SmartTranscript of House Commerce - 2025-02-05 - 10:10AM

[Brian Maggiato ]: Like us right here in front? [Kirk White ]: Yes, sir. Thanks, sir. [Chair Michael Marcotte ]: Good morning, everyone. This is the Vermont House Committee on Commerce and Economic Development. And Wednesday, February fifteen is gonna be five at ten o seven in the morning. So we're back from our hearing a joint hearing that we've had in room ten. We're back in our own playroom, and so we're here to hear things from the monologuing association. Good morning. Thank you for joining us this morning. We appreciate you coming in. I look forward to what you have to tell us. I think before we have you start, I'll just ask the committee to introduce themselves to you so, you know, put a date with the name and all the areas of the state that are represented in on this committee. Thank you. I'm glad [Jonathan Cooper ]: to start off. My name is Jonathan Cooper. I live in Holland, the southwestern [David "Dave" Bosch ]: corner of the state, representing Bennington one, including the towns of Stanford, Reedsborough, Searsburg, and Hertford. [Michael Boutin ]: I'm also representing Bristol, Lincoln, Moncton, and Sterling's Grove, and Northern Sidesburg. [Jonathan Cooper ]: I'm Abby Duke. I represent part of Grove. [Edye Granning ]: Hi. Edie Granning representing Jericho and Underhill. I'm the vice chair of the committee. [Jonathan Cooper ]: Emily, go ahead. Hi. I'm Erica Stunken representing the Lansing Lakehead Gym in Halifax. [Chair Michael Marcotte ]: And I'm Mike Martott. I I'm from Coventry. I represent Coventry, Harrisburg, Newport Town, Troy, Jay, Westfield, Lowell, and Eaton, and I'm chair [Kirk White ]: of the committee. Kirk White. I'm Bethel. I represent Bethel, Rochester, Stockbridge, and Hancock, [Jonathan Cooper ]: and I'm. Now. Monique Priestley, Bradford, Fairley, Westfield. Michael Luton, Bering City. [Kirk White ]: Let me make less. Most of Milton and a [Emily Carris-Duncan ]: little bit of Georgia. [David "Dave" Bosch ]: Dave Bosch. I live in Clarendon. Represent Longford, Clarendon, West Rutland in the bulk of Brooklyn. [Emily Carris-Duncan ]: Right. Hey. [Chair Michael Marcotte ]: And Anna Grace. [Brian Maggiato ]: We got to meet Anna. Is the key. Exactly. Thank you very much, representative Mark. We've got Joe Tanguay right here from the Capital Plaza right across the street. My name is Brian Maggiato. My wife and I are the owner operators of the Inn at Manchester in Manchester, Vermont. [Chair Michael Marcotte ]: I'm [Kim Donahue ]: Kim Donahue. I'm the chair of the Vermont Lodging Association, and my husband and I own the Inn at the Round Barn Farm in Waitsfield in the beautiful Mad River Valley. [Chair Michael Marcotte ]: Amy Tedesco? [Kim Donahue ]: I do know Amy Tedesco. [Chair Michael Marcotte ]: Amy was [Kim Donahue ]: Oh, yes. [Chair Michael Marcotte ]: She was, my committee assistant a few years ago. [Brian Maggiato ]: Yes. That's right. She was. Say at least one thing we all have in common is there's probably a lodging property in each one of your districts, at least one, if not a whole lot more. And that, you know, that's a big part of why it's important for us to have at least a conversation and a discussion so that we can both help educate you guys about what's going on, but also so that, you know, we can establish where the needs might be in the future, for an industry like ours that is so intimately connected to almost every facet of the state of Vermont's economy. So, you know, we had the opportunity, I think a lot of you guys have heard from from the Department of Tourism and Marketing, Heather Pelham. The twenty twenty three data that she was able to put together resulting in four billion dollars in visitor spending alongside two eighty two million dollars in direct tax revenue is incredibly important for the success of the state. And our industry is a key player in putting those bodies here in the states so that they can explore, discover, and experience all the great things that we have to offer. The people that help give us these opportunities as lodging operators represent ten percent of our eligible workforce. That's about thirty one thousand Vermonters. And that doesn't include all the non Vermonters. That also has to come in from across the state lines to make this a reality as well. My neighborhood alone is about twenty five percent of the workforce does not come or live in Vermont. So we rely on New York State and Massachusetts to help us fill the gaps. You know, we only have six hundred and some hundred thousand people. We need a whole lot more. And I think that's a lot of the work that you guys are helping to do as well so we can continue growing our workforce and hitting some of those key numbers in terms of what we need to be a sustainable state. But to take this further, I mean, our inns, B and Bs, hotels and resorts are the cornerstones of rural and urban communities. There are gathering places. There are economic drivers for downtowns, support spaces for nonprofits, and ultimately extensions for each of our homes, especially when, you know, some crazy relatives want to come and visit. The hospitality professionals are ambassadors advocating on behalf of our attractions, restaurants, and retailers. They are the geographic experts and experienced curators of the highest degree. The direct impacts of their efforts can obviously be seen through meals and roos tax contributions each month, but the indirect impacts are much farther reaching. There is no part of the Vermont economy that we do not support. Trades, professional services, recreation, nonprofits, we're the indispensable partner that supports the livelihoods of so many across our state. And a lot of what we've heard recently, which is the power of the ski industry, the power of the events industry, and how much that is generated for the state each year is incredibly important to understand what that ecosystem actually looks like and what it's comprised of. And Kim is one of our many experts on how that all comes together and how many professional sectors we touch just to execute what could be a small backyard event, but really does have a trickle down impact across the entire state. [Kim Donahue ]: Yes. So the Vermont, wedding industry generates over four billion dollars a year also in, direct and indirect spending. So while the, if the, lodging properties house all of those people, it's the venues and the