BENNINGTON — An agreement that would allow additional tax increment financing districts in Vermont appears on its way to approval as the legislative session winds down.
David White, of White & Burke Real Estate Investment Advisors Inc., of Burlington, whose firm was hired to lobby for additional TIF districts, said a compromise that emerged last week from a House-Senate conference committee allows six new districts. That compares with 14 districts in the original Senate bill and two in an amendment approved in the House.
The proposed changes would lift a cap on new TIF districts imposed by the Legislature three years ago. White & Burke was hired by several communities considering a TIF district, including Bennington, Newport, Rutland, Montpelier, Brattleboro, Springfield and St. Johnsbury.
“Late last year, seven of Vermont’s most important regional core communities began what some thought was a quixotic effort: to remove the prohibition of new Tax Increment Financing districts in Vermont,” White said in an email. “They dreamed of having the opportunity to use this tool to foster economic development as other communities have to such great effect (for example, St. Albans, Barre, Hartford).”
With a TIF district in place, a community can bond for infrastructure improvements that can enhance or encourage private development in that zone, and then retain a percentage of the new property tax revenue created — rather than sending it to the state — to pay down its debt. There are nine active TIF districts in Vermont, none south of Route 4.
Development efforts supported by TIF districts include projects in the downtown areas of Burlington, St. Albans and Barre.
White said the compromise amendments include no sunset provision concerning when municipalities may apply for a district. Applications are submitted to the Vermont Economic Progress Council, which oversees the TIF program.
The proposed changes also prohibit a community with an existing TIF from applying for a new one until all debt associated with the existing district is paid off, White said.
The legislation also mandates a study of the fiscal impacts of TIFs and other tools the state uses to finance public infrastructure that supports economic development, along with an assessment of the levels of long-term debt, before it is decided whether to allow more districts beyond the six authorized.
The language also reduces from 75 percent to 70 percent the amount of the new tax revenue generated by development in the district that can be withheld from the state education fund to pay down municipal debt associated with a TIF district.
As lifting the TIF cap was debated in the Legislature, the focus was on the effects on the education fund. Opponents expressed concern that new funding that otherwise would support education was being reduced, while supporters contended that the private development and resulting new revenue typically would not materialize without the public infrastructure improvements stimulated by a TIF.
In the compromise, criteria for where a TIF district can be located also were tightened, White said.
“The seven communities and the rest of us who want to encourage economic development in Vermont’s downtowns have not gotten all that we dreamed of,” he said. “Yet, subject to a final vote of both chambers, we’ve gotten far more than many predicted.” He credited committee members in both the Senate and House, and efforts by communities to make clear “how important TIF is for the future of their communities.”
White said it now appears the TIF language will pass during the coming week as part of comprehensive economic development legislation in S.135. If the changes clear both chambers of the Legislature, Gov. Phil Scott has expressed strong support for raising the TIF cap.
The Selectboard in Bennington, one of the communities hoping for a TIF, voted last week to hire White & Burke to oversee the town’s application. The district would encompass the site of a proposed $50 million redevelopment involving six buildings on 4 acres centered on the former Putnam Hotel.
Bennington’s costs for developing a TIF proposal and applying to the state — estimated to be $35,000 — would be folded into the bond and repaid through TIF revenues.
