Gov. Phil Scott listed TIF districts as one of the development tools he wants to expand during last week’s budget address.
TIF stands for “tax increment financing,” a method municipalities can use to finance infrastructure improvements in a designated area. The improvements spur private development, which increases tax revenue in the designated area, and that increased revenue is then used to pay off the infrastructure improvements rather than going into the municipality’s general fund.
“It could be roads, sewer, brownfield remediation, numerous types of public improvement,” said Megan Sullivan, executive director of the Vermont Economic Progress Council. “The idea is, the community needs to do these public improvements to spur private development in that area.”
Joel Schwarz, executive director of the Barre Area Development Corp., said Barre’s downtown is a TIF district. The designation was used to finance parking supporting downtown housing and office space.
“Right now, it’s kind of a break-even proposition, but as certain tax stabilizations wind down, it’ll start producing revenue,” he said. “When you have a TIF district, it’s leveraging. It helps attract other grant money to make improvements in the downtown area. ... If there’s an empty, blighted property that has to go, but you have to clean it up and put in lighting, it’s really beneficial.”
Rutland lacks a TIF district, but has considered pursuing one in the past.
“When we looked at that Evelyn Street redevelopment corridor, that was one place we thought TIF could come into play,” said Rutland Redevelopment Authority executive director Brennan Duffy. “There was significant acreage that would have needed to be renovated. ... That would probably be the poster-child for that kind of project.”
The proposal, which involved converting Evelyn Street into a pedestrian mall and building a hotel over what is now Depot Park, never came together. Duffy said he sees no imminent possibilities for seeing a TIF district in Rutland, but that there was potential for seeing a designation of the right proposal came along to redevelop the area west of Evelyn Street.
“Some of those properties are underutilized,” he said. “That would probably be the area I could see fitting into this.”
The option has always been there for places like Rutland and Barre, though.
“The biggest thing is, how can we get them in more rural communities,” said Rep. Michael Marcotte, R-Newport, chairman of the House Committee on Commerce and Economic Development. “We authorized six TIFs several years ago, and I think there’s four slots left. ... It’s not an easy process for a municipality to get a TIF. They need to really know what they’re doing.”
Sullivan said the governor’s proposed approach would make the TIF program more widely available by creating a more “project-based” version of the designation, rather than the wider-ranging requirements that include large-scale public improvements that would likely span multiple bond votes and might require a staff to oversee.
“We’ve seen that communities had success with the TIF district program that have administrative support,” she said. “Our smaller communities don’t necessarily have the staff and don’t necessarily have the need — there’s not 10 years worth of projects.”
What they do frequently have, she said, is one project that could spur investment — like a sewer upgrade that could create the capacity for more housing — but not quite enough funding to get it done.
“We’re looking at this as being that gap financing piece,” she said. “There’s loan funding available, but it’s hard for a community of 1,000 people or 800 people to take on the financing when there’s so many demands on municipal funding.”