wedding planners who are selling one event that is bringing one hundred to two hundred, two fifty guests into the state of Vermont. The bulk of the events that the Vermont Wedding Professionals Association, puts on are destination weddings. So we are bringing all of those visitors in one sale. So it's an easier lift, in some ways, and in some ways, it's a heavier lift. But, we work with caterers. We work with photographers. We work with all sorts of solopreneurs, and their sole source of income, is generated around these events in the state of Vermont. The resultant rooms and meals tax for a single event is, significant. It's not one at a time. It's not one room at a time, but it's two hundred rooms at a time. So, our, our, weddings generate a tremendous amount of revenue for the state of Vermont and a tremendous amount of traffic into the state of Vermont for us. Conventions similarly work similarly. And it's one sale to one person that brings in perhaps thousands of visitors to the state of Vermont and their resultant spending dollars. So the, we couldn't do it without the Lodging Association. We couldn't do it without the solopreneurs and without the important other vendor team members. We couldn't do it without the gas stations, the general stores, the restaurants in our town. We couldn't do it without the recreation hubs that we have in the state of Vermont. So again, just like the lodging industry, the events industry, the convention industry really touches every industry in the state of Vermont, not just the most obvious. [Brian Maggiato ]: And so with all of this investing to a degree in the economic driver for the state, I I'm not trying to say that we're the sole, you know, the sole responsible or carry the sole weight of this. And I know there's no direct ask from the administration or its Department of Tourism Marketing this year, but we have to plan for the future. And we have to continue investing to continue to earn on behalf of the state. The cost of doing business in Vermont has admittedly, as we're all having to discuss, gotten incredibly expensive. It is a pride point for properties across the state, for recreation operations across the state to put dollars out there to bring as many people here as we can. And we all benefit as a result of it. We currently spend about four point seven million dollars total on our tourism budget. We had an amazing opportunity, thanks to the ARPA funds, to put some data together that will only help give these types of committees resources and tools to make very qualified decisions down the road on how we can direct funding to better improve and grow our economic base when it comes to the tourism industry. I mean, fifteen point eight million people are coming to the state of Vermont now every year, and that's something to celebrate. We jumped up by almost two million people over a three to four year period. And that's a wonderful thing and we should all benefit as a result of that. But when we look at states like Maine, Massachusetts, and New Hampshire, where in some cases half or some cases more like a sixth compared to the budgets that they have to put marketing dollars downstate or into the international markets to bring people in to discover this amazing gift that we have to share. So I would really just continue to implore this committee and others to think about how we take advantage of the dollars that we have and how we can better utilize and grow upon this base that we've all helped build together. When it's a scary concept having gone through the pandemic and seeing our doors closed, our lights off, knowing that there was nobody here coming to stimulate the livelihoods of six hundred and fifty thousand people. And the volatility that our industry is subject to, whether it's climate change or a bug or anything else in between, it just shows how fickle this all can be and the impact it has on things like the general fund or in some cases, you know, and ultimately the property tax issue that we're all having with the education fund. So I just I think it's important that we open as many channels as possible on behalf of the Horvano Lodging Association and our hundred plus members so that you all know that there is a resource available whenever you need it. And whether it's even just going down the street to the corner, you know, your local inn or BNB and having that conversation with them to understand exactly what they're feeling, what they're hearing, and what their needs are will only help the overall ecosystem succeed. And I think it's wonderfully appropriate having having Capital Plaza here as well because we all hear about what's happening without all the employees coming back into Montpelier and the restaurants and its downtowns, and that's after a flood. So we are all intimately tied together. We're all in this together. What happens in Montpelier impacts us in Manchester. What happens in Stowe impacts folks in Pownall. Vermont is too small to go it alone in each one of these municipalities. We are one Aurizon body that is trying to speak with one very strong and unified voice. And as a state, we have done an amazing job with all of this, and we have some amazing partners that have helped us do it, this committee included. And you did a lot of work for us over the pandemic period and helping keep those lights on and those doors open and the keys off the desks of our friendly bankers down the street. And for that, we cannot thank you enough, but the work is not done, and we would like to continue being the best partner we can so that we can only grow that base and help Vermont succeed further. [Kim Donahue ]: If I may, the tourism economy generates three point nine percent of Vermont's GDP. [Chair Michael Marcotte ]: The [Kim Donahue ]: average of our surrounding states is, or of other states, is about three percent. So you can see how important tourism is as a percentage of our total economy than it is to our neighboring states. The fact that we pull so much weight in that the tourism economy pulls so much weight in the state of Vermont with such a small spend compared to our neighboring states, is a testament to the fact of, each individual property and each individual business and sector really contributing a lot to that marketing effort in an outsized way. If you look at our occupancy rates in the lodging sector alone, our occupancy rates far outpace our New England counterparts and our ADR also far outpaces our