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.

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.