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S.291

AN ACT RELATING TO TAX INCREMENT FINANCING DISTRICTS FOR MILTON, SOUTH BURLINGTON, AND BERLIN

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  24 V.S.A. § 1891 is amended to read:

§ 1891.  DEFINITIONS

When used in this subchapter:

(1)  “Municipality” shall include means a city, town, or incorporated village.

(2)  “TIF” or “district” means a tax increment financing district.

(3)  “Legislative body” means the mayor and board of aldermen of a city alderboard, the city council, the board of selectmen of a town selectboard, and the president and trustees of an incorporated village.

(3)(4)  “Improvements” shall include its ordinary signification, such as installations, means the installation, new construction, or reconstruction of streets, utilities, and other infrastructure needed for transportation, telecommunications, wastewater treatment, and water supply, parks, playgrounds, land acquisition, parking facilities, brownfields remediation, and other public improvements necessary for carrying out the objectives of this chapter.

(5)  “Original taxable property” means all taxable real property located within the district on the day the district was created.

(6)  “Related costs” means expenses, other than debt for issuing bonds, incurred to meet the goals of a TIF development not to exceed pro forma costs, which are costs directly related to the administration of the district, approved by the Vermont economic progress council. 

Sec. 2.  24 V.S.A. § 1893 is amended to read:

§ 1893.  PURPOSE

The purpose of tax increment financing districts shall be is to provide revenues for improvements located wholly or partly within the district and related costs, which will encourage stimulate development or redevelopment within the district, provide for employment opportunities, improve and broaden the tax base, or enhance the general economy economic viability of the municipality, the region, or the state.

Sec. 3.  24 V.S.A. § 1894 is amended to read:

§ 1894.  POWER AND LIFE OF DISTRICT

(a)  A municipality may incur indebtedness against revenues of the tax increment financing districts for a period of ten up to 20 years following the creation of the district.  The ten-year 20-year borrowing period of the district shall commence at 12:01 a.m. on April 1 of the year so voted, and shall end at midnight on March 31 ten years thereafter. Any indebtedness incurred during the ten-year borrowing period may be retired over any period authorized by the legislative body of the municipality under section 1898 of this title.  The district shall continue until the date and hour all such the indebtedness is retired.

(b)  Notwithstanding subsection (a) of this section, any district created to use education tax increment financing that has not incurred indebtedness within five years following the creation of the district, shall request reapproval from the Vermont economic progress council in order to utilize education tax increment financing following that period. 

Sec. 4.  24 V.S.A. §1895 is amended to read:

§ 1895.  ORIGINAL TAXABLE VALUE

On or about 12:01 a.m., April 1, of the first year the lister or assessor for the municipality shall certify the assessed valuation of all taxable real property within the district as then most recently determined, which is referred to in this subchapter as the "original taxable value," and shall certify to the legislative body in each year thereafter during the life of the district the amount by which the original taxable value has increased or decreased, and the proportion which any such increase bears to the total assessed valuation of the real property for that year or the proportion which any such decrease bears to the original taxable value.  Upon creation of the district, the listers or assessor for the municipality in which the district is located shall certify the most recent appraisal value of the original taxable property of the district.  In each year thereafter during the life of the district, the listers or assessor shall determine the amount by which the appraisal value of the original taxable property has increased or decreased.

Sec. 5.  24 V.S.A. § 1896 is amended to read:

§ 1896.  TAX INCREMENTS

In each subsequent year the lister or assessor shall include no more than the, original taxable value of such real property in the assessed valuation upon which he computes shall be used to compute the rates of all taxes levied by the municipality, the school district and every other taxing district in which the tax increment financing district is situated; but he shall extend all rates so determined against the entire assessed valuation of such real property for that year.  In each year for which the assessed valuation appraisal value of all real property within the district exceeds the original taxable current appraisal value of the original  taxable property and that are authorized under section 1987 of this title the municipality treasurer shall hold apart, rather than remit to the taxing districts, that proportion of all taxes paid that year on the real property in the district which such that are in excess valuation bears to the total assessed valuation of the current appraisal value of the original taxable property and that are authorized under section 1897 of this title.  The amount so held apart each year is referred to in this act as the "tax increment" for that year for the purposes of this subchapterSo much of the The tax increments received with respect to the district and pledged and appropriated under section 1897 of this title for the payment of debt service on bonds issued for improvements shall be segregated by the municipality in a special account on its official books and records until all capital indebtedness of the district has been fully paid.  Such The final payment shall be reported to the lister or assessor, who shall thereafter include the entire assessed valuation of the district in the assessed valuations upon which tax rates are computed and extended and taxes are remitted to all taxing districts.

