Tax Increment Financing (TIF) offers False and Flimsy Promises

The city of Burlington loves Tax Increment Financing (TIFs) – whether it be for the Moran Plant, waterfront improvements, the mall redevelopment, or the nontransparent private marina process – even though TIFs are seriously flawed. TIFs are sold on flimsy and false promises – from helping low income communities to boosting the economy when it wouldn’t have been boosted otherwise. On top of this, TIFs in practice are undemocratic. Politicians will ask voters to approve a supposed done deal but they often amount to a blank check finalized behind closed doors by a select few. It’s time to end TIFs and invest public funds in low-income communities.

TIFs are districts where cities can ‘leverage’ private investment by borrowing on future property value increases. While there may be some benefits, those benefits are unproven and do not outweigh the many many downsides to TIFs.

The 6 problems with TIFs:

  1. Once you vote on the idea, you don’t get to choose the final product even if the final product is drastically different than the initial idea. See: private marina, mall redevelopment, City Hall Park.
  2. Since the goal line on TIF projects always changes, it’s impossible to hold elected officials responsible for failing to act on their words. For example, first the $20 million mall TIF would buy a couple streets and fix streets around the mall, but in the final weeks before the vote it included fixing an additional two streets to get voters to approve it.
  3. While TIF money may have originally been used to help struggling downtowns, it is now used in mainly wealthy downtowns to improve infrastructure for wealthy land owners. For example, the mall is owned by a multi-billion dollar investment company but supposedly wouldn’t build this project unless taxpayers gave them 9% of their funding costs for free. TIF money never seems to be used for programs to support those in poverty, like funding new low-income housing.
  4. TIFs hurts our public schools by taking desperately-needed millions out of the education fund for 20+ years, as TIFs money is split 75/25 education fund and general fund. The money used to improve our downtown never reaches Burlington’s low income children.
  5. TIFs raise rents and cost of living for everyone else by accelerating property values in urban areas past typical levels of inflation. They, like Downtown Improvement Districts, lead to accelerated gentrification.
  6. TIFs are sold as being integral to spurring new development, but are based on a false and unproven assumption that the development wouldn’t have occurred ‘but for’ TIF money. In fact, the ‘but for’ clause means ‘but for that specific design/development plan’. So we have no way of knowing if some level of development would have occurred regardless. Vermont State Auditor Doug Hoffer has made is clear that this ‘but for’ clause is impossible to prove or audit.

The reality is that MANY people, when they vote for TIF, they vote for a specific project without realizing they’re writing a blank check for politicians who may be more interested in making wealthy interests and donors happy over ensuring the community meets everybody’s needs.

In the end, TIF money gambles on the future with little oversight or proof of its effectiveness. It takes badly needed property tax revenue, money that our schools desperately need, and gives it to investors so that they can boost their profits and wealth for the next 20 years while taxpayers pick up the tab. It’s time to end TIFs and fund local government through taxes, and if necessary, bonds.

UVM and Champlain College’s Admission Process Is Fueling Burlington’s Gentrification

UVM and Champlain College have a lot of power in shaping our community, in both positive and negative ways. We often hear about how 40% of UVM’s students living off campus increases non-students’ housing costs, and I’ve written about how as two of the city’s largest landlords with a captured client base, their exorbitant room and board costs likely distort rents citywide. There’s a third way that UVM and Champlain College contribute to Burlington’s gentrification, and that’s their admissions processes which are highly geared towards very wealthy families.

Thanks to the New York Times we can see a snapshot of UVM and Champlain College students’ economic backgrounds and how they compare to Burlington’s residents in 2016. Both schools have high rates of students from very wealthy backgrounds and low rates of students from very poor backgrounds, particularly when compared to Burlington residents. The median college student family is nearly 3 times as wealthy as the median Burlington family.

According to their data, not only are more than half of UVM and Champlain students from the top 20% wealthiest families, but only 4%-6% of students came from the bottom 20%. College students in Burlington are wealthy at 3 times the rate that Burlington residents are, while Burlington residents have 5-8 times higher rates of poverty than college students in Burlington.

These schools function less like educational institutions striving towards equity and more like businesses trying to maximize profits and growth. That’s the reason students and faculty are fighting against the administrations’ cuts to programs that aren’t ‘making money’.

More students come from families making $2.2 million a year than families making under $22,800 a year. A full 8,000 students come from families wealthier than 82% of all Burlington households.

