Tax Increment Financing (TIF)

Our Programs Vermont APEX Accelerator Vermont Economic Progress Council (VEPC) Community and Housing Infrastructure Program (CHIP) Tax Increment Financing (TIF) Vermont Employment Growth Incentive (VEGI) VEPC Annual Reports VEPC Meeting Agendas and Minutes VEPC Members Working Groups Housing Community Development Historic Preservation Tourism and Marketing About the Agency Tax Increment Financing (TIF) Tax Increment Financing (TIF) is a tool that municipalities use to finance improvements for public infrastructure like streets, sidewalks and storm water management systems. The improvements serve a specified area known as a TIF District. Active and retired TIF Districts have proven that TIF leverages additional private investment that builds and renovates the retail space needed to grow jobs and the economy. After the creation of a TIF District by a municipality and approval by the State, voters authorize municipal bonds or other debt to finance the construction or improvement of public infrastructure to serve the TIF District. As the infrastructure is built and improved, the private sector follows with investments in new and renovated buildings. This private investment incrementally increases the value of the grand list. The boost in the value of the grand list and the generation of incremental revenue are the result of the TIF financing that paid for the infrastructure improvements that attracted new visitors. While the infrastructure debt is being repaid, the entire Original Taxable Value, or base level of annual property taxes generated within the District, goes to the Education Fund. Of the increased property tax revenue, up to 70% is retained by the municipality to finance infrastructure debt. A minimum of 30% of the increased revenue is sent to the Education Fund. After 20 years, the grand list value of the properties within the TIF District has substantially increased because the infrastructure investment supports and enables increased private sector investment. From that point forward, the base and the entire increase in property tax revenue are paid to the Education Fund in perpetuity. Questions? Contact the Vermont Economic Progress Council:  [email protected] TIF Overview: Master Document TIF Rule Annual Report Frequently Asked Questions Q. Who creates a TIF District? A. In Vermont, municipalities create TIF Districts. But the State, through application to the Vermont Economic Progress Council, approves utilization of incremental Education Property Tax revenue for TIF debt, if approval criteria are met. Q. What is required of a municipality to create a TIF District? A. A municipality must: Create a TIF Plan that meets the requirements of Vermont statute. Hold one or more public hearings on the TIF Plan. Have the select board or city council find that creation of a TIF District will meet the purpose of TIF Districts as stated in statute. Vote to create the District, adopt the TIF District Plan, pledge a certain portion of the incremental municipal tax revenue toward the District debt, and authorize municipal staff to submit an application to the State. The TIF Plan must be considered by the Vermont Economic Progress Council to ensure that the District and the expected outcomes meet statutory approval criteria. Once approved, the municipality must follow the statutory process to incur TIF District debt to build public infrastructure. Q. Can a municipality create a TIF District that only uses incremental municipal property tax revenue? A. Yes. A municipal-only TIF District does not require approval by the State. Q. Can any municipality create a TIF District?