Code of Vermont Rules › Agency 11 - AGENCY OF COMMERCE AND COMMUNITY DEVELOPMENT › Sub-Agency 030 - DEPARTMENT OF ECONOMIC DEVELOPMENT › Chapter 002 - TAX INCREMENT FINANCING DISTRICTS › Section 11 030 002 - TAX INCREMENT FINANCING DISTRICTS

Current through June, 2024
Section 100 Statutory Authority
Vermont statute [1] charges the Vermont Economic Progress
				Council with adopting rules for the purpose of providing clarification and
				detail for administering the provisions of law regarding the creation,
				implementation, administration, and operation of Tax Increment Financing
				Districts. [2]
Section 200
			 Statement of Purpose of Rule
The purpose of this rule is to address issues relating to
				creating, implementing, administering, and operating Tax Increment Financing
				(TIF) Districts (herein referred to as "Districts"). Act 80 of the 2013
				legislative session (as amended by Act 174 of 2014) clarified tax increment
				financing laws and specified a process for future oversight and enforcement.
				The Vermont Economic Progress Council (herein referred to as "Council") was
				granted the authority to adopt rules in accordance with the Vermont
				Administrative Procedures Act [3] to provide further clarification of statutory
				construction and administrative detail.
Act 80 also required the Council to identify issues that
				require corrective action on the part of the municipalities with Districts that
				were created prior to January 2006 and were audited by the State Auditor of
				Accounts in 2011 and 2012. From the date of adoption of this rule,
				municipalities with Districts in existence prior to 2006 must abide by this
				governing rule and any other provisions of the law in force. However, this rule
				also indicates which specific provisions are not applicable to those Districts
				in existence prior to January 2006 and specifies rule provisions applicable to
				only those Districts or only to individual Districts created prior to 2006. Any
				issues identified in the Auditor's reports that remain unresolved and continue
				to result in disputed underpayments to the Education Fund shall cause an
				accumulation of underpayments commencing only upon adoption of this rule and
				shall be subject to the non-compliance provisions contained in statute [4] and
				this rule.
Section 300
			 Definitions
All terms used in statute or this rule, but not defined herein,
				shall have the meanings ascribed to them in statute. [5]
"Active District" means a District that has been created
				pursuant to
				24 V.S.A. §
											1892 ( a), has not been terminated pursuant
				to
				24 V.S.A. §
											1894(a), and which has not
				retired all District financing or related costs.
"Appraisal value" has the same meaning as
				32 V.S.A. §
											3481(1) as the property's
				estimated fair market value.
"Appropriated" as used in 24 V.S.A. 1891 (8) means approved by
				the municipal legislative body and dedicated to service eligible District
				expenditures.
"Assessed valuation" as used in
				24 V.S.A. §
											1895 and § 1896 is the listed value of
				each property within the District, less any statutory and voted
				exemptions.
"Capital assets" as used in this rule means tangible property
				used to advance the purposes of 24 V.S.A. Chapter 53, Subchapter 5, which is
				not easily converted into cash, and has an initial useful life extending beyond
				a single financial reporting period. Capital assets can be defined in terms of
				a minimum useful life and a minimum initial cost.
"Coordinating agency" as used in
				24 V.S.A. §
											1892 ( c) means any public or private entity
				from outside the municipality's departments or offices and not employing the
				municipality's staff, which has been designated by a municipality to administer
				and coordinate a District during creation, public hearing process, approval
				process, or administration and operation during the life of the District,
				including overseeing infrastructure development, real property development and
				redevelopment, assisting with reporting, and ensuring compliance with statute
				and rule.
"Council" means the Vermont Economic Progress Council, as
				established by
				32 V.S.A. §
											5930a.
"District Debt" means financing, as defined by 24 V.S.A. 1891
				(7) and this rule, which will be serviced or paid using District incremental
				revenue.
"District Finance Plan" or "TIF Financing Plan" means a plan
				filed by municipality with a District created after 2006 either concurrently
				with, or subsequent to, a District Plan, which is considered and approved by
				the Council, and which includes District improvement details including finance
				instruments and tools, timing for incurring debt, finance structures and terms,
				development and redevelopment schedules, and projections of revenue
				generation.
"District Fund" means the special fund created by a
				municipality in accordance with
				24 V.S.A. §
											1896(a) in which the
				District's revenue and expenditures shall be segregated and tracked for
				accounting, recordkeeping, and reporting purposes.
