Town officials eye possible TIF district in Springfield

How to generate growth in the private sector without funding in the public sector, and vice versa, is a problem that plagues many Vermont villages, towns, and cities. But, Tax Increment Financing (TIF) has been available in Vermont since the 1990s.

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2017-08-17 / Front Page Town officials eye possible TIF district in Springfield By KELSEY CHRISTENSEN kchristensen@eagletimes.com SPRINGFIELD, Vt. — How to generate growth in the private sector without funding in the public sector, and vice versa, is a problem that plagues many Vermont villages, towns, and cities. But, Tax Increment Financing (TIF) has been available in Vermont to help provoke infrastructural investment, private sector growth, and buzz about a town’s offerings without the burdensome costs that can inhibit such efforts since the 1990s. Once rich in derelict buildings and poor in private investment, towns like Barre, Burlington, St. Albans, Hardwick, and more have reaped the benefits. Now, the state of Vermont has announced available funding for the formation of six new TIF districts, and the Town of Springfield — already armed with a comprehensive revitalization plan, the Streetscape Master Plan — is examining the feasibility of investing in the town through TIF funding themselves. On Wednesday, the town hosted a luncheon, in which project managers with Burlington-based White and Burke Real Estate Investment Advisors, Gail Henderson-King and Stephanie T. Hainley began to arm town officials and interested members of the public with information that will be necessary as the town enters the public hearing process. After the municipality expresses interest in becoming a TIF district, the town will have to seek local approval of the process, hold a meeting in the municipality to gain public input, and have the town approve a funding plan, plus the steps that are required at the state level. Springfield first heard a presentation about the ins and outs of TIF districts from Fred Kenney, executive director of the Vermont Progress Council, on June 12. Kenney reviewed the qualifications required to become a TIF district, such as the density of the development area, and laid out a rough timeline of the application process. On July 10, Town Manager Tom Yennerell recommended that the selectboard allocate $20,000 to hire a feasibility consultant to assist with earning the TIF designation. Henderson-King and Hainley broke down the complex TIF structure in a digestible way: the town receives a municipal bond through the state, the municipality uses the bond to build infrastructure, which entices private developers to create projects. “You’re creating development that wouldn’t have occurred,” Henderson-King said. What’s particularly special about a TIF district, however, is that the state allows the municipality to retain some of the state property taxes that are added when a private developer increases the value of a property in order to pay off the debt service from the bond. “Downtown development is really expensive, and [a TIF district] takes away one of the barriers,” Hainley said. TIF districts work by having the state authorize a dense area of development in a growth center or downtown, rather than just one project at a time, reducing the challenges, costs, and barriers to large development projects. “Redevelopment in downtowns tend to be very difficult,” Henderson-King said. “High costs for brownfield issues, clean-up: all of that adding up can make a project not viable.” TIF districts don’t only benefit the municipality which gets to enjoy the growth. It creates long-term investment in the education fund, as Hainley pointed out. Henderson-King Hainley and were on hand to address attendee questions, and there was a big one: taxes. Paul Kendall, of Lawrence and Wheeler Insurance Company, asked whether homeowners in Springfield could expect to see an increased tax rate following the development for which a TIF district allows. According to Hainley, the answer is largely no. Hainley says that the developer who has increased the value of their property may see a higher tax bill because they’ve added assessed value, but to the average resident, the risk of increased taxes are low. And, as Yennerell pointed out, just because residents need to vote on the bond doesn’t mean the funding is coming from their tax dollars. “When municipal debt is incurred, even though the payments will come from the [incremental taxes], the town still needs to vote on that,” Yennerell said. Another concern raised was the risk posed if the town doesn’t bind a developer to committing to a development project. “There is a risk,” said Hainley. “If, for some reason, a development project didn’t happen but you did do an infrastructure project.” For that reason, Hainley and Henderson-King explained, TIFs are most successful if a municipality and a developer work together to determine what infrastructure projects will create the most market opportunities. For example, if a business needs parking spaces in order to relocate to Springfield or expand, then a reasonable infrastructure project would be more parking spaces. The next steps for Springfield will be public input sessions and creating a website, hosted on the town of Springfield website, with more information on TIF districts for residents. “If a town creates more cultural and recreational opportunities, that brings more traffic to the town,” selectboard member Walter Martone said. “We want to make Springfield a destination.”