An explanation of TIF funding mechanisms
Rutland has been awarded a $3 million Catalyst Grant from the Northern Border Regional Commission (NBRC) to support planned streetscape improvements on Center Street. Before those visible upgrades can begin, critical underground infrastructure work must take place. This grant represents just one piece of the larger funding puzzle needed to move this phase of the Tax Incrementing Financing (TIF) District forward. So, how exactly are projects like this funded and how do they connect to the anticipated development?
To explain, we spoke with Stephanie Clarke, Vice President of White + Burke Real Estate Advisors, the firm helping to guide the City through its TIF and infrastructure planning and implementation.
Q: In a nutshell, what’s the difference between a private development project and a public infrastructure project? How do they connect within the TIF framework?
Stephanie Clarke: To make private development projects like the hotel feasible, the City must ensure the property has the necessary infrastructure in place. In a downtown where building is especially difficult, the City of Rutland wants to step up to be part of the solution. TIF is one tool the City is using to remove utility and access barriers that have historically made the site impossible to redevelop.
Q: How does the $3 million NBRC grant fit into the financing structure for this first infrastructure project?
Clarke: The City wants to avoid placing the burden of these infrastructure improvements on taxpayers. This is a large undertaking, so the City must use as many available dollars as possible to fund the project. TIF and the Catalyst grant are the two biggest sources.
Q: What other funding sources could come into play for this project, and future projects? What have other communities used?
Clarke: The City has projected that other sources of funding will come from a variety of state and local sources. These could include money through VTrans programs, Sales Tax Reallocation, and City funds for capital projects. For a visual example of how funding is stacked, see the Killington Forward page.
Q: Do all of these funding sources need to be in place before voters are asked to approve a bond?
Clarke: In short, no. With projects of this scale, municipalities search for all available sources of funding. At the time of the bond vote, the City will have most sources identified, though not all may be secured, nor is it required. Final funding is typically locked in before construction begins. You can see in the Killington Forward bar chart that more funding came through in the months after the bond vote. It’s very possible that this, too, could happen in Rutland.
Q: How are TIF-related expenses tracked and paid-for when multiple funding sources (like the NBRC grant) are involved?
Clarke: Very carefully! The City is ramping up its TIF District accounting capacity to track this and all future TIF projects. There are specific guidelines around how—and which—expenses can be repaid using TIF. The Vermont Economic Progress Council (VEPC) will work with the City of Rutland to make sure everything is running smoothly and according to statute.
For more information, visit the Rutland 360 website: https://www.rutlandvtbusiness.com/tax-increment-financing/ or email Ed Bove ([email protected])
About the Rutland City Task Force and Rutland 360. A collaborative initiative, Rutland 360 is led by the Rutland Redevelopment Authority, the City of Rutland, the Chamber & Economic Development of the Rutland Region, and the Downtown Rutland Partnership. Together, these stakeholders (known as the “Task Force”) have developed the Rutland City TIF District Master Plan, a strategic effort to drive economic growth and revitalization in our city.
