This commentary is by Robert Fireovid of South Hero, a grass-fed beef farmer who retails frozen beef directly to consumers. He is also the volunteer executive director of Better(not bigger)Vermont (betternotbiggervt.org/), a small nonprofit.
Two companion bills introduced in the General Assembly, H.129 and S.33, “An act relating to project-based tax increment financing districts,” deserve close scrutiny by the public.
Tax increment financing — TIF for short — may be an effective tool for the development of brownfield properties within urban communities. A brownfield is a “blighted” lot that has been contaminated by hazardous substances, thereby making it a financially risky location for new construction.
Unfortunately, characterizing an area as “blighted” may be a pro forma exercise, since specialized consultants can be hired to create the needed evidence in most cases. However, this problem may be overcome by limiting the determination of whether a property is “blighted” (or not) up to government entities that are qualified to perform such assessments. An example of such entities might be the Act 250 District Commissions.
Vermont already has statutory processes for creating TIF districts in urban centers, and a number of cities already use them (Barre City, Bennington, Burlington, Hartford, Milton Town Core, Montpelier, South Burlington, St. Albans City, Winooski). A Vermont TIF is paid back by extra tax revenues that the real estate investment would hopefully generate without cannibalizing commercial or residential tax revenues from properties outside the TIF district.
In addition, any development, irrespective of whether it is subsidized by a TIF, will likely increase the demand for taxpayer-funded infrastructure, personnel and public services — roads, sidewalks, water, sewer, transportation, snow removal, schools, teachers, recreation, public safety, fire protection, etc. The additional tax revenues from a TIF rarely cover all of these increased costs and the owners/residents/businesses outside a TIF district are forced to pay more to make up the difference. A good investigation into the problems with TIFs was done for this report.
H.129 and S.33 define brownfields as “an area in which a hazardous substance, pollutant, or contaminant is or may be present…” [emphasis is mine]. The way H.129 is currently written, a developer could claim that just about anything is a brownfield.
H.129 and S.33 specify three other situations for which TIFs might be used:
- The development includes new or rehabilitated affordable housing, as defined in 24 V.S.A. §4303.
- The development will include at least one entirely new business or business operation or expansion of an existing business within the project, and this business will provide new, quality, full-time jobs that meet or exceed the prevailing wage for the region as reported by the Department of Labor.
- The development will enhance transportation by creating improved traffic patterns and flow or creating or improving public transportation systems.
These are all legitimate goals for public investment. But would it not be greatly preferred to target public investment toward just these important objectives, rather than use scarce public resources to subsidize large developments within which one of these objectives is just a small piece? Better yet, require that these objectives be a part of any and all development projects whether they enjoy TIF subsidization or not.
In summary, except for reclamation of brownfields, using TIFs for other purposes is nothing but taxpayer-funded corporate welfare for developers. Currently, many Vermont residents are in urgent need of effective social services. Does the government really want to be a Robin Hood in reverse — take from the poor and give to the rich?
I have seen the injurious misuse of TIFs in other states. We don’t need legislation to expand the use of TIFs throughout Vermont.
Hopefully, Vermont will protect itself and eschew widespread use of TIFs, except in cases where taxpayers in urban centers can cost-effectively extract value out of true brownfields.
