Federal government rejects winning bid for Montpelier’s former post office

The federal government has rejected the winning bid for Montpelier’s former downtown post office building, throwing the future of the building into uncertainty. 

The 87 State Street Local Development Corporation, a nonprofit coalition of local organizations and developers, had made the winning bid of $540,000 in the auction that ended in August. On Friday, the group announced in a press release that the sale did not go through.

The treasurer of the corporation, Jon Copans, told VTDigger that he was surprised and frustrated by the decision to reject it. 

“Here we are again. It’s like Groundhog Day,” Copans said. 

The large marble-clad building at 87 State St. was significantly damaged by flooding in 2023, forcing the U.S. post office to relocate. The General Services Administration put the property on the market in 2025, and the Foundation for a Resilient Montpelier, a nonprofit flood recovery group, saw the possibility of turning it into a site for housing and businesses. 

But the two parties have been at odds since the beginning about the value of the property. The foundation walked away from a potential negotiated sale in early 2026, citing concerns about a report that showed widespread PCB contamination. Copans said at the time that the federal government was asking $2.4 million for the property. 

Instead, the foundation put together 11 local entities and secured state funding to bid on the property at open auction. However, Copans said federal government personnel told him this week that it was rejecting the bid because it was lower than the property’s value. 

“We believe there’s a fundamental misunderstanding of the market here in Vermont, the redevelopment realities of a property in a downtown with significant contamination, and significant questions about how serious that contamination is and how much it’s going to cost,” Copans said. 

The General Services Administration did not respond to a request for comment before publication time. 

Copans said the federal government indicated there would be another auction, but he’s not yet heard about the parameters, such as the timing. The sign advertising the initial auction still sits outside the building on State Street. 

He said the “fundamental reality” of the site’s importance to Montpelier hasn’t changed — the federal government has just added a few “perplexing” twists and turns to the process. 

“If you look out to the future, there is real opportunity in terms of the building and the property,” he said. “It’s just that we have to roll up our sleeves and work to get there.”

This story will be updated.

Read the story on VTDigger here: Federal government rejects winning bid for Montpelier’s former post office.