BENNINGTON — The town is considering joining a consortium of Vermont communities that seeks to lift the current state cap on new Tax Increment Financing (TIF) districts.
The Select Board on Monday reached a consensus on the proposal, pending further details on the other communities that will take part and details of the lobbying effort. The proposal came from a consulting firm that would work to convince the Legislature to remove the cap on the formation of new TIF districts.
With a defined district zone in place and approval from the state Vermont Economic Progress Council, a community can borrow for infrastructure improvements that are likely to spur private development and direct most of the additional tax revenue generated by the projects to pay off the debt.
White & Burke Real Estate Investment Advisors Inc., of Burlington, which has assisted other Vermont communities in gaining approval for TIF districts, is seeking $5,000 from about six communities to begin lobbying the Legislature during the current session to remove or lift the cap.
In a memo to the Select Board, Assistant Town Manager Daniel Monks and Economic and Community Development Director Michael Harrington said the consultants recently approached the town with the idea. Other communities expressing an interest in joining the effort are Rutland, Springfield, Newport, Montpelier, St. Johnsbury and Brattleboro.
At the suggestion of board member Michael Keane, who also is a member of the Vermont Economic Progress Council, which reviews TIF district proposals, the board will consider inviting council Executive Director Fred Kenney to Bennington to speak about the TIF program.
Keane gave a brief presentation about the process during the board meeting. He said 11 Vermont communities had TIF districts in place before the program was capped about three years ago. Among those are those located in Burlington, South Burlington, St. Albans, Barre and White River Junction.
The districts have utilized public-private partnerships and public infrastructure investment designed to stimulate private investment within the district and increase tax revenue through rising real estate values in revitalized properties. The process is jump-started by infrastructure improvements to encourage other investment within the district, which in the case of Bennington could mean street improvements and enhancements, parking improvements or development.
The downtown Putnam Building and surrounding structures, already eyed for a major development project, is considered the type of area that could benefit from a TIF district, Keane said.
While acknowledging it is uncertain whether the Bennington Redevelopment Group, which is considering purchasing and renovating structures around the former Putnam Hotel at the Four Corners intersection, would want to participate in a TIF project, Keane said he considers that area has potential similar to district sites in other communities.
He added that most of the TIF districts in Vermont are much larger than the seven-acre parcel at the Four Corners, but the area for potential development could be expanded.
Town Manager Stuart Hurd said he could envision a district extending north a few blocks in each direction from the Putnam Building to include two former town schools and other structures that could be redeveloped.
Hurd also said that if Bennington is going to tackle its infrastructure needs, a TIF or some similar method of raising funding will be needed.
“I think it will be very necessary,” he said, adding, “We know we have needs, and it would be very difficult to finance that on the backs of the taxpayer.”
A TIF district, he said, allows the debt incurred for infrastructure improvements to be paid back through the new taxes generated by the new development.
Keane said it is worth noting that TIF financing programs are used around the country to spur new development, and that all of the current TIF districts, save one, in Vermont is “north of Route 4,” primarily in Chittenden County.
“Chittenden has figured this out,” he said, adding that Bennington and other communities in the southern parts of the state should also have a chance to benefit.
If the cap is lifted, he said, communities could apply for designation for a specific TIF district and would have to submit extensive data on the reasons the plan will lead to development sufficient to cover the community’s debt for the infrastructure projects.
The nine-member council, which is appointed by the governor, would then approve or reject the proposal, he said. If approved, the TIF district, which would typically extend for 20 years as the debt is paid off, is monitored annually by the council, which is under the state Agency of Commerce and Community Development, and its staff.
TIF districts have been used in the state to help develop the Burlington Waterfront area, the Burlington downtown area, and downtowns in St. Albans, Barre, South Burlington, Milton and other communities.
Outlining the pros and cons of the TIF program, Keane said it can help mitigate brownfield sites, develop a stressed area of town, focus on high density development in a district, and enhance transportation and infrastructure.
Cons, he said, are that debt falls on taxpayers if the projected additional tax revenue is not realized; the program takes long-term commitment by town officials over 20 years and an economic downturn can upset the tax revenue projections.