counterparts in New England. ADR is the average daily rate. So that's basically how much people pay on average for a room in a lodging in a lodging property. One other significant part just, pursuit, pursuant to the lodging sector, the lodging sector by volume is the largest, revenue producer in that tourism economy, vertical stack. So we, we represent one point four billion dollars in revenue. The next closest sector would be restaurants, which is approximately eight fifty million dollars many of those lodging properties also feed our neighbors and feed our visitors as well as, pull double duty in other, in other tasks. So we, we feel very strongly that we really want to make sure that we can continue with a successful, lodging sector, within the tourism economy for a long, long time. Vermont depends on it. [Brian Maggiato ]: I know you guys have one of our other colleagues coming in shortly after, so I think the workforce component of this will save for for mister Hans Van Weese from Hotel Vermont. But are there any questions that Kim and I can answer? [Joshua Sharpe ]: I, I don't think you need to convince any of us here that lodging is important. I mean, we just, last week, heard from the captive insurance agent association that they don't have any meeting space. But, yeah, I see hotels, you know, closing down. I I've heard rumors this new hotel that's beautiful up in Saint Albans is mostly empty. What's what's the problem? What what's why why is it that we're screaming for all this space, but yet what we have is empty? And how can we, as a legislative body, what can we do to help you? Joshua Sharpe [Brian Maggiato ]: (zero twenty three:thirty seven): So I mentioned this to I got to see Representative James earlier today and some of that used to exist. I don't know how many of you have you along, some of you have served, but we used to have funding mechanisms for regional marketing groups. So putting dollars in the hands of regional experts so they could create messaging specific to their region. So St. Albans would be a great example. Right right on the lake, beautiful harbor in bay. I mean, it's an amazing asset for the state of Vermont. But they're stretched thin as it is, taking dollars out of each business for their own you know, there's the Chamber of Commerce or their own little marketing engine. Those dollars don't go very far anymore. And we need to find ways to create targeted messaging specific to a specific an area so that the Department of Tourism can amplify that further. If St. Alban is creating collateral that can be used by anybody else in the state to get their message out, everybody wins. The seasonality of the state can sometimes be a challenge depending on what your assets are. If we're not having things like pond hockey tournaments anymore because it's too darn warm outside, it's going to be a challenge if you're right there on the lake in the dead of winter. If we're not out ice fishing as often as we once were or the derbies aren't taking place, there are going to be fewer people passing through your doors. So we've all had to diversify what our edge is or what the driving force is for why people are coming to us. But at some point, there's only so much that you can sustainably do without having, you know, your own financial issues as well. I would argue that we're probably underserved by rooms as a overall state for periods out of the year, but that, yes, they will sit empty while we we kind of stretch ourselves through the winter. So in the winter, you survive. In the summer, you thrive. [Kim Donahue ]: The reason why some of those doors are closing is not necessarily for lack of business. It's for being underwater. It's for being underwater in the increased in the ever increasing cost of doing business. And that it plays in with that seasonality as well, where if you can't sustain yourself to get to can't build that bridge to get to the busy season and you can't pay your mortgage, you can only defer your mortgage for so long. So [Brian Maggiato ]: In pulling our members, we've heard property tax increases on average about fifty percent. Most of us, especially the concentrations, are in high density marketplaces, whether it's Manchester, Stowe, Woodstock, Burlington. And those generally did their appraisals a little bit earlier than other parts of the state. So those increases were impacted year over year and became quite large very quickly. Utility costs have gone up by about twenty percent, and payroll increases are around twenty five to thirty percent. Now some of those things are actually worth celebrating, especially payroll. It's putting more money in the pockets of Vermonters, but other fixed costs are are becoming unsustainable. Similarly, commercial loans are usually on a five year fixed variable, and a lot of us refinanced during the pandemic when the opportunity was there. But five years are are right around the corner. So we are gonna continue having those tough conversations with both small and large operators around the state, trying to do everything we can as an organization to put as many resources in front of them as possible so they can find the experts to help. But I don't think any of it should surprise you. It's the unfortunate reality of seeing a boom and now seeing a new return to the normal that we're gonna have to exist with for a period. [Jonathan Cooper ]: Cool. Yeah. Cool. I'm gonna ask you an uncomfortable question. Okay. How how has the hotel program impacted your industry? Yeah. The well, the the hotel for for people out unhoused. Mhmm. How has it impacted? [Chair Michael Marcotte ]: So it's it's actually I [Brian Maggiato ]: mean, it's not an uncomfortable question. I think there was genuine concern about the the narrative that might be spun around it from those fifteen point eight million visitors, if they saw or heard that we were using a voucher program to, you know, basically take our unhoused and put them into some of these marketplaces. But I wouldn't argue that it's had an adverse impact. I'd say it has led to it's led to the dilution of what you might consider meals and rooms tax generators because we've now seen motel properties almost completely converted to housing or being purchased by larger entities so that they can have workforce housing of their own, which will otherwise dilute the contribution that we see on meals and rooms tax ultimately, if we continue to take inventory out of play. But in some