Thursday February 26, 2015
The City Council unanimously approved and authorized the submittal of the TIF District financing plan to the Vermont Economic Progress Council (VEPC) at the Tuesday, Feb. 17 meeting.
This is a necessary step in the financing plan, and a topic of ongoing discussion for several years. Once approved by VEPC, the TIF District financing plan will come before voters this spring for debt authorization of City Center.
The impetus of a tax increment financing district (TIF District) is to help create economic development that would otherwise not occur, and in summer of 2013, VEPC approved South Burlington’s TIF District proposal for the development of a proposed City Center.
The TIF District financing plan, which Project Director Ilona Blanchard presented before council, acts similarly to the TIF District Plan since it is a conceptual master plan for potential new public infrastructure as well as private sector investment. If the TIF District financing plan is approved by voters, South Burlington will set aside 75 percent of the property tax revenue from new development in the district, and use that to repay debt incurred from public investment. Seventy-five percent of the statewide education property tax due will go toward the debt, as well.
The total projected cost is $98 million, 62 percent is TIF eligible, and the city can now incur debt through 2022 instead of 2017. But the city will need to start incurring debt financed by the TIF District before March 2017.
There are 11 projects approved in the TIF District Plan, including Market Street, which is eligible for 100 percent of TIF District financing and is slated to begin construction in 2016. This is the only project the city is committed to currently, but the other future projects approved include the following: Garden Street, City Center/Dumont Park, Community Center (library, city hall, and recreation center), Central Urban Park, public parking, stormwater treatment and wetland mitigation/stream restoration, Williston Road streetscape, and a pedestrian/bicycle bridge over I-89.
Some projects, like Market Street and public parking, are 100 percent eligible for TIF District financing. Others that range in eligibility--such as the community center--will rely on capital campaigns (fundraising), impact fees, and the CIP Reserve fund for additional funding. Funding will also come from taxpayers; councilors said they wanted to lessen the burden on the residents.
“You won’t have to put a shovel in the ground until the money is made,” proposed councilor John Simson.
“Is the council going to say, as a matter of policy: we’re not going to start any public project until we actually have the money in hand, or are we going take a leap of faith on some things?” City Manager Kevin Dorn asked councilors. “These are going to be the very difficult questions you’re going to have because the TIF revenue is not always going to move in perfect sync with when you’ve got to build something.”
From a developer’s standpoint, Larry Michaels said that he wouldn’t want to build something without already having a buyer.
“I don’t know if the city should take risks,” he said. Having offer agreements and not simply building and hoping the revenue will come are points to consider, he added.
Throughout the discussion, Blanchard presented a series of charts in the TIF District financing plan, including a list of all the parcels within the district, cash flow-TIF financed portion, cash flow-city portion, a summary of all annual debt, a summary of all revenue costs, real property development projects -incremental value, infrastructure costs by year, and a property tax revenue projection summary. This plan outlines an “ideal” situation for the city, Blanchard said.
Councilors concluded that they need to approve and authorize the plan to be submitted to VEPC in order to progress to a public vote. After exiting the public hearing, Councilor Helen Riehle moved to submit the plan to VEPC, Simson seconded, and the vote was unanimous.
SOURCE: Miranda Jonswold, Correspondent