Frequently Asked Questions

What is the total cost of this project?

$21,800,000

What is the total amount of bonded debt needed to support the project?

$20,400,000

Will this project increase my taxes?

Debt issued under this authorization will not raise the tax rate. Debt will be serviced by two main revenue sources: TIF District Financing and City Center Reserve Fund (see details on these sources below).  There is no additional tax increase needed.

What are the sources of money that will pay for this project?

City Center Reserve Fund (estimated $15,400,000 bond) 30 Years
Tax Increment Financing
($5,000,000 bond) 17-19 Years
Library Blanchette Fund ($428,000)
Impact Fees (estimated at $220,00)
Solar Array Roof Net Metering Revenues (estimated at $720,000)
Pie chart - financing revenue sources

Revenue Sources Further Defined:

City Center Reserve Fund

The City Center Reserve Fund is funded annually through the collection of taxes.  Over the past 5 years, this fund has grown to an annual contribution of as much as $860,000.   The current funding level for fiscal year 2019 is $750,000, and there is currently $3.4 million dollars in the fund.  An annual payment from this fund of $736,000 is estimated to pay the debt on this project over 30 years.  Because the current allocation of approved funding ($750,000) is larger than the payment required to pay the debt on this project ($736,000), no additional tax increase is required.  The money that is not being used for this project will remain in the City Center Reserve Fund for future projects in City Center.  Since the early conception of new public infrastructure in the proposed Downtown, the City Center Reserve Funds was planned and established to finance this type of project.

Tax Increment Financing
The TIF District Financing revenues are generated from new development within the TIF District – revenues that did not exist prior to 2012 and most of which would otherwise be transferred from South Burlington to the State. Tax Incremental Financing captures incremental additional tax income when projects are developed. These are taxes that otherwise would be sent to the State Education Fund. The revenue collected can then be invested in public infrastructure and facilities right here in South Burlington.  We are already collecting TIF revenue and as additional private projects are developed, the amount will increase.  Projects now contributing to the TIF include Trader Joes, Pier One, the Market Street townhomes, and Cathedral Square.  TIF Funding for this project will contribute 30% of Library and Senior Center Funding, and 10% of City Hall Funding. The estimates for TIF Funding contributing to this project are based on current and approved projects. The City believes this is a conservative estimate. As additional private projects are developed, the TIF Funding will increase.

Please see the spreadsheet for the estimated debt payment schedule.
For more information about TIF District Financing, read TIF 101

Other Funding Sources
Additional funding sources include the Blanchette Fund (Library Bequest currently valued at $428,000), the Library Capital Fundraising Campaign, Impact Fees collected from development (estimated at $220,000), and revenues generated by net metering for the solar array on the roof (proposed at $720,000).

How long does the City have to incur debt through Tax Increment Financing?

There is a 5-year time period after the City first incurred Debt (February 2017) that ends in March of 2022. Therefore, we’re a little over a year and a half into the TIF process, just under 3 ½ years left for the opportunity to incur any debt and utilize TIF to help offset costs on the projects that has been identified and approved by the City Council and the State VEPC Board for consideration of these funds. Most importantly, all TIF projects require the approval of voters, no TIF debt may be authorized without this.

What is the Capital Improvement Plan (CIP) for the City, and how does this relate to the City Center Reserve Fund?

The Capital Improvement Plan is a tool used to improve coordination in the timing of major projects, plan for capital replacement and major maintenance costs, and reduce large fluctuations in the tax rate. The City Center Reserve Fund is included as a part of the CIP.  The Plan is not a budget, but provides a road map to guide budget preparation based on an estimate of future projects and costs consistent with City priorities and fiscal outlook.  The CIP is prepared annually during the budget process and a summary of the 10-year CIP is included in the Annual Budget Booklet and can be found on the City webpage under the Finance Department-Budget.

Funds allocated to the City Center Reserve Fund are separate funds collected for this specific purpose, and not co-mingled with other capital improvement costs. The CIP is a part of the General Fund budget that is set aside each year for capital improvements. The planning for large ticket items, then, is spread out over time. The categories for CIP are itemized by department, for example- Fire, Police, Library, Public Works, Recreation & Parks, IT, etc.

The CIP is updated annually.  The City has been paying into the Reserve Fund for the City Center project for 5 years. There will be no new taxes, because the City has planned for this financing over time. Dollars allocated to the Reserve Fund can only be used for the Reserve Fund purposes, as defined in the Resolution approved by the City Council establishing the Reserve Fund. 

Is the City Center Reserve Fund part of the General Fund Budget?

Any allocation to the City Center Reserve Fund is included in the General Fund (property tax monies for the operating budget).  A transfer this fiscal year of $750,000 has been moved from the General Fund to the City Center Reserve Fund. There is currently $3.4 Million dollars in this Reserve Fund.  The build-up of these funds will be used by the City to pay the initial higher payments that are over a million dollars annually while taxing at a much lower annual payment of debt at the $736,000 level.  As this amount is below the annual transfer to the reserve fund, this project will not require an increase in the tax rate.

What is the current amount of City Debt from the General Fund?

It is important to distinguish here between what debt was incurred over time (original debt borrowed), and what is the balance of total debt.  Currently the City has $18 Million dollars of debt balance,
$5 million of which is for the two TIF projects already funded for City Center- the reconstruction of Market Street, and the development of City Center Park.  The bonds for these projects are completely funded by Tax Increment Financing, not necessitating any use of local tax dollars to fund these projects.  Thus, the current tax rate reflects a General Fund obligation of bonded debt for just over $13 Million dollars.  The majority of this debt is reflective of two major items, the Police Station- $4.3 million dollar balance, and the Pension Loan - currently with a $5.8 Million dollar balance. Current Debt by Fund is listed on the City website, Finance Dept.- Budget, and included in the Annual Budget Booklet. Enterprise Fund Debt for projects (water, sewer, stormwater) are paid by the rates collected for these services by the ratepayer, not paid for with tax money, thus these debts are not included in the General Fund budget, and not included in your tax rate[IB2] .