cases, that may have been for the better. In other cases, it may have may have a long lasting impact depending on where the property is. But I think as an industry, we understood the immediate need to take care of our friends, family, and neighbors. So you can't say that it's necessarily had, you know, a huge negative because there were definitely some positives that that came out of it. Seeing it right fitted over time, I think, is incredibly important to the industry instead of the the kind of broad stroke that we saw where, you know, I guess folks were I mean, really being transported from their home communities into an entirely different place. And that did have some that did have some dangerous impacts in areas where support systems were not readily available, and that could have some tourism impacts as well from a health and safety perspective. [David "Dave" Bosch ]: Bringing up the we're thinking about local option taxes and maybe some few dozen of them, I believe, municipalities have local option tax around rooms. What are your relationships or what is your obligations relationships like with municipalities that do have those option taxes that your, presence is therefore helping contribute to? [Brian Maggiato ]: It's like a golden goose. Right. [Michael Boutin ]: So I'd like [Brian Maggiato ]: to hear more about this. Yeah. So I coming from Manchester, we've had the the local option sacks, I think, since its inception. And that's an incredibly wonderful asset. [David "Dave" Bosch ]: It's a trickle back to your industry in some ways. Yes. [Brian Maggiato ]: But it depends on how the municipality chooses to use it. When it was first rolled out in Manchester, the idea was that this would help subsidize the the tax base so that we could still have the same municipal services at a lower rate on our property taxes. That has evolved over thirty years to become an asset for marketing. So in a place like Manchester, we have the Manchester Business Association. They can request an appropriation that would come out of that options tax fund each year, provided we are all doing our jobs, restaurants, lodging, and retail, to continue to flow the money in. It's a seventythirty split between administrative fees for the state, I believe, and then seventy percent back to the municipality. I would not argue that it's a great fit for every municipality. You have to be a front facing marketplace. And otherwise, you're basically just taking from your your neighbor when you could just take it out of property taxes in the end. But for a lot of for a lot of communities, it could and should be a continued growing base and opportunity. And if possible, to grow the percentage that goes back to municipality will only help with ideas of that regional marketing group having a stronger voice and better resources to do their jobs. But I I can't control what municipalities do with their money. [Chair Michael Marcotte ]: Working away. Yeah. It's [Jonathan Cooper ]: not personal. [Brian Maggiato ]: I hope when when Bennington has had those conversations over the years, I've I've tried to sit with the select board and help them understand the benefits, and, ultimately, there there can be persons. [Edye Granning ]: Can you talk a little bit more to the short term rental market, how it's impacting your business? [Brian Maggiato ]: I mean, I I don't like the word impacting when it comes to it. It's not apples to apples around the state. There are areas within Vermont that could probably benefit from more of them. I think about the Northeast Kingdom sometimes and the I mean, how which amazing asset the Kingdom Trail network is. But without as much density and lodging as we have in other parts of the state, there aren't as many places for folks to stay to come and experience, you know, this amazing opportunity. It has definitely and I say anecdotally, when you read about other municipalities that have a a large percentage of their inventory being applied to it, I can understand why the local level they want to to have conversations. But I would not go ahead and say that it has a broad stroke impact negatively on Vermont's traditional lodging sector in terms of our visitation or occupancy. We offer a very specific type of product and the folks that discover how to stay in Vermont with us generally do so because they want that experience and because we've continued to curate the best possible products for them. We have more control over the success of that than I think a homeowner might when you understand what it takes to create the Vermont five that people really want to experience. So these are different types of lodging programs. But right now, seeing it managed at the local level, I think is incredibly important because they'll know better than we do how they need to manage their communities and how they need to manage the inventory that they have. And from a health and safety perspective, I guess that's probably one of our bigger concerns. You know, we pay we pay a lot to the traditional lodging, licensed lodging. And we just hope that anybody else who's putting their property out there is keeping in mind what it takes to take care of somebody else. And when we hear stories about, like, what happened in Ludlow, unfortunately, it only gives us reason for concern and pause on what can we do to help educate committees like this one or others so that they understand, you know, really what goes into creating these opportunities at least places for people to to come and stay. I do have two other colleagues in the room now from Westport Hospitality. I know. But we I mentioned Hans come in earlier and that we have formerly of Westport Hospitality, Joe Carton. Any other questions at least for Kim and I before we move over to workforce? [Joe Carton ]: I think, [Chair Michael Marcotte ]: you know, Tony touched on our captive industry is [Brian Maggiato ]: The biggest event in the state. [Kirk White ]: Yeah. We have to not. [Chair Michael Marcotte ]: We're having now they're having a hard time finding enough places. And the other problem is that they can't find flights to come in. Do you ever work with BTV, and have conversations with them about what's going on in their industry. You like to get all the links to [Brian Maggiato ]: I'll leave it I'll leave it to Hans, but I will tell you that the one big conference has a trickle down effect on everybody else. Each one of those organizations has a board meeting. That board