NYTimes data shows that the trend of students coming from families much wealthier than Burlington residents has been consistent or increasing for decades. While UVM has become slightly less accessible since the early 2000s, Champlain College has catered towards significantly wealthier students and is their student body is now comparable to UVM’s.

How does an admissions process that caters to wealthy students effect low and moderate income Burlington residents? How does this process hurt low-income college students? How is such a model sustainable, and how do we keep Burlington from becoming an elite town for wealthy students and the business community that caters to them? Lastly, who is holding UVM and Champlain responsible for their role in hastening gentrification and making life harder for Burlington’s low income residents including low-income college students?

Many Low-Income Families are Being Gentrified Out of Burlington

For years now we have been hearing anecdotes about the harmful effects of gentrification on low income families in Burlington. The data in this post shows that elected officials have done nothing to slow the destruction of the widening income gap, while the low-income families remaining in Burlington are those living in worsening, abject poverty.

Over the past decade, elected Burlington officials have sat idly by as the city has morphed from one of the most livable places in America into a town that only the wealthy can afford. Businesses that served low-income communities closed, were priced out and evicted like Resource, while megalandlords like the Bissonnetes legally evicted over 300 low-income tenants and families.

Over a year ago I asked Mayor Weinberger about what he would do to stop poor residents from being legally evicted by ever-increasing gentrification, and he told me that this was “the best system we had” and offered no solutions to help these families. I clarified. “Are you saying that the best we can do in Burlington is let 300 poor families be priced out of the city?” Weinbeger said yes.

A year ago I researched childhood poverty in Chittenden County from 2003-2016 using free/reduced public school lunch data*, and discovered that while Burlington had lowered childhood poverty by 8%, nearly every surrounding communities’ childhood poverty increased. I believed at the time that this was likely a result of gentrification, poor families being priced out.

Data from https://education.vermont.gov/student-support/nutrition/school-programs/free-and-reduced-meals

The data shows that my theory is correct – within just 7 years, upwards of 30% of Burlington’s poor families have been priced out of Burlington.

While the overall number of BTV households have increased by 6% since 2009, and median income (adjusted for inflation) increased 8% ($3,445), low-income folks have not shared in this wealth. In fact, the income gap during this time increased 18% between households making under $35k a year and those making over $75k a year.

When you look a bit more into the data, low-income families have clearly been hit the worst by, so much so that in Burlington their share as a percentage of all families has decreased by 19% and 17% respectively. Yet 40% of Burlington’s children live in poverty because the families that are able to remain, thanks to public housing, limited housing vouchers, and limited nonprofit housing, are in ever greater poverty.

We are in a housing crises and our elected officials keep promoting trickle-down market-rate housing as a solution, which does nothing to slow the ravages of gentrification. After 7 years of failed policies under conservatives and centrists like Mayor Weinberger, council Democrats, and council Progressives, isn’t it time we tried some better policies that have a proven track record of helping low-income families, like investing money in low-income housing, rent protections, and higher minimum wage?

*A family of 3, average Burlington size, cannot make more than $37,167, or 1.85 times the federal poverty rate, in 2016 dollars, to qualify for free or reduced lunch.

Is Burlington Using Land Effectively and Efficiently?

 

Land-use planning has a lot to do with how Burlington is shaped, and the way our city is currently planned certainly seems to favor some over others. For instance, the way our zoning works gives priority to single-family homeowners in the new north end and south end. The way our zoning changes work give priority to the largest and wealthiest developers, for instance the spot-zoning done for Don Sinex downtown and the spot-zoning done for Eric Farrell on the old Burlington College Land. Zoning, and land use-planning, should be fair, consistent, and benefit the maximum number of residents, current and future.

The example I would like to look at today, to highlight how land-use planning can benefit the entire city or a select few, is the Burlington Country Club.

 

Burlington is a small city with little undeveloped land to build on. As a city we only have about 10 square miles, or 6457 acres, of land to build on. This number drops to 5,601 acres when we exclude right-of-ways. When we then factor in all the protected land, we are left with less than half that amount, or 3.9 square miles (2500 acres) to build on. That’s not a lot of space.

 

 

The 220 acre country club constitutes nearly 9% of all buildable land in the city, while over 40% of all land in Burlington, buildable or otherwise, is tax-exempt. That puts significant pressure on the limited private, for-profit land in Burlington that is built up, and when land is under-utilized it puts an even greater strain on that limited land.

