Frequently Asked Questions

TIF question on the November 8, 2016 Ballot

On September 29, 2016, the City Council passed a resolution which called for placing the following question on the ballot of the November 8, 2016 Special City Meeting: 

“Shall the city council be authorized to pledge the credit of the City to secure the repayment of indebtedness or make direct payments for the purpose of funding one or more public improvements and related costs attributable to projects serving the Waterfront Tax Increment Financing (TIF) District, specifically: 

(a) Pine Street Acquisition, Construction and Streetscape Improvements: (the block between Bank Street and Cherry Street) to include property acquisition; street infrastructure and construction; streetscape, stormwater, utility, lighting and multimodal transportation improvements; 

(b) St. Paul Street Acquisition, Construction and Streetscape Improvements: (the block between Bank Street and Cherry Street) to include property acquisition; street infrastructure and construction; streetscape, stormwater, utility, lighting and multimodal transportation improvements;

(c) Cherry Street Streetscape Upgrades: (up to four blocks; between Church Street and Battery Street inclusive of intersections) to include streetscape, stormwater, utility, lighting and multimodal transportation improvements;

(d) Bank Street Streetscape Upgrades: (the two blocks between Church Street and Pine Street inclusive of all intersections) to include streetscape, stormwater, utility, lighting and multimodal transportation improvements; 

(e) Related Costs: reimbursement for TIF eligible related costs incurred by the City for the administration of the Waterfront TIF District, including direct municipal expenses such as departmental or personnel costs related to creating or administering the district to the extent they are paid from the municipal and not education taxes and are otherwise reimbursed in accordance with law 

in a total principal amount not to exceed $21,830,000.00 (which would be added to prior approvals for incurrence of Waterfront TIF District debt, since the district’s creation, of $32,858,873.00, of which $15,473,290.00 was outstanding at the start of this fiscal year), and to issue bonds, notes or make inter-fund loans for such purpose with the understanding that tax increment from the properties within the Waterfront TIF District shall be pledged and appropriated for the payment of such indebtedness or direct costs of the improvements; and with the further understanding that the City may utilize up to but not more than 75 % of all education increment and not less than an equal amount of municipal increment for payments of such indebtedness or direct costs and shall be further authorized upon City Council approval to utilize up to 100 % of municipal increment upon such determination as may be annually made that such additional retention of municipal increment is necessary for the purposes of reimbursing those direct municipal expenses such as departmental or personnel costs related to creating or administering the district which under the law may only be paid from the municipal and not education taxes?”

What is TIF (Tax Increment Financing)?

TIF is a long-term tool that uses incremental tax revenue over 20 years to repay debt. Investment debt will be repaid with the incremental tax revenue of the district, not just one particular project.

How will TIF affect my taxes?
There is no impact on taxes. TIF is devised to use the incremental future property tax revenue, not additional taxes, to pay for the debt incurred to finance infrastructure improvements within the District. Incremental property tax revenue is calculated based on the increase of property values within the TIF District since the date of its creation. Past improvements have led to redevelopment of properties and the resulting increased property tax revenues fund the cost of the infrastructure, with new economic development creating growth in the tax base.

What projects and activities will these funds be used for?
The TIF funds can be used for renovating and enhancing the 8 sections of the Burlington streets (Cherry, St. Paul, Pine and Bank Streets) that are located in the Waterfront TIF District (for more detailed information, including a map, page 18). The TIF funds can be used for the construction of the public infrastructure improvements which may include but are not limited to brownfield remediation, land acquisition, utility upgrades, utility undergrounding, street surfaces, sidewalks, plantings and lighting improvements, as well as related costs.

What is a TIF district?
A municipality establishes a TIF district within an area requiring public infrastructure to encourage public and private real property development or redevelopment. When the municipality creates the district, the existing property values for properties within the district are recorded; this is the Original Taxable Value (OTV). These properties already generate a certain amount of tax revenue for both the municipality and the State Education Tax Fund. Revenues generated by the OTV will continue to go to the taxing entities (municipal and State) throughout the life of the TIF district. However, as the property value increases due to TIF-financed improvements, so does tax revenue generated by the district as a whole - this increase is the increment. The municipality incurs debt to build public infrastructure that will allow for real property development and redevelopment to occur.

What is the "Tax Increment"?
The tax increment is the additional new property taxes generated within the TIF district above the OTV, based on the assessed value increases for properties within the TIF District during the life of the District.

How much tax increment is retained?
When the Waterfront TIF District was created the law enabled the city to retain all TIF increment. In 2009 State legislation was passed whereby the Waterfront TIF district has since been required to remit 25% of the state increment to the State of Vermont. The City may retain not less than75% and up to 100% of the local municipal increment to service related costs and debt.

How is this Waterfront TIF District different than the Downtown TIF District?
Burlington's two TIF Districts are entirely separate - both geographically and legally. The Waterfront TIF District was opened in 1996 under an old State statute. It is governed by some grandfathered provisions that apply to its administration and has its own projects and investments.   The Downtown TIF District is located in a portion of the Designated Downtown and is brand new under current State Statute. This has an entirely new set of project opportunities and public infrastructure needs. Please see the TIF map for boundaries of the two, separate districts.

How can we be sure the increment funds will be used as intended?
The City's Treasurer's Office and the State Department of Taxes are required by statute to satisfy the various reporting requirements concerning the use and operation of the incremental tax revenue. In Burlington, TIF is considered a special revenue fund; the City has a distinct and separate fund that tracks both the TIF revenue and tracks all the payments of debt service. Only debt authorized by City Council for TIF investments is allowed to be expensed in this separate TIF fund. The Clerk/Treasurer's Office keeps a list of approved TIF debt and records all debt service payments directly to the fund. Likewise, the Treasurer's Office records the incremental property tax revenues to the TIF fund. From year to year, the revenue and debt service payments vary and do not equal each other, although they are usually close, so the fund has a running balance.

Who monitors the TIF district?
Both the City and State monitor the TIF district. The City's Treasurer's Office is responsible for managing the debt and incremental tax revenue. The City submits an annual report to the State Department of Taxes to report on property taxes and the incremental taxes withheld for TIF debt repayment.