Q1. Can any project in a TIF District use TIF?
A1. Not necessarily. The Town must work collaboratively with a private developer or property owner to determine the eligibility of the project for the use of TIF for supporting infrastructure. All properties within the TIF District boundary, however, are preliminarily eligible for TIF.
Q2. Could you explain the TIF District Timeline? (5years to start a project, 10 years for projects, 20 years to retain the increment to pay off the debt…)
For example, if the St. Johnsbury Select Board votes to create a TIF District in 2019 and bonds for an infrastructure project in 2020 with a 30-year bond, the following will apply:
Q3. What level of detail is provided to the public about a development that uses TIF?
A3. During the TIF District Plan development and the VEPC application process, the Town will disclose all of its assumptions for possible development projects. But these are not binding projections. When the Town is considering incurring debt to stimulate a development project, the property owner must be involved, site plans will come before Select Board, and when permits are required, the Development Review Board. The financing of the debt and the repayment sources and projections are then provided to the Select Board for consideration of warning a bond vote and provided to the public before the election.
Q4. How long does it take to go through the substantial change process with VEPC?
A4. This is unclear at the moment. The Vermont Economic Progress Council (VEPC) is in the process of revising the TIF Rule and the substantial change process. The Town is advised to initiate conversations with VEPC when first considering a project that will differ from the TIF District Plan.
Q5. How do you close a TIF District?
A5. A TIF District is “closed” when all TIF-financed debt is repaid.
Q6. What happens if the increment is not enough to pay the debt?
A6. If at the end of the twenty-year period in which the Town retains both State and municipal increment, there is not enough retained increment to repay the debt, the Town may continue to retain the municipal portion of the increment until the debt is repaid. No matter what, the Town is obligated to repay the debt. At that time, the Select Board could also choose to raise all tax rates instead of extending the retention period. It is also possible, though, that the increment retained over is more than sufficient to cover debt service. Whenever that happens, the Town could choose to repay all debt and close the District before the twenty-years is over or ahead of the repayment schedule. Any remaining money in the TIF Fund would be allocated to the Education Fund and Municipal General Fund proportionately.
Q7. How will the partial reappraisal effect my tax bill? In the district & out of the district?
A7. Although the effect on your tax rate is uncertain due many factors besides the town-wide reappraisal we expect that the partial re-appraisal of the TIF District properties during 2019 could increase the town municipal tax rates by about 1 cent. The properties within the TIF District may have lower or higher assessed values, which may result in lower or higher tax bills. Throughout the TIF District, the assessed values have averaged about 108% lower than before.
Q8. Does any increase in property value within the TIF District go into the fund to pay off infrastructure? Does this include residential property?
A8. Yes and yes. 100% of all new municipal taxes generated by increased property values (due to renovations, redevelopments, new construction, etc.) will be allocated to the TIF fund to repay the debt for any infrastructure built within the District. 70% of the State incremental taxes will also be allocated to the TIF Fund (while the remaining 30% goes to the Education Fund).
Q9. Will the partial re-appraisal remain in effect if the TIF District is not granted?
A9. Yes. The Town is re-appraising all properties regardless of the creation of a TIF District. That process began in 2018. Beginning the re-appraisal with a small number of properties (the 144 properties in the TIF District) is a good way for the Town staff to incrementally approach the process.
Q10. When does the town start collecting the tax increment?
A10. The Town can begin retaining municipal tax increment after the Select Board votes to create the TIF District. The State incremental taxes can only be retained once the first debt has been incurred. (This begins the twenty-year period of retention, as per the above.)
Q11. Do you re-appraise development projects annually in order to receive accurate property tax increment?
A11. Any new projects that would create tax increment will be subject to a reappraisal every spring until the project is completed.