Question #4: Main Street TIF

Frequently Asked Questions

Main Street TIF FAQ

How much is the proposed TIF bond?

The City is asking voters to authorize additional borrowing up to $25,920,000. If approved, this will bring the cumulative total authorized by voters to $35,920,000. This includes $5.4 million of previously completed TIF projects and ~$30 million for Main Street Great Streets and the ravine sewer.

What will the TIF bond be used for?

The City proposes to use the funds for the Main Street “Great Streets” project and the “ravine sewer” project.

Main Street “Great Streets”

The Main Street upgrades will meet the Great Streets standards that were adopted by the City Council in April 2018. The work will begin with underground utilities being upgraded, extended, relocated, and reconstructed, as needed. But Great Streets is so much more than that. Great Streets will create a far more livable environment along Main Street designed to focus on people while still accommodating cars. It will incorporate environmental benefits such as rain gardens to pre-treat stormwater runoff. Bicycle lanes will create safer and more inviting travel for cyclists. Wider sidewalks with street trees, street furniture and other landscaping will create an appealing environment for pedestrians.

Ravine Sewer

The ravine sewer is a very large and very deep stormwater sewer line that runs through an old ravine that bisects the City-owned parking lot at the corner of Main and Winooski Ave. It then passes under Main Street as it continues generally south-west. It was built beginning in the 1860s, more than 150 years ago!

In its current condition, a building could not be constructed on top of the ravine sewer. If the City-owned parking lot at the corner of Main and Winooski is ever to be redeveloped, there is no doubt the sewer ravine must be relocated or possibly re-built. The City is including the sewer ravine work in the overall TIF project to open the parking lot for redevelopment and to avoid the risk of re-building Main Street and the intersection with South Winooski Ave. only to return at some later point to dig up the Great Streets work to deal with the inevitable need to rebuild the ravine sewer line.

Why is the City proposing this work?

The strength of Burlington largely rests on the vitality of its downtown. Our downtown is the core of the City’s economy and is a huge element in what makes Burlington a great place to live and attractive for investment. The investments the City has made through TIF and other funding sources directly and indirectly make it a place where property owners are willing, even eager, to invest.

Main Street is the gateway to downtown, whether someone is coming from the Interstate, Route 7, or from the waterfront. Yet it hasn’t had any substantial improvements in decades. This particular resource provides one once-in-a-generation opportunity to redevelop Main Street.

What is TIF and How does it Work?

Tax Increment Financing (TIF) is an economic development tool designed to foster the types of development Vermont has been encouraging for years, in the places we want it to occur – downtowns, industrial parks, and compact village centers.

TIF allows local governments to invest in public infrastructure and other improvements up-front. Local governments can then pay later for those investments by capturing the future anticipated increase in tax revenues generated by the project to pay back the bond. TIF is designed to have tax increment revenue fund improvements, not increase taxes.

How does the municipality pay for the public infrastructure investments?

At the time a TIF district is established, the total taxable grand list value of the properties in the district is determined and is called the “Original Taxable Value” or OTV. During the life of the TIF district, all taxes generated by the OTV continue to go to the funds they have always gone to – principally the municipality’s general fund and the state education fund. Not a nickel of those dollars is taken away.

New incremental taxes generated by the new incremental grand list value created by the new private development goes to the TIF fund, but not all the new taxes. In the case of Burlington’s downtown TIF district, 100% of the new incremental municipal taxes and 75% of the state education taxes go to the TIF fund. The other 25% of the state education taxes go to the education fund.

These new incremental taxes in the TIF fund are used to pay the debt service on the money the municipality borrowed. The money in the TIF fund also pays for costs to plan and manage the construction of the public infrastructure projects, and the costs to set up and operate the TIF district. These are referred to as “Related Costs”.

Does TIF take money away from the education fund?

TIF uses only new incremental tax revenue. The core idea is that “but for” the use of TIF to make public investments the private development would not have occurred, and the tax dollars being used for TIF would not have existed. Therefore, the education fund would not have had them in the first place.

What is the purpose of TIF?

Every state that has a TIF program has its own goals and objectives for TIF. In Vermont the TIF enabling statute (Title 2VSA, Chapter 53, Sub-chapter 5, § 1893) says:

The purpose of tax increment financing districts is to provide revenues for improvements that serve the district and related costs, which will stimulate development or redevelopment within the district, provide for employment opportunities, improve and broaden the tax base, or enhance the general economic vitality of the municipality, the region, or the State.

What is the Downtown TIF District?

The purpose of the Downtown TIF is to promote economic and public infrastructure development in a portion of Burlington's Designated Downtown. The boundaries of the Downtown TIF district are shown on this map. Burlington’s downtown TIF district was approved by voters in March 2012 [RH1] and can fund stormwater, utility, streetscape, public parking and transportation/pedestrian improvements. Incurring specific debt requires separate approval by voters.

Burlington’s downtown TIF district was established and approved by VEPC in 2011. The final date on which it is authorized to incur debt is March 31, 2023. The Downtown TIF is separate from Burlington’s Waterfront TIF district which began in 1996.

What has the Downtown TIF district been used for so far?

To date the Downtown TIF district has paid for several key upgrades:

St. Paul Street – the Great Streets improvements between Maple Street and Main Street
Marketplace Garage repairs
Browns Court parking brownfield cleanup
Stormwater management upgrades on Main Street adjacent to City Hall Park
Design work for Main Street upgrades from South Union to Battery

How is the downtown TIF doing? Is it covering its debt?

It’s doing great and, yes, it’s covering its debt. Since the Downtown TIF district was established in 2011, the assessed value has increased by $109.5 million (from $170 million to $279.5 million), which amounts to 6% average per year. The “background growth” referenced above, at only 1%, is considered to be very conservative. The expectation is that much more growth will be stimulated and will occur.

Original Taxable Value (OTV) in the Downtown TIF District: $170 million
Current taxable value: $279.5 million
Incremental Value in the downtown TIF district to date: $109.5 million
In 2015 voters approved up to $10 million bonding
Debt incurred to date: $5,420,000 with $4,580,000 not yet borrowed
Debt balance (as of 7/1/21) $4,565,000 (already paid off $855,000)
TIF Fund Balance (as of 7/1/21) $1,790,524

In brief, the TIF fund has sufficient revenue to pay its debt and has a current surplus of nearly $1.8 million.

Where can I get more information?

Information regarding the Great Streets program is here:

http://greatstreetsbtv.com/

The CEDO website includes more information on:

Downtown TIF district: https://www.burlingtonvt.gov/CEDO/Downtown-TIF-District

Tax Increment Financing: https://www.burlingtonvt.gov/CEDO/Tax-Increment-Financing