Burlington entrepreneur Russ Scully wants to change the zoning rules across a swath of the city's South End to allow housing to be built, years after a similar proposal failed because of concerns about gentrification.

If the nascent proposal advances, the changes, along and just off Pine Street, would allow residential development in an area now zoned for light manufacturing and industrial uses. It includes a six-acre parking lot that Scully bought last year for $12 million; an adjacent parcel on Sears Lane, where the city recently evicted dozens of homeless people; and two polluted wooded lots on the west side of Pine Street that are currently on the market for $2.5 million.

Scully, who transformed the old Blodgett Oven factory on Lakeside Avenue into the tech incubator and coworking space Hula, says the zoning change would allow him and other developers to address the city's housing crunch. His proposal has so far won over city officials, planning commissioners and some of the people who opposed a 2015 South End rezoning effort.

"Times have changed. I think that the pressure on housing, the cost of living, are all factors and drivers that have increased significantly," Scully said. "We just gotta figure out how to [develop] in the most community-minded spirit."

Scully already has a tentative idea of what he'd like to build on his Lakeside Avenue parking lot: dozens of energy-efficient apartments anchored by ground-level shops, restaurants and a childcare center. The units would be affordable, he said, a "21st-century version of a factory town." That's nothing new for the Lakeside neighborhood, which was built for cotton mill workers in the early 1900s — and later occupied by Blodgett employees — when heavy industry was prominent in the South End.

Scully also wants to build a transit center that could offer bus and rail service to commuters coming off the Champlain Parkway. If ever completed, the long-planned roadway would run from the unfinished Interstate 189 interchange through Lakeside to downtown. The lot abuts a rail line, and regional planners have applied for a federal grant to study the feasibility of creating a "community rail" hub on Scully's property. They expect to hear back later this month.

"Replacing a parking lot with a walkable neighborhood — it's an exciting shift in the way that people live [and] want to live in the future," Scully said.

Both the zoning change and the building plans are still a long way from final approval, and many people interviewed for this story hadn't heard of Scully's plans. But some, including Burlington City Council President Max Tracy (P-Ward 2), are already skeptical.

"It would be gross to have the Sears Lane encampment cleared and then have upscale housing put in its place," Tracy said. "That's the concern."

During an interview last week, Scully acknowledged the optics.

"I know how it looks," he said, adding that he put no pressure on the city to shut down the camp. Scully said his development could include transitional housing, if the city were on board.

"We're not building this just for the high-wage earners of the tech industry, necessarily. We're really thinking about this more as workforce housing," Scully said. "There's no better way to bring down the cost of living than making sure there's ample supply."

Scully owns a windsurfing shop, two surf-themed restaurants and the Burlington Surf Club, a private beach operation that rents out an assortment of watercraft. In 2017, Scully paid $14.3 million for the lakeside Blodgett property and has since transformed the buildings into modern workspaces for 100 businesses, with stunning views of Lake Champlain.

But the 500 people who work at Hula had trouble parking, Scully said, so he leased a nearby parking lot from developer and philanthropist Bobby Miller, whose name is on a Champlain College building next door.

After Miller died in February 2020, Scully bought the property for $12 million. In order to build there, Scully wants to rezone the lot, as well as 11 other properties in the Enterprise Light-Manufacturing district, the city's primary industrial zone.

The city council has previously modified the Enterprise Zone to allow certain projects. In June 2019, councilors voted to permit larger performing arts centers there so that Higher Ground could open at Burton Snowboards' Queen City Park Road campus, though the project is stalled. The South End location of City Market, Onion River Co-op also required a zoning change.

Scully's team met with business owners and artists in the spring and pitched the concept to city planners in July. Officials ran with it and, at an October meeting of the Burlington Planning Commission, proposed expanding the rezoned area to include the Dealer.com property and a few parcels south of Sears Lane. Commissioners didn't vote but were amenable to discussing the matter further.

"I want to put it out there and have a conversation about housing," former planning director David White told the volunteer commission, "but I recognize as well as anyone that that can be a very challenging conversation."

Indeed, a proposal to add housing to the area was killed in 2015 after intense backlash. At that time, artists said they'd be priced out of their studios or kicked out if their landlords converted the spaces to apartments.

The proposal, which Mayor Miro Weinberger and Scully supported, spurred satirical displays at that year's South End Art Hop, including "Miroville," a cardboard village wedged into a green space on Pine Street. Just before the event, Weinberger announced that the administration wouldn't back the plan after all.

Six years later, though, he supports Scully's effort to revive the discussion.