Sec. 6.  24 V.S.A. § 1897 is amended to read:

§ 1897.  TAX INCREMENT FINANCING

The legislative body may pledge and appropriate any part or all of the tax increments received from properties contained wholly or partly within the tax increment financing district for the payment of the principal of and interest on bonds issued for improvements contained wholly or partly within the district Such bonds; provided, however, that if any tax increment utilization is approved pursuant to 32 V.S.A. § 5404a(g), no more than 75 percent of the state property tax increment and no less than 75 percent of the municipal tax increment may be used to service this debt.  Bonds shall only be issued if the legal voters of the municipality, by a majority vote of all voters present and voting on the question at a special or annual municipal meeting duly warned for the purpose, shall give authority to the legislative body to pledge the credit of the municipality for the purpose these purposes.

Sec. 7.  24 V.S.A. § 1898(e) is amended to read:

(e)  Prior to the resolution or ordinance of the local governing body authorizing the bonds issued under this section, the legislative body of the municipality shall hold one or more public hearings, after public notice, on a financial plan for the proposed improvements to be funded, including a statement of costs and sources of revenue, the estimates of assessed values within the district, the portion of those assessed values to be applied to the proposed improvements, the resulting tax increments in each year of the financial plan, the amount of bonded indebtedness and related costs to be incurred, other sources of anticipated revenues, and the duration of financial plan.  A municipality that has approved the creation of a district under this chapter may designate a coordinating agency to administer the district to ensure compliance with this chapter and any other statutory or other requirements.  

Sec. 8.  24 V.S.A. § 1900 is amended to read:

§ 1900.  DISTRIBUTION

In addition to all other provisions of this chapter, with respect to any tax increment financing district, any municipal tax increment received which in any tax year that exceeds the amounts pledged for the payment on principal and interest on the bonds issued for improvements or other related costs in the district shall be distributed to the city, town, or village budget and school district budget, in proportion that each budget bears to the combined total of both the budgets unless otherwise negotiated by the city, town, or village and school districtAny state education tax increment received in any tax year that exceeds the amount pledged for the payment on principal and interest on the bonds issued for improvements or related costs in the district shall not be remitted to the towns but shall be used only for prepayment of principal and interest on the bonds issued, placed in escrow for bond payment, or paid to the state education fund.

Sec. 9.  32 V.S.A. § 5404a is amended to read:

§ 5404a.  TAX STABILIZATION AGREEMENTS; TAX INCREMENT

                 FINANCING DISTRICTS

* * *

(e)  A municipality may apply to the Vermont economic progress council for an allocation of the education grand list value for up to ten years, of a portion of the increase in the value and liability assessed under section 5402 of this title on new economic development that is subsequently approved by the Vermont economic progress council pursuant to this section and section 5930a subsections 5930a(c) and (d) of this title.  Allocation to a municipality pursuant to this subsection shall be in addition to any other payments to the municipality under chapter 133 of Title 16.  If allocated, the allocated portion of the education fund liability shall be used by the municipality to support economic development through the purchase or financing of for infrastructure including, but not limited to that includes wastewater treatment, water supply, transportation, and telecommunications and utility connections.

(f)  Municipalities which have existing tax increment financing districts under subchapter 5 of chapter 53 of Title 24 shall have the authority to expand those districts and to collect all state and local property taxes on properties within the tax increment financing district and apply those revenues to repayment of debt issued to finance improvements within the tax increment financing district to the extent approved for this purpose by the Vermont economic progress council upon application by the district under procedures for approval of tax stabilization agreements under this section, and that any such action shall be included in the annual authorization limits provided in section 5930a(d)(1) of this title. A municipality that establishes a tax increment financing district under subchapter 5 of chapter 53 of Title 24 shall collect all property taxes on properties contained within the district and apply up to 75 percent of the tax increment as defined in section 1896 of Title 24 to repayment of debt issued to finance the improvements or related costs for up to 20 years, if approved by the Vermont economic progress council pursuant to this section.

(g)  Any allocation approved pursuant to subsection (e) of this section or utilization of tax increment approved under subsection (f) of this section shall be in addition to any other payments to the municipality under chapter 133 of Title 16.  Allocations and tax increment utilizations approved pursuant to subsections (e) and (f) of this section shall affect the education property tax grand list and the municipal grand list of the municipality under this chapter beginning April 1 of the year following approval.  Allocations and tax increment utilizations authorized pursuant to subsections (e) and (f) of this section shall remain available to the municipality for the full period authorized and shall be restricted only to the extent that the real property development giving rise to the increased value to the grand list fails to occur within the authorized period.