meeting has to take place in the state. They leave Burlington to do it. It's the ecosystem. It's all tied together. I mean, almost every property I know has had an opportunity to be, you know, impacted by the CIA, whether it's fifteen people coming for a night or twenty five coming for a full on retreat to go to the Land Rover driving school, to restaurants, to everything. So it's it's important. It's a big one. [Kim Donahue ]: As far as working with BTV or even Amtrak to for transportation into the state, although I wouldn't say that we work directly with them, we do [Hans van Wees ]: we are very aware of [Kim Donahue ]: what their routes are and what their availability is when we do our own marketing specifically for events and for weddings. [Chair Michael Marcotte ]: Just wondering if that's an opportunity for you to actually have conversations, get better ideas of what where they're going and maybe feed ideas to them as well. But, you know, I mean, the captive industry is is one, but is there an opportunity to build on what would what BCIA is doing for the state to to to grow that into more of a destination for other opportunities for businesses to have their meetings here and [Brian Maggiato ]: and Whenever you'd like to have me back in, I will talk to you folks about it all you want. It's something that we lost. We used to have a convention bureau, and it's it's definitely worth having a conversation in the future as we talk about economic development on how we can build that program back up because the state will benefit as a result. [Chair Michael Marcotte ]: I'd like to have that conversation. I've actually I've been here a while, so I know the convention bureau, but there were issues that were going on there that, you know, we need if you're gonna have a bureau like that, you need one that's gonna grow its membership. Mhmm. And I think it was pretty stagnant. So yeah. I I mean, I think it'd be great to have those conversations with them. Happy to do so. Yeah. [Kim Donahue ]: Alright. Thank you. [Emily Carris-Duncan ]: Thank you. Thank you. [Michael Boutin ]: Great. Yeah. [Kirk White ]: Good morning. Morning. [Ted Crittenden ]: Good morning. Thank you for for having me. [Kirk White ]: And with me is Joe Carden. I'm Hans Van Wees. I'm managing director for Westport Hospitality. We operate Hotel Vermont the Harbor Hotel in Burlington. Formally, I ran Trapp Family Lodge for about a decade as well, so I come from a resort as well as city perspective. And Joe Carton is the recently retired COO of Westport Hospitality and very actively involved in the workforce development initiatives we're working on. So we're here together today, and Brian and Kim need to leave. They're not running out of you, but they're they have another meeting to go to. I did bring some slides. I don't know if that's a possibility to end of September yesterday. They're on. That's great. Oh, yeah. So what I what I wanted to talk about is just, first of all, a little historic perspective that I presented at the, at tourism day to a larger group of legislators, and then a really good news for where we are today. Yeah. Because we have some good news. We have some we're making progress on initiatives that we've been pursuing for over three years. Joe and I worked very closely on that, ever since the founding of the World Lodging Association during the pandemic. Following that, we very quickly realized that our next biggest challenge was a lack of work workforce and as we want to grow this industry. I just saw a statistic this morning that that when a business magazine came out that the industry tourism industry now represents four billion dollars of revenues to the state of Vermont. And when I looked at it last year, I looked at twenty twenty statistics, we're up to three billion. So So we're really seeing a growth post COVID, and it shows. I mean, hotels have been busier. I should say that, as you probably all experienced yourself as well, we had this post COVID boom where we were all very excited to travel again and and nothing was good enough. We spent all the money on it and collectively the nation, we burned through two trillion of savings in a short time and our industry in general was one of the recipients of that nationwide, worldwide really. I don't know if you I don't know any friend that hasn't been to Italy or or Greece in the last two years, and she was crazy. So but oh, thank you. Yeah. So what we what I sent over was just sort of a presentation from from from last year, and it really talked about the size of our industry and what we represent. The leisure and hospitality industry represents eleven and a half percent of the workforce here in Vermont. It's actually second largest employer after the state of Vermont itself. So there's a lot of folks involved in working in our industry, as many as thirty five and a half thousand. One of the challenges we have is that we need future leaders in our industry. You saw Brian Maggiado just now who is one of our future leaders. He's a young professional. SS Kim Donahue, Joe and I are aging out. We need to really think about that next generation of leaders. And if we look at it then, what what Vermont is doing in the educational field is, we've seen some, we've we've struggled. The hospitality major at Vermont State Colleges or Johnson State College at the time closed down. That was a program that was run through, some of the special funding. And New England Culinary Institute closed down, We all missed that very much. It's very hard to find train shops, and Champlain College hospitality program closed as well. So that does not leave much for education in in Vermont in the hospitality field. We also have what we call the, what I call the high school cliff, that seventy percent of high school graduates continue, follow continued education, thirty percent does not. And where does where does that thirty percent end up? And I've always felt we should offer for those folks who should offer a gap year, you know, think of what you wanna do and have them experience different industries and which is we also hope is definitely in the tourism and specifically the hospitality sector. We have career changers. We see that folks are looking to change their career, particularly post COVID, figured out that they want to make change in life. And then we have career advancement. These are people already working in our industry, for example, and that would like to grow