"District Plan" means the plan required by
				24 V.S.A. §
											1892(a), which was the
				subject of public hearings in accordance with
				24 V.S.A. §
											1892(a), adopted by the
				municipal legislative body and recorded by the municipal clerk or listers in
				accordance with
				24 V.S.A. §
											1892 (b ), and which, for Districts created
				after 2006, was considered and approved by the Council in accordance with
				32
				V.S.A. §
											5404a(h). Such
				plans set the baseline for implementing Districts and against which performance
				will be measured, but may be amended pursuant to
				24 V.S.A. §
											1901 and these rules.
"District Reconciliation" means a document filed with the
				Council by municipalities with Districts created prior to 2006 to provide
				baseline information and data.
"Education Property Tax Increment" or "Education Tax Increment"
				means the amount of additional revenue resulting from the application of tax
				rates when the education taxable value of all the properties within a District
				for a given year is greater than the education original taxable value of all
				the properties within a District.
"Financing Plan," "Financial Plan" or "Finance Plan" has the
				same meaning as District Finance Plan as defined in this section.
"Financing" means, in addition to the meaning provided by
				24 V.S.A. §
											1891(7), debt instruments,
				leasing, lease-purchase, other borrowing arrangements, and direct payments,
				undertaken for improvements in or serving a District, that will be repaid in
				part or in whole using District increment, only after being authorized by the
				legal voters of the municipality in accordance with
				24 V.S.A. §
											1894(h) and (i).
"Improvements" means, in addition to the meaning provided by
				24 V.S.A. §
											1891(4), the installation,
				new construction or reconstruction of municipal capital assets.
"Incur District debt" or "Incur District indebtedness" means
				the proper and appropriate execution, by an authorized official of a
				municipality, of a debt instrument to finance District improvements, or to make
				a direct payment for District improvements, if such instrument is intended to
				be financed, or payment made, in whole or in part with District incremental
				revenue and has been approved by the legal voters pursuant to 24 V.S.A. 24
				§ 1894(h).
"Inter-fund loans" as used in
				24 V.S.A. §
											1891(7) means a method of
				financing District improvements whereby loans are made from one fund to another
				within a municipality, with explicit terms of repayment, which, in accordance
				with
				24 V.S.A. §
											1894(i), shall not include
				the payment of interest.
"Listed value" has the same meaning as
				32 V.S.A. §
											3481(2) as 100% of the
				appraisal value.
"Municipal Property Tax Increment" or "Municipal Tax Increment"
				means the amount of additional revenue resulting from the application of all
				tax rates when the municipal taxable value of all the properties within a
				District for a given year is greater than the municipal original taxable value
				of all the properties within a District.
"New real property development" means the development or
				redevelopment of real property expected to occur through private or public
				investment caused by improvements financed with District increment.
"Nexus" means the causal relationship that must exist between
				the improvements and the expected development and redevelopment in the District
				or the expected District outcomes.
"Non-increment" or "Non-TIF" revenue means any revenue
				available to a municipality to pay for District improvements, service District
				debt, or pay for related costs, that are not derived from the increase in
				taxable value of the properties within the District. Examples include municipal
				property tax, Federal and State grants, use fees, and parking revenue. These
				revenues are often used to help pay the proportion of District improvement
				costs that do not serve the District, as determined by the Council.
''Original Taxable Value" or "OTV" means, in addition to the
				meaning provided in
				24 V.S.A. §
											1891(5), the value of all
				real property within a District as determined under V.S.A. 32, Chapter 129,
				calculated by aggregating the taxable value of such properties as of April 1 of
				the calendar year in which the District was created, or in accordance with the
				appropriate statute controlling the establishment of the OTV. Each District has
				a municipal OTV and an education OTV.
"Parcel" has the same meaning as
				32 V.S.A. §
											4152(a)
				(3); all contiguous land in the same
				ownership, together with all improvements thereon.
"Pledged" as used in
				24 V.S.A. §
											1891(8) means authorized by
				the legal voters of the municipality and dedicated to service eligible District
				expenditures.
"Proportion" as used in
				24 V.S.A. §
											1894 ( e) means the percentage, as determined
				by the Council at the time of approval of a District Plan, of the total
				improvement cost that is eligible for financing with District increment, based
				on the ratio by which the improvement will serve the District.
"Proportionality" as used in
				24 V.S.A. §
											1894(e) means the relational
				process used by the Council at the time of approval of a District Plan to
				determine the percentage of total improvement costs that are eligible for
				financing with District increment.
