Berlin Town Center

and

Tax Incremental Finance District (TIF)

Town Center History

On June 21, 2005, the townspeople approved revisions to the Town Plan and the Zoning Bylaws at a Special Town Meeting. The Town Plan and Zoning Bylaws, provides for the creation and regulation of a Town Center District. (P.17). The Planning Commission, through a State funded grant, completed a Town Center Study in March 2005 by Wilbur Smith Associates.  The Study recommended tax incremental financing (TIF) as a primary method of funding infrastructure improvements (P.14) for the Town Center. In November 2005, the Town was awarded another State grant to further study the infrastructure requirements of the Town Center. In all, the Town has commissioned the following studies: Berlin Interchange (1), Town Center and RT 302 Corridor (1), Town Center Study (2), and Water Supply Studies (3).

Commissions, Committees, and Councils

The Selectboard appointed 5 citizens to serve on the Economic Development Advisory Council (EDC) on April 4, 2005. The purpose of the EDC is to recommend methods to promote and strengthen the town’s economy among a host of related goals. The Town Center has been an area, which drew the attention of the EDC. Since August 10, 2005, the EDC worked diligently on TIF concepts having warned and met 9 times and went on 2 fact-finding field trips. As a result of the EDC efforts, the Selectboard discussed the TIF concept and district boundaries at duly warned meetings on September 19, 2005, November 21, 2005, and December 19, 2005.  The Selectboard gave full support of the TIF concept and the future establishment of a TIF District. On February 6, 2006, the Selectboard appointed 8 citizens to serve on the Town Center Task Force to bring the Town Center into fruition. The Town Center Task Force supports the TIF concept. The development of a Town Center will combine a variety of mixed uses such as housing, retail and commercial into the Town Center District. To provide for financial planning for wise expenditure of public funds, the Selectboard appointed 5 members to the Capital Budget and Program Committee (CB&P).  The CB&P presented their introductory report on Town Meeting Day 2006.  The CB&P will present a Capital Budget and Program to the Planning Commission who in-turn makes recommendations to the Selectboard.  In the meantime, the Water Supply Committee has been active in an attempt to secure financial assistance for the establishment of a municipal water supply system.  The TIF District is one tool, which can lead to the development of a water supply system.  The Town is moving forward in the direction of establishing a TIF District.

What is TIF? 

Tax incremental financing is a funding tool, which began in 1952 and has spread across the country with great success. TIF is a relatively new concept here in Vermont.  The communities of Milton, Derby, Winooski, Burlington, Newport, Williston and South Burlington have established or are in the process of establishing TIF Districts.  Presently, there are several other towns of all sizes considering this method of financing infrastructure improvements as opposed to raising taxes. TIF, as an economic development tool, can help finance land acquisition, road improvements, water and sewer systems, building expansion, property rehabilitation and so forth. 

What is a TIF District?

A TIF District is a geographical area established by the Selectboard as per Statute for the purpose of using tax incremental financing as a future financing tool. 

How a TIF District Work?

J. Paul Giulani provided the following information and will be at the Selectboard meeting Monday evening 3-20-06 to answer questions.

All property within the district constitutes the benchmark appraisal as of April 1. Everything above that benchmark, new and existing, is the tax increment.  The theory being that a rising tide lifts all boats - new development is going to increase the value of existing property - therefore the aggregate benefit (the increase in valuation) appropriately supports the TI. 

Each year, the aggregate part of the tax levy that is directly attributable to and calculated upon the incremental valuation above the benchmark is segregated from the general fund.  Under the pending legislation, a piece is going to be paid to the State for the educational tax assessment.  The balance is used to pay the costs of financing infrastructure improvements within the district.  Bear in mind that to the extent there are user charges for these improvements (water and sewer) the rates impose within the district are identical to those charged outside.  Also, it bears repeating that property owners within the district will not be subjected to a different tax rate, appraisal methodology or valuation appeals.  Aside from anticipated property appreciation, the TIF is revenue neutral to property owners

The importance of having the district in place by the end of the month is to capture as much of the increment as possible as early as possible.  Waiting until 2007 means that whatever is under construction now and whatever is built between today and March 31, 2007 won't be part of the TI.

No debt of any sort for infrastructure improvements within the district will be issued without voter approval.  Tax increments collected between April 1, 2006 (net of the education tax contribution piece) and the date debt is issued, can be used to pay the part of the cost of improvements (thereby reducing the ultimate amount of bonded indebtedness), fund a capital reserve for additional improvements, create a debt service fund, or pay for ongoing studies and analysis both within the district and presumably within adjacent parts of the Town that might want to be annexed to the Berlin Center TIF District or might want to be constituted as a separate district.

Current State Statute codifies the method by which finances are to be administered.  Presently, the Legislature is in the process of reviewing those procedures for possible changes.  The Town of Berlin is very active in the pursuit of better Legislation, which benefits the Town, Region, and State. In addition, the Central Vermont Regional Planning Commission supports the Berlin Town Center and establishment of a TIF District. 

Why should Berlin create a TIF Now?

The Town is working on a collaborative basis with South Burlington and Milton to establish a TIF District pursuant to Statute and newly introduced legislation. The following language is incorporated in Senate Bill (S. 291) for your information. The funding mechanism coming out of the Senate and/or House may differ as work progresses.  In any case, the Town has studied the Town Center concept for several years and it is time to start.

(1) The creation of a TIF district in the area of the town of Berlin, including the Berlin Mall and surrounding area, created pursuant to 24 V.S.A. § 1892 and more specifically described as being bounded by Route 62, Paine Turnpike North, and Fisher Road, will provide financing for improvements to create a vibrant business and community center that will: 

(A) Connect the Berlin Mall with the Central Vermont Hospital, schools, transportation systems, businesses, and housing with the surrounding lands and open spaces.

(B) Improve the aesthetics and the character of the area.

(C) Foster the multi-model potential of the town center district.

(D) Resolve a long‑ standing groundwater contamination problem.

(E) Enhance the quality of life for residents and workers in the town center.

(F) Develop infrastructure that will accommodate the needs of the town center district.

(G) Preserve and enhance the town’s tax base.

(H) Reduce pressure to develop open land in the region for commercial and residential uses.

(I) Reduce traffic congestion and protect existing interstate exchanges.

Note: I would also like to thank the Economic Development Advisory Council for all the hard work they have put in to this since last April.  I extend my thanks to the newly formed Town Center Task Force who have stepped up to the plate and taken on a great challenge.  It will take the cooperation of everyone to make the Town Center a reality.