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.

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.

The New Burlington Town Center Is Already Hurting Working Class Residents

I have been a very vocal critic of the Burlington Town Center for several years, mainly because the development relies on trickle down housing and trickle down economics to help low income residents. A recent article in VTDigger about UVM Medical Center’s expansion to the BTC, and the pressure and ‘passion’ Mayor Weinberger used to persuade them to move there, shows how the Mayor’s policies consistently hurt more residents, especially vulnerable ones, than help them.

Sources said the mayor lost his cool at the meeting and reminded hospital officials about the sweet deal they had for city services, though Weinberger said that argument was “not a major part of the conversation,” largely because the city’s hands are tied for another decade plus.

(As an aside, the Mayor’s ‘passion’, which has been described to me as temper tantrums, a good source tells me is a big reason why beloved former Library Director Rubi Simon decided to leaver her job and move out of state over a year ago.)

Now that the hospital will be paying an extra $1,00,000 a year, who will be paying for it? As the article makes clear, “patients”. It’s as if the mayor is so insulated from the yearly 8%-10% yearly increase in healthcare costs and premiums, that adding another $1,000,000 onto the backs of overworked Burlingtonians remains somehow overlooked. Not to mention that UVM Medical Center will likely use this as an excuse to continue paying MUCH less than the fair share of a $1 billion business should be paying for their fees in lieu of property taxes.

Who will benefit from the Burlington Town Center? Businesses on and around Church Street, landlords, hotels, and restaurants. Bringing people to the downtown core, even just for a few hours, means they will spend some amount of money there. The city will likely see a small increase in sales tax and alcohol tax revenue. Property taxes, however, will remain stagnant for 20 years, due to voters’ majority to support the TIF vote (supported almost unanimously by city councilors except Max Tracy). Instead of getting upto $1,000,000 a year in badly needed revenue, we will have to wait until the next generation is voting and having children.

Who will lose from the Burlington Town Center? Workers, especially low-wage workers, service workers, and now anyone who uses the UVM Medical Center (which is, essentially, everyone because they have a monopoly). Wages for service workers continue to remain stagnant, and likely the wealthy Church Street business owners, most of whom don’t live in Burlington, will end up pocketing any extra revenue.

“This decision is highly defensible” after all the factors are weighed, Weinberger said.

As long as those factors don’t include the vast majority of Burlington workers and service workers? Mayor Weinberger, the working class hero.