Public infrastructure paves the way for Village development
By Polly Mikula
Killington Forward achieved its first major milestone on Thursday, June 30, when Vermont Economic Progress Council (VEPC) approved its application for a master tax increment financing (TIF) district. The VEPC board voted unanimously to approve Killington’s application, which grants the town a financing mechanism to build a new municipal water system and rebuild Killington Road — infrastructure projects that have thwarted the development of a village at the base of the resort for decades.
The proposed $62.3 million planned invest- ment will facilitate private development of the long awaited Six Peaks Village which will include a hotel, over 35,000 square feet of retail space, and ap- proximately 323 new units of housing consisting of condos, townhomes, and single-family homes.
The infrastructure improvements to water and roads will also resolve water contamination, miti- gate road hazards, enhance transportation capacity and accessibility, and pave the way for affordable housing development — all part of the overarching Killington Forward plan.
Not every municipality has need of or can sup- port a TIF district. The town of Killington went through significant analysis and public process to
ensure this tool could work for the commu- nity and was the proper use of the financing. Then the VEPC board vetted that plan. It required revisions to the town’s initial ap- plication(a more extensive TIF district spanning the length of Killington Road and onto Route 4 west) before ultimately approving the district — a process that spanned the better part of the past year.
TIF paves the way for development
The capital investment needed to build the long proposed village at the base of Kil- lington Resort had proven untenable without a foundational road and water system in place. Envisioned since the 1980s, develop- ment of a resort village has been thwarted by the lack of municipal infrastructure.
But for Tax Increment Financing for the initial public infrastructure, the Village development proved too difficult and costly to begin, and the town’s growth has stagnated for decades because of it.
“Establishing Killington’s TIF District and completing the proposed improvements are important steps toward attracting private investments in projects that add value to the community and grow the economy,” said Commissioner of the Department of Eco- nomic Development Joan Goldstein. “The town’s plan focuses on important economic opportunities that would continue to stall without the use of the TIF program.”
Killington Town Manager Chet Hagenbarth agreed: “Installing a public water system and improving the road infrastructure is necessary groundwork for attracting new businesses and residents to town, which are needed for our local economy to stay relevant and continue to rebound from the impacts the pandemic had on our hospitality-based economy,” said Hagenbarth. “Without the public investments, the town will continue
to see the stagnant and declining Grand List growth that has occurred over the past decade. Funding these investments locally without TIF would effectively double the town tax rate, which is too much for taxpayers to bear.”
Financing $62.3 million without raising taxes
Tax Increment Financing allows Killington to use a portion of the new property tax revenue generated from the private property growth within the boundary of the TIF District to finance the cost of the public improvements over time. Meanwhile, the State Education Fund and municipal fund will continue to receive its base tax revenue and remain unaffected or grow over time due to new property value revenue generated. This mechanism removes the burden of increasing property tax rates for property owners to finance the public improvements.
In the Killington TIF district, the improvements are anticipated to add over $285 million of new taxable value to Killing- ton’s Grand List, yielding over $115 million in new property tax revenues over the 20-year retention period for the TIF District. Over $26 million of those new property tax revenues will go to the Education Fund, $4 million to the town’s General Fund, and the remaining $84 million will be used to service debt taken on by the town to make the improvements.
Now that Killington has secured the designation as a master TIF District, it can proceed with deal-making for this public- private partnership to set up the first phase
of the water and road work. A public-private development agreement was only hypotheti- cal before receiving the TIF designation, but will now be worked out in earnest between the town and the private developer (currently SP Land Co. owns the land and rights to development, but it will likely sell it to a dif- ferent company before the work commences Michel Sneyd, president of Great Gulf Resort Residential, introduced himself to the public at the VEPC hearing May 26, and is a likely partner for the Village development.)
“Although the approval of a TIF District was likely, private developers and investors need to have the certainty that the municipality has the authorization for the financing tool to proceed with confidence,”said Stephanie Clarke, vice president of White + Burke.
The Master TIF approval means that individual approvals from VEPC (known as Phased Fil- ings) will be needed for each phase. Once a public-private development agreement is attained, the town can file its first phased filing with VEPC and once that’s approved, proceed to a bond vote. Construction bidding and breaking ground on phase 1 will follow thereafter, which could be as early as next spring.
The public will have opportunities to com- ment throughout the process at public meet- ings and at specific informational meetings in advance of the bond vote.
The first phase of the project proposed under the TIF program will focus on install- ing a new $26.7 million water system that will help to provide for a clean water source and address the contamination of per- and polyfluoroalkyl substances (PFAS) that exists along Killington Road.
“Killington is currently home to approxi- mately 70 small public water systems and many more private water sources,” said Bryan Redmond, director of the Department of Environmental Conservation’s Drinking Water and Groundwater Protection Division within the Agency of Natural Resources (ANR). “The construction of a new public community water system to provide safe drinking water to the homes and businesses in Killington is a major step forward.”
According to Redmond, this work exem- plifies ANR’s work to manage and address PFAS compounds in public water systems statewide—one reason that the Agency is supporting this project with an additional $2.3 million in American Rescue Plan Act funding from its Village Water and Wastewater Initiative this year, with more expected to be allocated for the years following.
The town is currently continuing to advance the design of the first phase of road and water work, and generate construction estimates.
Improvements along Killington Road are anticipated to be completed in four phases with the first focusing on addressing hazards at the intersection of Killington Road and Route 4. When complete, the road project will increase traffic capacity, improve flow and provide for greater multi-modal accessibility to the new Village businesses and amenities.
“Economic development for the entire Rutland County Region takes a transforma- tive step forward with the approval of the Killington TIF District,” said Lyle Jepson, executive director of the Chamber and Eco- nomic Development of the Rutland Region. “I applaud the town of Killington for being innovative and proactive in their planning and for being the catalyst for a transformative period in our region’s history.”
“Growing Vermont’s economy in all corners of Vermont has been a top priority of my administration, and providing for the basic needs of all Vermonters, including access to safe and clean drinking water, is an essential component,” said Gov. Phil Scott about the decision. “Improving public infrastructure such as water systems and roadways opens new opportunities for a community to grow, and I’m pleased to see Killington accepted into the TIF program to begin this important work.”