"To have so much valuable city land devoted to asphalt parking when we have a housing crisis is just wrong, and we should address that," the mayor said. "Whatever form, exactly, this effort takes, it will be different from the last time."

That was welcome news to Steve Conant, a craftsman who owns the Soda Plant, a beverage factory turned artist incubator space on Pine Street. Conant opposed the 2015 proposal because it would have allowed property owners to convert art studios into apartments. But he's behind Scully's renewed push because it mainly affects vacant lots.

Conant shares Scully's concerns over the lack of housing for workers in the South End. Home values in the neighborhood spiked during the city's property reassessment this year.

"During the heat of the resistance, I think our community's awareness of the cost and scarcity of housing in the city wasn't as clear," Conant said. "I think the times are different in terms of [rezoning] being accepted by the community."

Maggie Standley isn't entirely sure. An artist who has run her Wingspan Studio off Pine Street for nearly 20 years, Standley worried in 2015 that housing would destroy the area's funky, artsy vibe. Now she questions why Scully wants to rezone properties besides his own.

"That gives me pause, because it's like, OK, then, what else is he gonna expand this proposal to ask to be rezoned?" Standley asked. "I wonder, who are the small business artists he talked to in the South End? Are we really stakeholders, or [does it just say that] in the proposal?"

Scully's plan was also news to Marc Leone, who manages the woodworking collective Sterling Furniture Works on Pine Street. In 2015, Leone said he worried that new residents would complain about noise from his shop and that housing would encroach on the artists' enclave.

Leone still has some of those concerns and said planners should focus on areas already zoned for residential development.

"The need for housing in Burlington probably trumps the needs of all the people in the Enterprise Zone. It's just that I think [city planners] have to be very cautious about how they do it," Leone said.

City Councilor Jack Hanson (P-East District), who wasn't on the council in 2015, supports Scully's plans. He said the city desperately needs more housing and praised Scully's intention to build on a parking lot. Hanson has been one of the council's most passionate proponents for local policies to curb the climate crisis.

"Having housing right near where people work is going to allow for the most sustainable transportation possible," Hanson said.

But Hanson isn't entirely comfortable with the fact that Scully's zoning proposal includes the former homeless encampment. He urged Scully to talk with the campers about what they need before the redevelopment gets under way.

The deeply divided city council would ultimately have to sign off on the zoning change, and it's unclear whether the body's president, Tracy, is on board. He questioned whether the Hula team was actually committed to helping lower-income people, noting that Scully was fined more than $100,000 in 2019 for violating federal overtime pay and child labor laws at his Burlington restaurants. And during a recent council meeting, Hula consultant John Caulo, speaking as a resident of the Lakeside neighborhood, called for the Sears Lane encampment to be shut down.

Scully has also long supported Weinberger, a former developer, and gave the mayor $1,040 during his most recent campaign. In that election, Weinberger bested Tracy by just 129 votes.

"All of these things make me skeptical of the intentions at play here," Tracy said, adding that if the proposal were to move forward, he'd want to have "an inclusive conversation that is not just rich folks making decisions together to benefit their own interests."

Scully may have to contend with more than city zoning to achieve his vision. Federal rules prohibit housing on two parcels on Scully's map, due to their proximity to the Barge Canal Superfund site, a dumping ground for the by-products of a coal gasification plant that closed in the 1960s.

Members of the Burlington Conservation Board led a walking tour of the city-owned land near the canal last week. Some people in attendance suggested that the contaminated land, including the properties currently on the market, be conserved as open space. South End resident Andy Simon and his partner, Ruby Perry, have also suggested using some of the land for green burials as a way to improve the toxic soils by composting human remains.

"I'm not surprised that developers are looking at it," Simon said. "There is a lot of pressure to build houses in the city, but this isn't the place to do it."

Stowe developer Rick Davis, who owns the two private parcels, thinks that allowing housing on at least one of them would make the land more attractive to a buyer. Trish Coppolino, who manages brownfields for the Vermont Department of Environmental Conservation, said the state is amenable to a process that could make residential development there possible. The pandemic diminished demand for office space, Davis said, and the rezoning could alleviate pressures on the housing market.

Caulo, Scully's consultant, said Burlington isn't going to solve its housing crisis by building accessory dwelling units or rehabbing century-old homes in the Hill Section. He said the city needs more units, and the parcels that the Hula team has identified are the best places for them. He hopes his neighbors agree.

"What is being proposed is something that I think should be acceptable by the community," Caulo said. "If the community, at the end of the day, decides, No, we don't want additional housing, I think it's a mistake."