ST. JOHNSBURY — Town officials are on their way to asking the state to approve a tax increment financing district downtown, a move they hope can entice private investors.
St. Johnsbury has sent a letter of intent to the state about creating the district and is now drafting its plan, said Stephanie Hainley, chief operating officer of White + Burke, a real-estate consulting firm working with the town, at a selectboard meeting Monday night.
The town is aiming to submit the plan for approval around the end of July, she said.
That, Assistant Town Manager Joe Kasprzak told VTDigger, will be one step toward achieving the kind of economic turnaround St. Johnsbury has long sought.
“We’re at a crossroads here: We have a declining, aging population with a declining household income,” Kasprzak said. “We want to really transform and revitalize our downtown.”
Tax increment financing can help that revitalization happen, he said.
The financing tool, often called TIF, works like this: A municipality designates a district where public infrastructure projects can encourage private development. Officials draw up a baseline value for property in the district, which remains constant for state and local taxes.
Then, voters approve a bond to pay for an infrastructure project in the district. Because of the added or repaired infrastructure, the thinking goes, private investors can more easily develop in the district, and that development boosts the value of property there.
In turn, that additional value is taxed and the funds are put aside to repay the bond.
Any new infrastructure would be for public use, Kasprzak said, and it would also make private projects more viable.
He called the idea “the ‘but for’” — as in, the development would happen but for a problem that can be fixed through a public infrastructure project.
Hainley, from the consulting firm, outlined four potential projects at the meeting:
The old armory site on Main Street, which is contaminated, could be turned into housing.
The 1187 Main St. property, which houses the town’s police department and dispatch center, could become an office site with parking. (The town is looking for a new public safety building.)
33 Eastern Ave., a service parking lot, could suit an office building. Investing in utilities and streetscape there could make it a desirable location, Hainley said.
The fire department’s site on Main Street could be used as a state office site.
The town has to submit its plans to the Vermont Economic Progress Council, which oversees TIF districts, for approval.
Officials hope the plan can be approved by the fall, so that the town could put together a project proposal that voters can authorize at the townwide meeting next March.
TIF districts are not without criticism or controversy. Vermont’s state auditor released a report at the end of May asserting that the city of St. Albans owes the state money because of irregularities with its TIF district. (The city denies the charge.)
Officials in St. Johnsbury didn’t comment on the specifics of the auditor’s report, but Hainley acknowledged it during the meeting and said it could lead to state rule changes regarding TIF districts.
“Our plan is to proceed as we were,” she said.
