Bennington TIF District Renewed

Bennington Retains Valuable Development Tool

Redeveloping the old Bennington High School building is one of the projects that may benefit from TIF funding.

Redeveloping the old Bennington High School building is one of the projects that may benefit from TIF funding.

The Vermont Economic Progress Council (VEPC) has approved Bennington’s request to renew/extend its Tax Increment Financing (TIF) District. TIF is an important tool the town can use to encourage and support private development projects in the district that increase the vitality of downtown and generate tax revenue.

Bennington’s TIF district encompasses the downtown area. A TIF District enables the Town to provide incentives for private development through investment in public infrastructure that supports the private development. The town, in turn, may use new tax revenues generated by private development within the TIF district to pay for expenses incurred in the construction of the public infrastructure. The program has proven itself to be a useful way to leverage public and private funds to allow large development projects that generate increased tax revenue to move forward.

Bennington created its TIF district back in 2017, but the designation must be renewed after five years if it is not used within that time. Due to the Covid Pandemic and timing of projects in the works, the town has not yet pursued using TIF funding for a project so the town was required to renew the designation in order for this critical development tool to remain available.

Currently, there are two high priority projects that could benefit from TIF; the redevelopment of the BenHi building, and the second phase of the Putnam Block project. In order for any project to be approved for TIF, a bond for the needed public infrastructure improvements must be approved by majority vote of the residents of the town. A number of other projects could also be candidates and are listed in the town’s TIF renewal application, along with the district map and plan summary which is available on the Town’s website at https://benningtonvt.org/select-board-notice-of-public-hearing-tif-district-substantial-change/

Here is how a TIF District generates money to pay for public infrastructure that supports private development. First, the town and a developer agree on the specifics of a proposed private development, including how much the value of the property targeted for improvements will increase after the proposed private development is completed. The town then holds a townwide vote to authorize a bond to fund the needed infrastructure. If the bond is approved, the developer proceeds with the project and the town constructs the public infrastructure. Once the project is complete, the value of the property developed increases and increased tax revenue is generated. The bulk of the property taxes for that increased value would normally go to the state as education taxes… but with the TIF, up to 70% of those newly generated education tax revenues go to paying back the town bond for the infrastructure over a period of 20 years.

A key element of TIF is that the town will limit the amount borrowed for the TIF District infrastructure to the amount the Town expects to receive in TIF revenues generated over the 20 years of the TIF District — in effect not costing the taxpayers anything for the necessary public infrastructure investments. Each project will be considered on its individual merits and the public will be asked to approve or not any project that is placed before them.

The State has seen very positive results from the use of TIF districts elsewhere in areas such as St. Albans, Barre, Hartford, and other Vermont towns. Redevelopment is never easy, and inadequate public infrastructure can doom a project before it even begins. Having a TIF District available for Bennington means the Town maximizes the chances of seeing critical projects come to fruition for the benefit of all.