The City of South Burlington has a once in a generation opportunity to use tax increment financing (TIF) as a tool for infrastructure improvements that create a downtown by supporting the development/redevelopment in City Center and creating a civic center.
So what is a TIF?
TIF stands for "Tax Increment Financing."
A TIF District captures the tax revenue on new development in a district while protecting the value of the Original Assessed Value for the General Fund. The difference is the "increment."
A TIF District is a local economic development tool used to leverage new property taxes generated by specific public projects in a specified area (district).
What is the purpose of TIF and what are the City's goals for TIF?
The purpose of Tax increment financing (TIF) is to fund public infrastructure and/or public facilities and to stimulate economic development.
The City's goals are to realize a downtown for South Burlington - City Center and the public projects that will make it the core of the community, such as a new library, a central urban park, a recreation facility, connectors such as Market and Garden Streets, and gathering places that promote community. Using the TIF District will help bring these projects to fruition and create jobs, as new businesses choose to locate or grow in City Center.
Is TIF a new fee or a tax?
No. TIF does not add to our taxes or fees. It allows us to keep some of the revenues that would otherwise go to the State's Education Fund. We can then use these funds for public projects that will encourage private development and grow our Grand List.
How does TIF work?
Generally, a TIF District is established by a municipality around an area that requires public infrastructure to encourage public and private real property development or redevelopment. The property values at the time the District is created are determined and the property taxes generated by that original value continue to go to the taxing entities (municipality and state).
The voters approve the TIF debt and the City uses it to build public infrastructure that support new development. The new values created by the the new development results in more education and municipal tax revenue (increment) which pays for debt service on the public infrastructure.
The City projects will encourage private developers redevelop within City Center. When the values of properties rise as they are improved or developed, they produce NEW local and state tax revenue. The TIF District allows the City to keep some of the NEW local and state tax revenues to pay for these local public projects.
The new values created by the economic development increase education and municipal tax revenue, which pays for the cost of the infrastructure.
The City currently is working with developers on new development projects.
Where is the TIF District?
The TIF District is the area outlined on the map below. It lies east of Dorset Street, south of Williston Road, east of Hinesburg road and along San Remo Drive. Within this District, once debt has been incurred, and if it is incurred by March 2017, the City can keep local and state tax revenues from the new (increase in) property values.
What other Vermont communities utilize TIF?
Tax Increment Financing Districts have been established in several communities. These towns/cities have successfully funded public infrastructure improvements and increased economic development in their specified areas:
- Burlington (2 districts — Waterfront & Church Street)
- Winooski (1 district)
- Milton (2 districts — Town Core & Catamount/Husky)
- St. Albans (1 district)
- Barre (1 district)
- Hartford/White River Junction (1 district)