There are arguments for and against a country club in the largest city in Vermont, especially when one considers there are 4 other country clubs within 15 miles of downtown Burlington. I would just point out that the country club pays property taxes of $140,000 a year. If the land were utilized in a similar manner to the rest of the city, where $98,000,000 in property taxes are collected every year, the city could raise an extra $9,500,000 per year in property taxes. It could definitely help relieve some of the property tax pressure that the majority of small homeowners face.

Proper land-use planning, done in a way that is fair and consistent, can benefit everyone. To do this, we should consider a few steps:

  1. Raise property taxes on for-profit private properties with low levels of development and a high percentage of open space. Possibly consider raising taxes on land based not just on it’s current value but on it’s under-utilized value. Gas stations and single-level properties in the downtown are could be assessed in a way to encourage more dense redevelopment.
  2. Create better incentives for landowners to redevelop, and make sure these incentives are consistent.
  3. Change the zoning laws to encourage fairer, more dense development throughout the city.
  4. Stop giving out one-time zoning changes for large, single developers, especially since these properties tend to be monolithic and less attractive as neighborhoods.

Updated: Why Are Developers and Housing Insiders Deciding Our Inclusionary Zoning Policy?

Correction: Councilor Knodell has let me know she is not a housing consultant and did not vote on Cambrian Rise. I stand corrected and apologize for the error.

The Inclusionary Zoning Working Group* is the sort of group that makes you want to bang your head against a wall. Approved unanimously by city council, it’s the perfect example of how our local politicians and government currently operate separately from constituents. The group consists entirely of housing developers and insiders, who meet 8 meetings during the morning when everyone is working, in class, or dropping their kids off at school. This group is a great example of a very noninclusive process decided entirely by political insiders – another example of our city using local experts for free advice instead of hiring outside experts who don’t have conflicts of interest.

Should we be worried about the the gaping conflicts of interests among participants, some of which I describe below? Should we be worried that we as a city are gladly letting insiders shape policy that will directly benefit them the most?

Who is on the committee? Local housing experts, as the council required. A City Council Member, who will chair the IZWG, 1 Representative from the Planning Commission, 2 For-Profit Developers, 2 Not-for-Profit Developers, 2 Affordable Housing Advocates, 1 CEDO Director or designee, and 1 Planning & Zoning Director or designee.

  • City Councilor Jane Knodell, a housing developer consultant with Monte and Davis (also in the group), who voted to segregate low income residents on the Burlington College development,
  • Erik Hoekstra, Redstone developer (and small personal landlord), who wants to gut inclusionary zoning,
  • Eric Farrell, Farrell Real Estate, building mega-development Cambrian Rise,
  • Michael Monte, CHT Director, housing developer consultant with Councilor Knodell and John Davis, who worked a deal with Farrell over the Burlington College Land, a deal that included entirely segregating low income residents into their own ‘ghetto’ building, supported the mall redevelopment even when it included a poor door entrance, and has advocating continuing this practice across the city,
  • Nancy Owens, Housing Vermont Director,
  • Bruce Baker, Real Estate Lawyer, Planning Commissioner, who hopefully doesn’t nor has ever worked for Farrell, Redstone, CHT, or Housing Vermont,
  • Brian Pine, former affordable housing director of CEDO who worked under Michael Monte, longtime friend of several people at the table, small landlord, and supporter of the mall redevelopment even when plans included a poor door entrance,
  • John Davis, Housing developer consultant with Councilor Knodell and Monte,
  • City Representation, David White, Planning Director and Noelle MacKay, CEDO Director

Other attendees for the other 7 meetings include Erhard Mahnke, director of the Affordable Housing Coalition (and longtime friend of most folks in the room), and a visit by city councilor Karen Paul. Those are the only people so far, not working for the city, who have had any input on the inclusionary zoning working group.

This group is 100% political insiders – folks who worked together on the Burlington College project, folks who have worked together in affordable housing since the days of Bernie, folks who regularly work on public/private development together. All of them are developers or landlords or directly work with them. All of them are MUCH wealthier than the typical Burlington resident, particularly those who benefit from inclusionary zoning.

Who is not included in this discussion?

  • Renters
  • Anyone from Legal Aid
  • Any case workers from BHA or Howard Center
  • People who live in inclusionary zoning units
  • Anyone living in poverty
  • Anyone who has lived in unsafe or unaffordable housing in the past two decades
  • Anyone who has faced growing housing discrimination or segregation

This is a working group created by industry experts. We wouldn’t want a smoking law to be decided by tobacco sellers and cigarette makers. We wouldn’t want our climate action plan to be decided by oil companies. So why as a city are we allowing this to happen? Why would our city council vote for this?