(h)  Criteria for approval.  To approve utilization of incremental revenues pursuant to subsection (f) of this section, the Vermont economic progress council shall do all the following:

(1)  “But For” test requirement.  Review each application to determine that the new real property development would not have occurred or would have occurred in a significantly different and less desirable manner but for the proposed utilization of the incremental tax revenues.  A district created in a designated growth center under 24 V.S.A. § 2793c shall be deemed to have complied with this subdivision.

(2)  “Process requirements.”  Determine that each application meets all the following five requirements:

(A)  The municipality held public hearings and established a tax increment financing district in accordance with 24 V.S.A. §§ 1891–1900.

(B)  The municipality has developed a tax increment financing district plan, including:  a project description; a development financing plan; a pro forma projection of expected costs; a projection of revenues; a statement and demonstration that the project would not proceed without the allocation of tax increment; evidence that the municipality is actively seeking or has obtained other sources of funding and investment; and a development schedule that includes a list, a cost estimate, and a schedule for public improvements and projected private development to occur as a result of the improvements.

(C)  The municipality has approved or pledged the utilization of incremental municipal tax revenues for purposes of the district in the same proportion as the utilization of education property tax revenues approved by the Vermont economic progress council for the tax increment financing district.

(D)  The proposed infrastructure improvements and the projected development or redevelopment are compatible with approved municipal and regional development plans, and the project has clear local and regional significance for employment, housing, and transportation improvements.

(E)  The municipality has demonstrated that over the life of the district, the aggregate amount of income sensitivity payments received by homestead taxpayers who are residents of new real property development in the district, and rental rebates received by renters who are renters of new real property development in the district will not exceed 25 percent of the amount of the tax increment determined under 24 V.S.A. § 1896 which is not allocated or pledged to the tax increment financing district under section 5404a of this title.  The Vermont economic progress council may make this determination based on information from the applicant provided in subdivision (B) of this subdivision (2) and the average amount of homestead sensitivity payments and renter rebates in the state in the year of application.

(3)  Location criteria.  Determine that each application meets one of the following three criteria:

(A)  The development or redevelopment is compact, high density, and located in or near existing industrial, commercial, or residential areas.

(B)  The proposed district is within an approved growth center, designated downtown, or new town center.

(C)  The development will occur in an area that is economically distressed, which for the purposes of this subdivision means that the area has experienced patterns of increasing unemployment, a drop in average wages, or a decline in real property values.

(4)  Project criteria.  Determine that the proposed development within a tax incentive financing district will accomplish at least three of the following five criteria:

(A)  The development within the tax increment financing district clearly requires substantial public investment over and above the normal municipal operating or bonded debt expenditures. 

(B)  The development includes new housing that is affordable to the majority of the residents living within the municipality and is developed at a higher density than at the time of application.  “Affordable” has the same meaning as in 10 V.S.A. § 6001(29).

(C)  The project will affect the mitigation and redevelopment of a brownfield located within the district, which for the purposes of this section means an area in which a hazardous substance, pollutant, or contaminant is or may be present, and that situation is likely to complicate the expansion, development, redevelopment, or reuse of the property.

(D)  The development will include at least one entirely new business or business operation or expansion of an existing business within the district, and this business will provide new, quality, full-time jobs that meet or exceed the prevailing wage for the region as reported by the department of labor.

(E)  The development will enhance transportation by creating improved traffic patterns and flow or creating or improving public transportation systems. 

(j)  The Vermont economic progress council and the department of taxes shall make an annual report to the general assembly on or before January 15.  The report shall include, in regard to each existing tax increment financing district, the year of approval, the scope of the planned improvements and development, the equalized education grand list value of the district prior to the TIF approval, the original taxable property, the tax increment, and the annual amount of tax increments utilized.

Sec. 10.  TAX INCREMENT FINANCING DISTRICTS; CAP

     Notwithstanding any other provision of law, the Vermont economic progress council may not approve the use of education tax increment financing for more than ten tax increment financing districts and no more than two newly created tax increment financing districts in any municipality within the period of five fiscal years following the passage of this act.  Thereafter, no tax increment financing districts may be approved without further authorization by the general assembly.


Sec. 11.  EXISTING TAX INCREMENT FINANCING DISTRICTS;

               MILTON

Notwithstanding the limitations under 32 V.S.A. § 5404a(e), the town of Milton may extend for an additional ten years beyond the initial ten years approved the two existing tax increment financing districts identified and known as the Husky campus and the Catamount Industrial Park, and collect all state and local property taxes on properties contained wholly or partly within the tax increment financing districts and apply 75 percent of the increase in the value and liability assessed under 32 V.S.A. § 5402 on new real property improvements to repayment of debt issued to finance improvements within the tax increment financing district and for related costs, upon application by the town of Milton.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us