What is the General Fund?

The General Fund is comprised of expenditures and revenues from a specific tax year that have been authorized by the voters as the official financial appropriation of funds for the operating budget.  The difference between the expenses and revenues determines what the tax rate will be. To compute tax for an individual property owner, the City takes the property owner’s assessed property value, divides that by 100, and multiplies it by the actual property tax rate.

Will I be able to comment publicly on votes for TIF District Financing?

Yes – The City will provide opportunities for public comment.  There will be one in October and one which is statutorily required in November.  There will also be opportunities to ask questions and learn about the project.

Where can I get more information?

Prior to each vote, the City develops a detailed Public Information Notice.  
See also:

Will there be parking?

Yes.  34-40 vehicle and 26 bicycle parking spaces will be provided onsite for the Community Center.  An additional 35-40 vehicle spaces will be leased offsite.  This project will also ensure that the Central School has the same number of spaces as they have today on the RMCS property.

What is Tax Increment Financing?

When property owners pay their property taxes, about 20% goes to municipal functions like plowing the roads, police and fire protection, the community library, recreation and parks  and other services.  The other approximately 80% is sent to Montpelier to be added to the Education Fund, and then those funds are redistributed to communities across the Vermont for education purposes.

Under Tax Increment Financing (TIF), some of the funds that would otherwise be sent to Montpelier can stay in South Burlington, to pay for certain public infrastructure projects.
TIF_District_Graphic(1)

The State Legislature has approved the City Center Tax Increment Financing District. Properties in the District are currently assessed an amount of taxes that go to municipal government and to the State Education Fund and that will continue as is. 

However, when new development is added in the District by private owners – new housing, or an office building or a hotel, or retail shops - the additional tax revenue that is generated from these improvements stays in South Burlington.  This revenue can only be used to pay debt service for things like roads, a library, or other public improvements that the City constructs for the City Center TIF District.

By using Tax Increment Financing, South Burlington will be able to create public facilities in City Center using funds that would have otherwise been sent to the State.  Learn more by reading the TIF District 101.

What and where is City Center?

City Center will have all of the characteristics of a downtown; housing, office, retail and civic uses as well as grid streets, bike and pedestrian facilities, public green and open spaces, Community Library and other public buildings and other features consistent with a downtown.  Opportunities for more downtown development will also drive growth to City Center reducing development pressure on more environmentally sensitive areas.

The City Center Tax Increment Financing (TIF) District is an area within City Center designated by the City and State as the new downtown for South Burlington. The TIF District is generally the area on both sides of Market Street between Dorset Street and Hinesburg Road and to the south along San Remo Drive.  This area has also been designated a New Town Center by the State Downtown Board.  

Why do we need City Center?

A survey in 2015 of South Burlington residents found that over 55% believe that the City has no discernible identity. An equal number felt that having such an identity is important for the economic and social well-being of the community. While many recognize that some pillars of identity and community exist such as a strong school system, the dominant feature of a community—its own “downtown” where residents can live, work, gather, recreate, shop and spend time with one another — is missing.  It is this long-held desire to have our own downtown which has led to the City’s efforts to create City Center.

Who has been involved in this process?

The City Council, City Committees, residents, adjacent property owners and other stakeholders such as state agencies.

Why does South Burlington need a City Center?

The lack of a downtown was identified by the community and included in Comprehensive Plans from the 1970s. Community effort and planning began in the 1980s for a City Center.  The Community has identified the development of a downtown as a focus for civic activities, events, and social activities as critical to bolstering and supporting South Burlington’s identity, cohesion, resiliency, environmental and economic sustainability, and spirit.

What are related costs?

Related costs are costs incurred in the TIF District application process, implementing and administering the TIF District.  The costs are incurred before and over the life of the district.  The City included the following TIF District estimated related costs in the application to the Vermont Economic Progress Council (VEPC) Financing Plan for the City Center TIF District.

Related Cost Name

Related Cost Description

Related Cost Amount

Application Deposit

Application deposit charged by VEPC for third party application analysis

5,000

Application Fee

Total Application Fee charged by VEPC for third party application analysis

16,802

Market Study 2012

Fee charged for the Market Study

1,900

Consumer Demand Study

Study anticipated to support real property development

30,000

Additional Market Study

Study update anticipated to support bond debt

2,000

Application Materials & Outreach

Public Notice, materials

217

Annual Audits

Audits required by Statute

110,000

Outreach

Costs for public notices, publishing, educational material, events, etc. related to the TIF District

50,000

Legal Fees

Support development and analysis of TIF District development agreements

450,000

Financial Analysis

Support debt structuring, market studies, etc.

100,000

State Audits

Audits required by Statute

300,000

Application Fee

Any fees charged for analysis

5,000


I heard that there were problems with the TIF Districts – will that happen to us?

Many years ago (before South Burlington had a TIF District) there was a disagreement between communities administering TIF Districts and the State Auditor.  Since then the State has established and adopted clear rules and a means to settle disputes.   As the City’s TIF was formed after these were resolved, the City benefits from newer, clearer language and regulations.  The City’s auditor will audit the TIF District once a year, and the State will audit it three times.  The City also has several staff, including in accounting, to make sure that the City is in compliance.

I have more questions, what other information is available online?

Learn more about TIF Districts on the TIF District 101 page...