Tax Increment Financing 101

How TIF’s work.


So what is a TIF?

TIF stands for "Tax Increment Financing."

A TIF District is an area in which we capture the additional (incremental) tax revenue generated from new development.  These additional tax revenues may then be invested in public projects that support the private investment (new development) in the District.

Increment is the difference between the original value of the property and the developed value of the property  --   when taxed.  Taxes from the original value of a property continue to go to the State Education Fund and to municipal government.  But the taxes on the “incremental value” during and after development of the project can be used to finance “TIF Debt” - financing for public projects in the District.

Tax Increment Financing is a state and local economic development tool used to leverage new property taxes generated by specific private projects and invest those funds for a public purpose approved by the voters.

What is the purpose of TIF and what are the City's goals for TIF?

The purpose of our TIF program is to fund public infrastructure and/or public facilities and to stimulate economic development in the City Center TIF District.

The City's goals are to realize a downtown for South Burlington - City Center.  Public projects will help make City Center the core of the community, projects such as a new library, new road infrastructure, a public park and gathering places that promote community.

Using the financial resources generated in a TIF District help bring these projects to fruition and create jobs, as new businesses choose to locate or grow in City Center and residents begin to live here – without placing an additional burden of these projects on South Burlington property tax payers. 

Is TIF a new fee or a tax?

No. TIF does not add to additional taxes or fees on our taxpayers/residents.  TIF allows us to keep some of the revenues that would otherwise go to the State's Education Fund and into municipal coffers. We can then use these funds for public projects that will encourage private development in the TIF District and grow our Grand List.

How does TIF work?

Generally, a TIF District is established by a municipality in an area that they hope will develop or redevelop.  Often these large projects like our City Center require public infrastructure to encourage private real property development or redevelopment.

When voters approve TIF debt, the City uses debt generated funds (debt proceeds) to build public infrastructure such as Market Street or Garden Street that support new development. Then, when new private development occurs, values of properties increase generating more education and municipal tax revenue (increment), a portion of which pays for debt service on the public infrastructure.


Are the City’s TIF financed projects supporting new development in City Center?

Yes, already we have seen new residential development in City Center.  Allard Square is a new residence comprised of 39 units of affordable Senior Housing.  The Garden Apartments are another 60 units of affordable housing for individuals and families.  Two new housing projects are now permitted and awaiting construction on the north and south ends of Garden Street.  And we also have the new town homes built at the east end of Market Street.  And there are other projects that are in some stage of design.

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, west of Hinesburg road and along San Remo Drive.  

TIF District Boundary map

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         (1 active - Town Core & 1 retired - Catamount/Husky)
  • St. Albans City   (1 district)
  • Barre City   (1 district)
  • Hartford/White River Junction (1 district)
  • Bennington  (1 district)
  • Killington     (1 district)