and, both in their abilities, the skill set, their positions, and also, you know, in their income. They wanna grow professionally. It's been a real issue with perceptions around hospitality jobs, specifically the hotel industry, often considered difficult profession to access. Like, how do you go start working in a hotel? You know, we can think easily of, like I mean, I know probably half the table, if not more, has had a history in hospitality, and we know someone who knows a lot about that. But where you may have worked in a cafe at a restaurant or maybe in a cafeteria at the university or wherever, we all, many of us have a background, but hotels, like how do you actually start working in a hotel? That often goes unnoticed and underappreciated. I'm a big proponent that hospitality is a profession. I'm a product of that. I studied hospitality management. I've always worked in this industry my entire life as has Joe, and we've done everything we can to really consider this a profession. Out of this grew what we felt was an educational opportunity And we are delighted that we have through the VLA, the Vermont Lodging Association, the Vermont Chamber, and with the Department of Tourism and Marketing, and we've come to an agreement to develop a professional certificate program through UVM PACE program, the Advanced Education program. And this is a full certified course that actually gives some credits as well to to students. So and that was the state as of last year. So so where are we today? We are now actually in at a stage where we enrollment has started. UVM is handling the majority of this now. This is really in their field as far as the logistics. And that's thanks to a a grant that we received, a two hundred and fifty thousand dollar grant, that was all part of ARPA money that was allocated partly to tourism development. And, we're very fortunate that a portion of that was allocated to this workforce development program. So that has allowed us to work with UVM, develop the curriculum, and start recruiting instructors, and start working, and Joe can talk about in a moment, on what is called a capstone internship opportunities, and and start enrollment. And and so if you look at what the program is like, it's there's three core courses. There's an introduction to sustainable operations, introduction to marketing and sales, and an introduction to hospitality, accounting, and finance. Sort of the basis of, like, hey. How do you run a a lodging business? It can be an inn, a hotel, a resort. You know, it applies. A restaurant, it really applies broadly to, many sectors in our industry. And then those are me like to sort of get more specific around front office operations or food and beverage and, event planning, which is an important sector here in Vermont as well, facilities management, and human resources. So touching on all these other topics. And then the key component of that is a hundred and twenty hour capstone internship, and that is at a Vermont based hospitality business. A paid internship for three weeks, where, the student will work, with a mentor, which in almost all cases is the either the owner or the general manager or the president of the company. So we really are stepping in high. We wanna make sure that these students are really being welcome to mentor to properly introduce to our industry. And we I I I can't tell you how important this program is for us because we really wanted this to succeed. So the the timeline now is that follows. We're very excited. In April, we start the first cohort. And in May, the second cohort will start. As of two days ago, we had fourteen people enrolled, and that's even before the marketing has started. UVM is starting marketing next week. So this is just through word-of-mouth, and it's it's brought us people from the industry. There's very excited to see there are number of young people in the industry that have signed up for this that want to advance. People from outside of the industry, a few UVM students, which is great too because it's another important lead or port source for us. And so so that's where we are as far as on the timeline and with the internship starting in May or June. This is really a program about UVM and employers working together. We have currently fourteen host sites confirmed with six. Joe can talk about that in a moment. Current employees are being enrolled and can enroll in this program. We're very excited. First two cohorts are at no cost to these to the enroll to the, to the students, And that's really thanks to this grant that we have that's significant. And we really hope that this will kick it off and that we find a way to find additional funding going forward. There's an advisory board being made up of employers to work with UVM. And then as employees, we also help market these programs into communities. Joe can talk briefly about the capstone and where we are with that. [Joe Carton ]: I wanna give you a little again, thank you, Hans. Joe Cartney. I am retired as of June, forty two years veteran of the hospitality industry in Vermont and tell you a little bit about I grew up in Northern Maine, in a small town called Holton, Maine, the end of I ninety five. And there weren't a lot of hotels there. And I went to University of Maine and Presque Isle and recreation management program and did my internship at Swannwood Lodge in nineteen eighty one and ended up in Vermont in nineteen eighty two. And I've stayed ever since since my whole hospitality career has been in Vermont, say, years in the ski business and then moved to Burlington, ran the Radisson Hotel, and then the Marriott Courtyard opened that, and that hotel belonged to actually, the Marriott Town Place Sweets, which we sold to, like, one of these in the Champlain Housing for interim housing. So I have been very interested in a program that develops local people and gives them opportunities to find out how to work within our industry. And in doing the research, we looked at, Cornell University, their certificate program, looked at NYU, which has a large hospitality program and certificate program, Johnson and Wales. None of them have a internship component requirement. And we thought we had to find a differentiator for Vermont. I think Vermont has a strong, strong hospitality brand. And when people think of that or students, we could reinforce it with this internship. It's it's not a hard lift. It's three weeks, but it exposes them to, you