Helen Riehle cuts ribbon in front of Allard Square on November 13, 2019, as part of the rapid transformation of the “new downtown” on Market Street in South Burlington. VermontBiz photo.
Vermont Business Magazine The Vermont League of Cities and Towns (VLCT) released an independent analysis of Vermont’s Tax Increment Financing (TIF) program Tuesday that concluded that TIF helps Vermont meet its smart growth goals, promotes long-term planning, and contributes to net-growth in the Education Fund. The report comes as the Vermont Legislature considers expanding TIF to smaller, rural communities through “project-based TIF”.
“VLCT commissioned the report to evaluate if the TIF program was meeting its intent of spurring development and growing tax revenues,” said VLCT Executive Director Ted Brady. “The findings of the analysis support the continued use and expansion of the program. In short, it’s advancing our codified development goals, encouraging communities to think long-term, and growing our tax base.”
Brady explained that Vermont’s TIF law allows municipalities to incur debt to make public infrastructure investments and repay that debt with a portion of the increased property tax revenue sparked by the new infrastructure.
The City of South Burlington is currently using the TIF program to finance infrastructure improvements in its new downtown.
South Burlington City Manager Jessie Baker said: “In the six years studied by the University of Wisconsin research team, Vermont’s TIF program paid for $180 million in public infrastructure in 12 TIF districts, generating nearly $685 million in development, nearly 4,000 jobs, and a 68 percent increase in property tax revenue for the Education Fund. The research team found that the Education Fund would be smaller if not for our state’s TIF Districts.”
VLCT hired the Hartland, Vermont-based Rural Innovation Strategies (RIS) to complete the analysis. RIS partnered with the University of Wisconsin Oshkosh Center for Customized Research and Services.
The report included ten key findings:
Vermont’s TIF policy clearly meets the state’s community and economic development goals.
TIF serves as a powerful long-term planning tool.
Measuring the performance of TIF districts is complicated.
The revenue story is equally complicated but suggests TIF districts generate net revenue growth to the Education Fund above naturally occurring growth.
TIF generates a clear rate of economic growth not recognized in previous analyses.
Forecasting a rate of return from TIF is complicated.
TIF produces conditions that allow communities to leverage other assistance.
The combination of safeguards built into Vermont’s TIF statutes maximize its effectiveness and accountability while minimizing risk.
Comparing TIF to other state economic development programs emphasizes the economic and operational benefits of TIF.
Vermont’s TIF policy must change in order for rural communities to use the program.
Johnson Selectboard Member Eric Osgood said he hoped a proposed project-based TIF pilot program in the Senate-passed version of H.159 would become law this year. The proposal would allow municipalities to apply to the Vermont Economic Progress Council for a relatively smaller TIF of up to $5 million to build public infrastructure in a designated growth area or an industrial park.
Osgood said: “Johnson would be hard pressed to use the existing TIF program. As a selectboard member for a small rural community, I welcome the changes in H.159 that would right size the TIF program and TIF requirements so that Johnson and other rural communities could have the same access to capital that the bigger communities in Vermont have had for nearly 40 years.”
For the full report and a high resolution image from the press conference, click here.
4.19.2022. Montpelier, Vt. – Vermont League of Cities and Towns vlct.org.
