How tax incremental financing revitalized St. Albans: a model to follow
By Polly Mikula
St. Albans and Killington may not have a lot in common, as far as Vermont towns go. St. Albans is a city of about 7,000 (with the town of St. Albans hosting another 7,000 just outside the city boundaries) located just 12 miles south of the Canadian border; Killington is a ski town (population 1,400) which is home to the largest ski resort in the East.
But St. Albans may be able to provide a model for Killington (or Rutland or other communities considering tax incremental financing) when it comes to facing a persistent obstacle to development: a lack of public infrastructure.
St. Albans, many say, is a poster child for how the state’s tax incremental financing (TIF) program can give towns the leg up they need.
Since the start of its TIF district in 2012, St. Albans has added $65 million to its tax base with over 60% growth in the TIF district, according to real estate advisor White + Burke. And it was accomplished without raising the municipal tax rate.
Such development seemed impossible to generate prior to TIF. The city had been stagnant for decades and all attempts at revitalization hadn’t significantly improved its prospects long-term.
Once designated by the Vermont Economic Progress Council as a TIF district, the program allows municipalities to retain 85% of the town’s approved TIF district increased property tax revenue to finance its infrastructure debt, as well as 70% of the incremental state tax revenue.
Once the TIF district was secured, leaders in St. Albans were able to think entrepreneurially by proactively seeking out development opportunities and negotiating public-private partnerships. By securing development agreements before investing in public infrastructure, St. Albans ensured the infrastructure debt could be paid by the incremental increase in taxable value from the private development and not increase the municipal tax rate.
St. Alban’s first success using TIF was a partnership with Ace Hardware store in the heart of downtown. The city located an underutilized site that was also a brownfield, purchased it, demolished the existing buildings and cleaned the site of pollution, then sold it to Ace owner Gordon Winters with an agreement on the minimum assessed value of the building.
That project became a model for success with the city removing infrastructure barriers after it secured a development agreement at the site.
By participating directly in the development process in partnership with businesses, municipalities can “tilt the playing field toward your community,” said City Manager Dominic Cloud, according to Michelle Monroe, who wrote about the city’s development in a story titled “How public-private partnerships transformed a city,” published in the September edition of Vermont Business Magazine.
Next, St. Albans set its sights on developing a new state office building, a new hotel, and a new parking garage with 370 spaces to serve both. Once again, the city stepped in to buy the land, clear it of pollutants and then sell it to developers.
Then just last year, three more new buildings went up downtown across from city hall: A commercial building whose second floor will house Community College of Vermont, and two apartment buildings creating 60 new apartments one block from Main Street. One of the apartment buildings is market rate whereas the other is owned by the Champlain Housing Trust and offers affordable housing.
Additionally, the city has embarked on streetscape projects to make the downtown more walkable and attractive, while addressing traffic and stormwater issues.
The city’s role is always the same: purchase land, demolish existing buildings and clean up the sites and manage parking.
“The tool that makes this all possible is TIF,” Cloud told Monroe. “Everything that’s occurred in the last seven years has been talked about for the last 30 … TIF is the closest thing we have to a silver bullet,” he added.
The town of Killington is in the process of setting up its TIF district in the hopes of finding similar success catalyzing much-needed growth in town. The letter of intent to apply to the state was submitted this month. The next step is a public review of the draft TIF district plan at a special Select Board meeting at 6:30 p.m. on Nov. 29. A copy of the plan will be on the town’s website the week before the meeting and any questions can be directed to the town’s TIF consultant, White + Burke Real Estate Advisors, whiteandburke.com.