know, to trap family lodge, the top notch, to hotel Vermont, places that are really top of the class Mhmm. In the country. And so we as a commitment, those fourteen properties, and I haven't put it all throughout the state. If we need more, we'll get more, but we only have space for twenty need for twenty at the moment and then maybe forty on the second cohort. And then when money goes away, we gotta make sure that those sixty people that have complimentary gone through the program are saying that was well worth, you know, for three thousand dollars or whatever the right number is. And I think that's probably the the tuition as we get into a paid three to four thousand dollars. They will have an opportunity to experience hospitality in Vermont through this program that, you know, if you get signed up with Cornell, you couldn't do it this way, or NYU, which are all the major programs in, you know, in the country, let alone perhaps the world. So the hundred and twenty hour capstone is really important. And that's my in retirement. That's what I'm gonna do is coordinate that to make sure those experiences are are top notch, and they're talking to the right people that the president or the general manager of the company or the owner is giving the three weeks direction and, you know, pouring into that student what it could be like to have this as a profession. So we're very excited about it. We were kind of astounded that because we kept knocking at the door a lot with Heather and the DDTM and whoever would listen and finally, instruct hopefully gold with it. And we just feel that if we can do this right and have everyone understand that there's not any slight of hand here, this is very open, transparent. We want people to come in and learn how to treat people through the wrong hospitality way. And we think it's sellable. It's it's we've already got people from Newfoundland call from other places that we hadn't really thought about how we're gonna handle an international student because it's a paid internship. So do they need a visa? [Ted Crittenden ]: I don't know. I [Kirk White ]: figured that out. [Brian Maggiato ]: Or can [Joe Carton ]: they just you know, how does that work? But there is a, I think, extreme demand to do this and adjust Hans and I are committed to doing it right as well as UBM PACE. So and even before we did this, UBM put out a program that did a feasibility study on their own because they didn't wanna get into something that we had thought [Emily Carris-Duncan ]: it was [Joe Carton ]: a good idea. They did the feasibility study, and they say, yeah. This is a market that we need to be involved in because there is a need. So I just want we want to share that with you, and we think it's a big win. We've gotta do it right, though, and we need everyone from you know, because the farmer is is hospitality. The the fields, the mountains, the experience. It's just not what they do within those four walls of the building. That is probably the least of us. [Kirk White ]: It's how we look, how we feel, [Joe Carton ]: how we communicate to each other. That is the essence of the hospitality. So that's where we are. We're late April, early May. We'll have the first kickoff of the program, and we're excited about it. And we'd love to share it or talk to anybody or answer any questions you may have. [Chair Michael Marcotte ]: You worked with the Department of Labor? Have you talked to them? [Joe Carton ]: Yes. Matter of fact, I've had two calls into them yesterday, and the, Savannah Haskell is now the new, executive director for my workforce development, and she has been helpful. So, yes. And although they didn't know the answer, because I was asking about the That's what she's the international student and visa, and they referred me to the federal program. We're looking forward to talking. [Chair Michael Marcotte ]: Can can you hear me at the agency of commerce the Department of Economic Development is our international person for business. He may have an idea of where you can get that information or he might be able to get [Jonathan Cooper ]: it for you. Okay. That's cool. [Chair Michael Marcotte ]: Have you had any conversations with career centers to maybe Yes. Start this in the high school level getting to Yeah. [Joe Carton ]: The tech centers Yep. And through guidance counselors. UVM PACE has all those contacts through that program. So we have reached out to those folks as well, and we'll continue to do so. [Kirk White ]: The the the group that identified these these high school, you know, graduates that are looking for I was a product myself. I took a gap year. I didn't know what to do. And somebody said, hey. Why'd you work in a hotel? I'd never thought of that. And here I am, you know, further my career, and I I love what I do. So I think we can, you know, we hopefully can can can really access that group as well. Because it is a very fun career. I mean, everybody that that works in this industry, you know, loves it. So and and the hotels is, you know, it's it's it's it's it's a growing market still too, so there is there's a good future for it. [Michael Boutin ]: So yeah. So one of [David "Dave" Bosch ]: the things you you referenced some of the other hospitality programs sort of in northeast. We have this very large industry, and it is a little surprising that Champlain [Michael Boutin ]: Yeah. [David "Dave" Bosch ]: Put it down. Vermont State put it down. UVM doesn't sort of have them. Do you feel that with this pipeline that long term, maybe looking five or ten years down the road, we might UVM might be in a position to have hospitality as a as a major or minor, or is that part of your thinking at this point? Or [Joe Carton ]: We think so. And that, UVM has said, the excellent Rubenstein School, said they will accept credits of this certificate, which I think is worth three credits Yeah. Toward a degree program, whether it's a two year or four year degree. So they see this as a potential as long as we can start building that foundation that Vermont is and can be accessed as certificate program and then parlay that into a larger degree opportunity. Go ahead. [Hans van Wees ]: For the hundred and fifty thousand dollars a year that you're requesting, what is that looking to cover? [Kirk White ]: Well, we're we're now operating on a a grant that was two hundred and fifty thousand to get the program started and they get the first few cohorts. So a portion of that's curriculum