On February 1, 2023

Killington Forward hearing draws a crowd,$47 million TIF-funded infrastructure bond explained

By Polly Mikula

Finding an open seat in the conference room of Killington’s Public Safety Building Monday night, Jan. 30, was a bit of a challenge as about 30 residents joined the public hearing in-person with another 50 attending via Zoom. 

“That’s about 10% of the town’s registered voters,” said Selectman Jim Haff. “That’s a very impressive turnout!”

The hearing began with an overview of the Killington Forward project, specifically focused on the first phase, which voters are being asked to approve via a bond at Town Meeting Day, March 7.

Killington needs municipal water, improved roads, and more housing at all levels; the developer for Six Peaks Village needs basic water and road infrastructure to get started, Selectman Chris Karr summarized. Using the TIF financing mechanism to spur private development, the town has devised a plan to achieved this without raising taxes.

Phase 1

Phase 1 includes constructing a municipal water system and construct new roads and upgrading existing roads.

The new municipal water system will commence on “The Flats” of Route 4 then run east along the Ottauquechee River, then up to East Mountain Road to the Snowshed area of the resort where it will service the planned Six Peaks Village, then down to Ravine Road. It also includes installing dry lines at the intersection of Route 4 and Killington Road up to Anthony Way.

The road portion includes constructing a few new roads within the TIF district, acquiring Killington Road from The Lookout up to the new roundabout connecting East Mountain Road to the Grand Hotel, and upgrading the base of Killington Road where it intersects with Route 4.

“We’ve all experienced an icy day when you come down that section and there’s only like a 5- or 6-foot landing at the bottom, so if you hit your brakes you slide through Route 4,” Haff explained, illustrating the current danger on the town’s main thoroughfare. 

“The goal is to get a 50 foot landing area,” Town Manager Chet Hagenbarth explained. “From that 50-foot landing to Anthony way will be a constant slope, it’ll go from 15%-18% grade to a constant 10% grade so it’ll be much more reasonable.”

“So now you’ll have 50 feet to slide,” Haff summarized, inciting laughter from attendees at Monday’s hearing. “It’s going to make that area a lot safer.” 

Phase 1 also includes connecting the existing sidewalk up to East Mountain Road. 

Future phases will includes new sidewalks on both sides of the road — an 8-foot shared use path along the west roadway, a 5-foot sidewalk along the east roadway — plus bus pull-offs, pedestrian crosswalks, intersection improvements (including two new traffic lights at Dean Hill Road and up by Choices/Domenic’s Pizza), lighting, new fire hydrants, and landscaping improvements.

TIF, not taxes

All of Phase 1 (water and road) will be paid for with Tax Increment Financing (TIF) — a tool that municipalities can use to finance public infrastructure serving a designated TIF district and spur private development that wouldn’t happen “but for” that initial municipal investment. New private development incrementally increases the value of the grand list and that increment is used to pay the municipal bonds. 

Thus paid as described, it does not raise municipal taxes.

At Town Meeting Day, Killington residents will be asked to vote on Article 5, which states: “Shall the Town Select Board be authorized to … secure indebtedness … not to exceed $47,000,000 … with the understanding that tax increment from the properties within the TIF District shall be pledged and appropriated for the payment of such indebtedness or direct costs of the improvements?”

The math

Stephanie Clarke, vice president of White + Burke, real estate advisor to the Killington Forward project outlined the over arching TIF math for Phase 1 at the hearing Monday:

$52 million in infrastructure investment ($47 million of which to be voted on for debt in Phase 1) will produce an estimated

$295 million in increased property value, a portion of which will be used to pay off the debt.

But even after the debt service, an estimated

$2.58 million of additional tax revenue will go to the town’s general fund over 20 years; and

$24.3 million of additional tax revenue will go to the state Education Fund over 20 years.

After 20 years, when the debt is retired, the full increased property value will be taxed by the state and town for perpetuity.

“Currently our grand list is about $800 million, we’re projecting it to grow by about $300 million — that’s over a 30% increase. Our only new cost increase is maintaining a few more roads, users will pay for the maintenance of the water system. So I actually see this very likely to lower our municipal tax rate over time,” Haff said. 

The guarantee

The long awaited Six Peaks Village has an Act 250 permit for over 32,000 square feet of commercial space, approximately 239 new units of housing consisting of condos, townhomes, and single-family homes and 9 single family lots. The town’s financing plan requires only a portion of the village to be developed to cover its Phase 1 investment costs — only about 180 units.

“But what happens if it’s never developed?” residents asked at the hearing Monday.(Understandably, many are a bit wary as other such village plans have fallen through over the decades.) “Could taxpayers be stuck with the bill?”

No, the Select Board clarified. 

Great Gulf, the developer, has guaranteed the minimum bond payment in a development agreement with the town signed Oct. 28, 2022. The increased in property value, once the water infrastructure has been built, guarantees it.

“The developer has agreed for us to raise the property value to pay for the bond,” Haff explained. “If the developer doesn’t pay, it goes to a tax sale, and … that’s just not going to happen. So this development agreement has that threat taken away… the developer is pledging 180 units will be sold, if they’re not [sold] they still have to cover that cost.” 

The development agreement is “bullet proof,” Haff said. 

Diving deeper, resident Art Malatzky asked what the annual revenue requirement to pay off a debt of the $47 million bond was specifically.

“It starts off at $2.5 million and grows to $4 million [annually],” specified Michael Sneyd,president of the North American Resort Residential division of Great Gulf. Adding for context: “Great Gulf is the second largest private home builder in the United States. We build about 5,000 units a year in the U.S. We’re also one of the largest home builders in Canada… the City of Toronto selected Great Gulf to develop 4,000 units along the waterfront on their behalf. So we’re a very large, very successful company, we’ve been in business since 1975 and we’ve got several different business units… so if one sector of the business isn’t doing well the other sectors make up for it. It’s a very successful, very diverse company North America-wide.”

Proportionally, the $4 million commitment to Killington is “not very big,” Sneyd summarized. 

Affordable housing

Another common line of questioning at the public hearing was about the need for and timing to build out affordable and market rate housing. 

“Municipal water and sewer are required before housing trusts will talk to us,” said Haff. “We have sewer, but we need a plan for water before we can even begin the conversation about affordable/market rate development. All this is contingent on a positive vote on Article 5. We simply need that to get started.”

Clarke added that once municipal water was available down Killington Road, the town would likely see current properties add more housing and that could happen possibly sooner than a new development could be built.

For more information and past stories related to TIF and Killington Forward, visit: mountaintimes.info/tif.

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