Cities and towns across Vermont are increasingly turning to a special tool known as a TIF district to attract downtown development. The city of St. Albans was just approved by the state for the latest tax increment financing district.
Other communities are interested in districts of their own, but state law limits how many there can be. So Governor Peter Shumlin wants the Legislature to add more of them.
The idea behind a TIF district is relatively simple. New development creates additional, incremental state property tax revenues. Towns that are approved for a TIF are allowed to keep a portion of those revenues to build public projects.
And supporters say that’s what they plan in the new downtown district in St. Albans.
"In plain English, it’s a real game-changer," says St. Albans City Manager Dominick Cloud. He says the city can now promise potential redevelopment partners new facilities, such as a parking garage.
"It makes our downtown more attractive for them to locate their business," Cloud says. "The city can say, ‘If you build this 40,000 square-foot office building, we will build an adjacent parking garage so it can happen in the downtown. It levels the playing field."
Cloud says left to its own devices, the private market won’t invest in historic downtowns because there’s too much red tape.
Now, officials in St. Albans are working to sell an existing state office building on the outskirts of downtown and build a new one in the heart of the city. If it’s approved, that plan will bring some 150 state workers closer to downtown restaurants and shops.
Other towns want a piece of the pie, too.
"We find ourselves in an unusual situation," says Governor Peter Shumlin. He says no one could’ve predicted the success of Vermont’s tax increment financing program when the Legislature capped the number of TIF districts at six. "We’re kind of having a photo finish of two communities applying for TIF opportunities at the same time."
Those communities are South Burlington and Barre City. And Barre Mayor Thom Lauzon has asked the governor to convince the Legislature to create a seventh district.
"Even though we’re certainly on the rebound, we’re playing a bit of catch up so we really need this to ensure future growth," Lauzon says.
Shumlin is seeking early legislative action to increase the number of TIFs that can be approved. But there are questions about the districts. Two of them – Burlington and Milton – are in a dispute with the state auditor over whether they owe tax revenue to the state.