Thursday, March 8th, at 8am is their final meeting, and I will be there to share my displeasure with the process and what the group has decided on thus far – I hope you can join me.

*(For those who may not know, inclusionary zoning was created so that neighborhoods and buildings would remain economically integrated – the purpose is not to significantly build more affordable housing, an issue of great contention among the developer-class in Burlington.)

Why is ‘Affordable Housing’ Often Not Affordable?

If we want to solve our housing crisis, we have to know the city’s housing profile – what type of housing is needed and at what cost. Otherwise, we will end up using scarce city resources on solving problems that aren’t really problems, like building a thousand market-rate units of housing. Burlington’s current administration’s focus on market-rate housing shows how focusing on the wrong demographic can do little, if any, good to help most vulnerable residents.

Vermont Legal Aid recently came out with a really good report titled The Cost of Substandard Housing:

Data from the 2014 Vermont Housing Profile by the Vermont Housing Finance Agency bears this out: over 80% of people with income under $20,000 per year are in unaffordable housing, whereas a comparative 50% of people with income from $20,000 to $50,000 are in that situation, and fewer than 20% of people with income over $50,000 are in unaffordable housing. The pressures of trying to rent unaffordable housing on a low income mean that tenants often experience the brunt of the landlord tenant power imbalance that Griffin describes.

So while the vast majority of folks making over $50,000 can find affordable housing (defined as paying 30% of income), folks making less have serious trouble. And that’s a problem because so few housing policies are targeted at those who need it the most. 2017 HUD income limits show that 100% of the Area Median Income (AMI) for an individual is $58,000 a year and for a family of 4 it’s $83,000.

 

How Does Government Support Affordable Housing?

There are a couple ways that our government tries to support those on the lower end of the income ladder. Section-8 housing vouchers are based on a family paying 30% of their income up to a certain amount, regardless of how little or how much they earn. To get a voucher, one must expect to wait at least 10 years and then try to get one of the very few apartments that are still affordable for those with vouchers. The second way, Burlington’s inclusionary zoning ordinance, is based off of AMI, so that 15%-20% of new housing in Burlington is limited to those making around 65% of AMI – $38,000 for an individual and $54,000 for a family of 4. While AMI may seem like a useful target for building housing, the truth is that AMI is actually a fairly useless statistic. How so?

 

City and Suburbs

Area Median Income looks at the income of everyone in the Burlington-metro area. That means folks in Burlington, many of whom are in the service and non-profit industries, are lumped up in with the doctors and other high-income residents of Colchester, Shelburne, Charlotte, Williston, etc. This means that while AMI may be an appropriate number for those living in the entire area, it is too high of a number when used for Burlington, due to wealth disparities between city and suburbs, and rent disparities between homeowners and renters.

According to national data, the median income in cities is about 92% of the median income in surrounding, wealthier, towns. So if we take these numbers at face value, Burlington’s Median Income (BMI) is likely closer to $54,000 for an individual and $77,000 for a family of 4.

Renters and Homeowners

But Area Median Income includes homeowners, and we are really just looking today on how we can help low-income renters – so we want to know Burlington’s Median RENTER Income (BMRI) – and that number is drastically different than AMI or BMI. According to the aforementioned study, in 2010 median homeowner household income in Vermont was $65,000, while median renter household income was $31,000, or 48%.

So! That means, when apartments are built in the city, if we want them to meet our city’s median renters, we need units that are affordable for individuals making $26,000 and families of 4 making $37,000. Which means we need housing built for those making 44% of AMI, and that is just to help the median renter! In this light, what exactly has Burlington done to help Burlington’s median renters?

Are Poor Families and Children Being Priced Out of Burlington?

The data below suggests that Burlington is becoming a city for the wealthy, as working class families are being priced out of Burlington and forced to move further and further away from jobs and social services. What does this mean for Burlington, for our schools, for our values of inclusion?

Burlington’s childhood poverty rate has been dropping from a post-recession high of 51%. While it may seem obvious to give credit to a rebounding economy and maybe even local policies, the truth seems to be a bit less rosy. Since 2004 the percentage of children receiving free and reduced lunches has fallen from 42% to 40%, but when compared to the high of 51%, the data looks promising. Yet when we look at data from surrounding districts, the data suggests that poverty is increasing in nearly every other school district but Burlington. A reason for this may very well be that families are being priced out of Burlington due to gentrification, legal mass-evictions, and anemic affordable housing growth under the current administration.

