A New Approach to Housing Development Funding in Vermont
When Eric Farrell embarked on the ambitious Cambrian Rise housing project on the former Burlington College campus in 2016, his vision extended to constructing over 1,000 apartments within a decade. However, the reality has been a slow journey, with only 567 apartments completed due to escalating costs in materials, labor, and loans. To overcome these hurdles and revitalize the project, Farrell is advocating for a proposed financing mechanism that could potentially transform the landscape of housing development in Vermont.
The concept under consideration by lawmakers involves the implementation of tax increment financing (TIF) to assist developers in covering the costs of essential infrastructure such as water, sewer, parking, and roads. Aiming to make housing projects more financially viable, this tool could potentially lower expenses for developers like Farrell, allowing for a ripple effect of savings to be passed on to renters.
The Evolution of Tax Increment Financing in Vermont
Tax increment financing, or TIF, was first introduced in Vermont in the 1980s as a strategy to incentivize real estate development by enabling municipalities to issue bonds for upfront infrastructure expenses. The premise behind TIFs is that these investments contribute to the growth of the property tax base, with a portion of the resulting tax revenue earmarked for repaying the initial bonds. Notable projects, such as the CityPlace housing development in downtown Burlington, have benefitted from TIF funding.
In recent years, there has been a renewed push by housing advocates to expand TIF programs, particularly towards establishing smaller, project-specific initiatives. The proposed changes would allow developers, rather than municipalities, to access funds for infrastructure improvements tailored to individual projects. By focusing on smaller TIF districts and simplifying the process, advocates hope to address the pressing need for increased market-rate construction outside Chittenden County.
Challenges Faced by Vermont Developers
For developers like Jonah Richard, navigating the complexities of building affordable and market-rate housing in Vermont has been a daunting task. Despite leveraging various state and federal programs to support his projects, Richard emphasizes the persistent challenge of constructing apartments that are financially accessible to local residents. High construction costs and the absence of adequate subsidies often create barriers to realizing affordable housing options, even in areas with a strong economic base like the Connecticut River Valley.
Proposals for Housing Development Funding Reform
With the support of lawmakers and advocacy groups, a wave of proposals is sweeping through the Statehouse to address the obstacles hindering home construction. Building upon previous reforms in zoning and permitting regulations, the focus has shifted towards alleviating the financial burden associated with infrastructure development. Initiatives such as Gov. Phil Scott’s small TIF program and Let’s Build Homes’ housing-centric TIF proposal offer promising solutions to streamline the construction process and enhance housing affordability.
Looking Ahead: A Collaborative Approach to Housing Development
As legislators deliberate on the integration of these proposals into a comprehensive housing bill, the momentum for change is palpable. Key stakeholders, including Rep. Marc Mihaly and Sen. Alison Clarkson, are optimistic about the prospects of a refined TIF program that strikes a balance between supporting developers and safeguarding public interests. While concerns raised by State Auditor Doug Hoffer underscore the need for thorough evaluation and oversight, the potential benefits of a project-specific TIF framework cannot be overlooked in addressing Vermont’s housing crisis.
In conclusion, the dialogue surrounding the future of housing development funding in Vermont is multifaceted and dynamic. By fostering collaboration between developers, policymakers, and community advocates, there is a tangible opportunity to enact meaningful change that resonates with the broader goal of creating affordable, sustainable housing solutions for all Vermonters.