"Related Costs" means, in addition to the meaning provided in
				24 V.S.A. §
											1891(6), expenditures
				incurred and paid by a municipality, other than the actual cost of construction
				and financing of improvements, that are directly related to the creation,
				implementation, administration, and operation of a District.
"Retention Period" means the period during which the approved
				share of incremental municipal property tax revenue and incremental education
				property tax revenue may be set aside in a District fund. The retention period
				commences the calendar year during which the municipality executes the first of
				any financing or direct payments for District improvements which have been
				approved by the voters. The retention period for incremental education property
				tax revenue is limited to twenty consecutive years. The retention period for
				incremental municipal property tax revenue is as authorized by the municipal
				legislative body or until all financing and related costs are retired. The
				retention period does not refer to the number of years the increment so
				retained in the District fund may be used to service District debt and pay
				related costs, which may continue until all District financing and related
				costs are retired.
"Secretary" means the Secretary of Commerce and Community
				Development.
"Serve the District" refers to improvements that have nexus to
				the District.
"Share" means the percentage of municipal property tax
				increment and education property tax increment that may be retained each year
				an increment is generated.
"Substantial change" means an amendment to an approved District
				Plan or District Finance Plan which may result in a significant impact with
				respect to any of the criteria for approval by the Council specified in
				32
				V.S.A. §
											5404a(h) and
				24 V.S.A. Subchapter 5, or a request for an extension of the five-year period
				to incur indebtedness, and, in the case of Districts created prior to 2006, an
				amendment to the District Reconciliation filed in accordance with this rule
				which may result in a significant adverse impact with respect to the District
				Reconciliation.
"Taxable value" means the listed value of real property within
				a District less any statutory exemptions.
"TIF" or "TIF District" or "District" means a Tax Increment
				Financing District.
Section
			 400 Purpose of Districts
The purpose of a TIF District, as stated in statute [6], is to
				provide revenues for improvements that serve the District, and related costs,
				which will stimulate development or redevelopment within the District, provide
				for employment opportunities, improve and broaden the tax base, or enhance the
				general economic vitality of the municipality, the region, or the State.
While this purpose assumes that the improvements will primarily
				be the construction of public infrastructure, the purpose does not assume that
				every improvement will be subject to 100% public use. Rather, the improvements
				should stimulate and cause public good outcomes.
Section 500 Resolution of Outstanding Issues
			 from Audits
501. Applicability of the rule to
			 Districts created prior to January 2006: This rule identifies issues that
			 require corrective action on the part of the municipalities with Districts that
			 were created prior to January 2006 and were the subject of performance audits
			 conducted by the State Auditor of Accounts in 2011 and 2012. From the date of
			 adoption of this rule, municipalities with Districts in existence prior to 2006
			 must abide by this governing rule and any other provisions of the law in force.
			 However, this rule also indicates which specific provisions are not applicable
			 to those Districts in existence prior to January 2006 and specifies rule
			 provisions that are applicable to only those Districts or only to individual
			 Districts created prior to 2006. Any issues identified in the Auditor's reports
			 that remain unresolved and continue to result in disputed underpayments to the
			 Education Fund shall cause an accumulation of underpayments commencing only
			 upon adoption of this rule and shall be subject to all of the provisions
			 contained in statute. [7]
502.
			 Submission of payments and transfers by municipalities required by law [8]: The
			 Council will prescribe a process for municipalities to notify Council staff
			 that the required payments and transfers have been approved by the municipal
			 legislative body, for submitting the payments electronically, and for
			 certifying and providing notification of the payments and transfers. The
			 process will require certification that the payments and transfers are from the
			 funds prescribed by law. Council staff will monitor the timeliness of the
			 submission of approvals, payments, and transfers and report on the status of
			 compliance with these requirements in writing to the General
			 Assembly.
503. Failure to submit
			 evidence of approval of payments or failure to submit payments or make
			 transfers: If a municipal legislative body fails to approve the payments or a
			 municipality fails to make a payment or transfer within 60 days of the dates
			 prescribed, the Council will notify the General Assembly, in writing, through
			 the Joint Fiscal Office. The General Assembly will consider any amounts
			 identified as owed to the Education Fund and may withhold such amounts from any
			 funds otherwise payable by the state to the municipality or a school district
			 in the municipality or a school district of which the municipality is a member.
			 [9]