayor Hooper says that in the past, the city had “rocky relations” with Jacobs, “but not at all these days.” That may be because, in recent years, Jacobs has left much of his business dealings to his son and Casey, who don’t elicit the same condemnations as does Jacobs himself.
And, while Mayor Hooper doesn’t go so far as to criticize one of the city’s main landlords, she did note that he’s never shown any interest in civic affairs, such as by serving on local boards or commissions. As she put it, “Great places like Montpelier don’t happen accidentally. You have to work at them.”