While Winooski’s poverty rates returned to 2003 levels after a tumultuous 15 years, four districts doubled their poverty rate, while two others increased 5%-6%. Milton doubled from 16% to 36%, Colchester doubled from 13% to 27%, Williston doubled from 8% to 16%, Essex doubled from 11% to 22%, while Georgia has increased from 16% to 21% and South Burlington 11% to 17%.

The truth seems to be that lower poverty rates are a reflection of low income families being priced out of Burlington, and less with Burlington making meaningful policy decisions to help low income residents. With stagnant wages, a city council and mayor that won’t raise the minimum wage or strengthen our livable wage ordinance, growing housing costs and a widening income inequality gap, it makes sense that working class families continue to struggle. More seem to be struggling outside Burlington. With Bissonette mass-evicting folks out of their 300+ units of housing, it’s no wonder that folks are moving further and further away from social services and jobs.

All data can be found here.

Bissonette and Legal Mass-Evictions

Over the course of a couple years, Bissonette has legally evicted nearly all of their tenants by upgrading their housing; the vast majority of said tenants were using Section-8 vouchers. This is not only entirely legal in an unregulated housing market like Burlington, but it is putting a huge, terrible housing crisis on Burlington’s low income residents as the city loses hundreds of units of affordable housing. While Mayor Weinberger regularly talks about the need to build market-rate housing to meet our city’s housing crisis, this crisis seems to exist outside of the Mayor’s reality. In fact it wasn’t until CEDO, the mayor, and city councilors wanted to sell city land to known slumlord Rick Bove that any elected officials recognized this severe loss of housing.

Just look at the numbers – in the past few years nearly 300 units of housing, most of which is located in the Old North End, over 540 bedrooms, are no longer affordable. The average price per bedroom in a Bissonette apartment, based off of their own numbers online, is $843 per bedroom. This is how gentrification raises the rents of previously affordable apartments, as $1700 for a 2 bedroom apartment is about the price for new Redstone apartments.

As far as I know, no elected officials have offered solutions on how to mitigate these legal mass evictions, or how to protect our city’s most vulnerable residents. These are the sort of issues that really define gentrification, and are the issues that our elected officials need to be actively fighting so that our must vulnerable neighbors are’t priced out the city entirely.

The Other Side of Gentrification – A Tale of Two Burlingtons

Last month Seven Days wrote an article about gentrification in Burlington’s Old North End, where expensive new housing was built, and new restaurants popped up. Yet there’s another side of gentrification that is rarely discussed – the loss of affordable services along with the upscaling of previously affordable housing – and I believe that this part of gentrification is what really ends up pushing low income folks out of Burlington.

A Lack of Affordable Retail and Household Goods

The Old North End and Downtown areas no longer have any places to buy affordable used furniture. Myers closed in 2015, Salvation Army closed in 2016, and now Resource will be downsizing. While they will be selling home goods out of their location across the street, it’s hard to believe they will be able to carry the same number of home goods compared to in their current location. What options do low-income families have left in Burlington, especially if they cannot afford a car, to buy affordable furniture and clothing?  Will folks just shop at the city’s only Rent-A-Center, which is located in the poorest part of town, a business with a history of predatory business practices?

A Lack of Affordable Restaurants and Closure of the One Bottle Redemption Center

That’s not all. The one affordable restaurant in the Old North End (and all of Burlington, really), QTee’s, was bought by Redstone and converted into pricey apartments, while a pricier restaurant, Butch and Babes, moved in to the Redstone apartment building across the street. The one bottle redemption center within walking distance of downtown? Bought by Redstone and is now being converted into a restaurant.

A Lack of Affordable Housing

The Bisonnettes recently converted all 306 units of housing they own, the vast majority located in the Old North End, totaling 546 bedrooms, from affordable housing (especially for those with section 8 vouchers) to housing for young professionals. While Bright Street Coop added several dozen affordable apartments, this loss is having a huge effect on low income families in the area. This lack of housing was an argument used by several city councilors to justify selling city property to known slumlords.

How are folks living Downtown and in the Old North End supposed to enjoy the many benefits Burlington has to offer if they are being priced out of their neighborhoods? And what is happening to all these folks being priced out of Burlington?