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Bennington has TIF districts. Those initials stand for “tax increment financing,” a private-public funding mechanism used to pay for infrastructure — sidewalks, storm drains, and streets — to enhance the value of developed properties. The program requires a vote of the town to work.

That vote would authorize municipal bonds to pay for the improvements. The bonds would be paid off from taxes on the enhanced value of the developments. Developers don’t get the money. They benefit from the infrastructure upgrades, saving them the expense, and it is believed the upgrades will have a direct impact on the value of the projects and the revenues from those changes.

If the town weren’t involved, developers would have to pay for the sidewalks, street improvements, and storm drains themselves. Our Town Manager says if the projects don’t go through, we’ll have to pay for those upgrades ourselves. Having a TIF in place means the developer has greater confidence in building new residential and commercial space, the town benefits from the taxes on the increased value of the property, and Bennington can begin to reenergize itself.

With the TIF, Bennington can borrow money to pay for the improvements, and have those loans repaid from the taxes on the increased value of the projects. The bonds will be paid for by a portion of the taxes that normally are sent to the state. Bennington gets to keep 70 percent of the increased revenue that is usually the school tax portion, rather than sending those funds to the state. The remaining funds are paid into the state education fund.

Bennington’s TIF program was first proposed over five years ago, but the deadline for completing the process ran out in March. The latest news of the TIF is that the Vermont Economic Progress Council (VEPC) is likely to grant Bennington a five-year extension. Projects now include redeveloping the former Bennington High School, part of the Putnam Block, and the old Tuttles property. The first will be a municipal project; the other two are being done with capital from private investors.

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This all sounds sweet, doesn’t it? It’s like found money. We make the changes, the value of the properties increase, we take most of the taxes on the increased value for ourselves. Apparently we have reached a point where developers have become so fearful that they can’t construct profitable development that they must insist on public support. Apparently state and local officials have been persuaded this partnership will succeed. I hope so. But I have some lingering doubts.

Those doubts are shown by a recent report from Vermont Auditor of Accounts Doug Hoffer, who questioned the math and the assumptions behind the TIF. He challenged the bias of reports prepared by lobbyists, including the Vermont League of Cities and Towns, which he found had “significant factual errors.” He concluded they were unreliable. He did not doubt that “municipal infrastructure investments” are justified in principle, but could not support the TIF as a way of accomplishing that goal.

Suppose the developments don’t go through or they don’t raise the expected revenues. Either way the burden will be on us. We are being asked essentially to co-sign an obligation that would otherwise be borne by the private developers. Suppose a new recession delays this for another five years. Suppose the rosy promises are an illusion. This is a good time to pause and rethink what we’re doing here. It’s not too late to insist on answers and it wouldn’t be wrong if after that Bennington decided not to proceed with the TIF. Certainly before the town puts the matter to a vote of the people we should insist on getting the best information to justify this new idea.

{span}To be clear, I do support the TIF as a way of helping us develop the old school. That investment does not hinge on the success of the private sector. But the other projects, under the TIF, expose us to risk that shouldn’t be ours to bear.{/span}

Mike Bethel is a resident of Bennington. The opinions expressed by columnists do not necessarily reflect the views of the Bennington Banner.


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