development. Going forward, it would really be to, you know, cover the cost for operating it, and and that would most likely come through UVM, you know, together with the industry to apply for that. But, yeah, it would cover operating expenses Marketing. Marketing. Yeah. And, hopefully, we'd we'd love to find the the idea or the program ideally is that there is no cost to the student. So whether that's through a program at FESAC or whether that's like, the capstone, for instance, is a paid internship. So the the this is as a role to pay that that Preparing weight, which [Joe Carton ]: For the eighteen dollars a month. [Kirk White ]: It's eighteen an hour. Yeah. And that'll actually pay for half, you know, of the tuition of the tuition. In this case, the first two cohorts actually do not have to pay anything into it. And so our hope is that out of that, you know, forward out of money going forward, we can ideally cover half that tuition cost. And then the other half is covered too. It's doing through the capstone. It's an investment in in in workforce development. That's the way we look at it. [Chair Michael Marcotte ]: Yes. [Joe Carton ]: If you [Kirk White ]: if you I don't I know we're probably over time or running out of time, but if you have more questions about the industry, Joe and I have been in this for years, and and and I heard questions around the the topic of, VCIA, for example, and and that's a concern we share. Vermont [Ted Crittenden ]: yep. [Kirk White ]: I used to live in Waterbury and work in Stowe, and it was always the thought was like, well, Burlington's a great place, but it's, you know, it's it's so great because it's right next to Vermont. The fact is it's it is Vermont, and it's a significant economic driver. Twenty five percent of the tourism revenues are generated just in greater Burlington area. And it has and as an effect, it sort of spreads over over the state as as Brian Machado just pointed out as well. And we're we're we're concerned there's not enough convention space. And if you look at any comparable destination, take for instance, Saratoga Springs, very successful. If you look in the September twenty two to September twenty four, comparing five destinations in the northeast, the four New England destinations, Portland, Maine, Portsmouth, Newport, and Burlington, Vermont were down in business. Saratoga Springs was up. And and that's just, you know, just one indicator, but the the presence of a convention center and and, yes, it would need to be based in Burlington because it's where the airport is and or near Burlington. It's critical mass of We got massive hotel rooms that you need, but PGIA has expressed a concern that it's that it's a problem to host that meeting here. And with all these captive businesses based here in Vermont, it's something we don't wanna put at risk. So Joe and I have actually, and together with, Palo Burlington, which is a marketing arm in for Marketing Burlington, have started conversations with VCIA as well. And we're sort of exploring this idea, what would it be if we had a convention center or what what would be needed or what would that look like? And more importantly, other than Fizzi, what other business could it attract? You know, it may be a conversation where we need to involve UVM as well. Say, are there sports events that you can't host? It would be great to host. Social events, concerts. I mean, it's not just conferences, but other events as well. And what is the market for conventions that are six hundred, eight hundred, a thousand people that we can't do in Vermont anywhere right now? And so and that's what we're missing out. So as we add you know, expand our our supply of hotel rooms in in the state, we also need to think about what is what are gonna be the demand drivers and how do we grow that pie. [Joe Carton ]: I just wanted to add, I spent the first fifteen years in my professional in the sales and marketing at SalesLion. I sold meetings, New England Association and the regional associations into Burlington, into the Radisson. And so the new England associations by mandate, they all have to. If you have a entity in Vermont, you have to meet. But there are several that were too small that wouldn't come to Vermont because they just were too big. The, you know, Groceries Association and the the laundry association. No. But yeah. So there's there are people there are groups that would come to Burlington and Vermont if the facility existed. And without a doubt, almost every time, like, a local hero from UVM or what said they'll invite their association, they had the largest attendance of almost any, where they went when they came to Vermont. So there is a, unique aspect about, oh, I've never been if you're in California or Colorado. I've always wanted to go. You know? And this gives them the opportunity, and we saw higher attendance because of that. So I think with the right Yeah. Parts and pieces, it really could work. [Chair Michael Marcotte ]: Thank you for joining us this morning. It's a pleasure conversation and let's keep us surprised at what's going on. I think there's a there is a real interest in how we can expand. You know, we don't wanna see BCIA meeting outside the stage, and they had a requirement to do it. And and it's just expanded so much. It's Yeah. It would you know, it's successful, but we've gotta keep up with the success. Right? [Joe Carton ]: Yeah. Thank you, Vikram. Thank you [Chair Michael Marcotte ]: very much for Very much. Yes. Take care. Morning. Morning. So do you want [Jonathan Cooper ]: me to make sure? Thank [Chair Michael Marcotte ]: you. Maybe I thought before we have conversations tomorrow afternoon, going hearing with general general housing committee that we actually the discussion about tips better on so everybody better understands concept of the tip, and I think it'll help you tomorrow when we start out out having those discussions about Spark. So I've asked Ted to join us from JFO, our joint fiscal office, to kinda give us an overview of of tips. Ted, thank you for coming in this morning, and appreciate your time. [Ted Crittenden ]: Of course. Would it be I imagine it would be helpful to have things on Zoom, so I'll boot into that. And then a quick question. Is there a power plug? Because I don't have a lot of juice nearby me. Is it very great. Perfect. So I'll plug in and take me a few minutes to get started here. And maybe if I can, you know, do this and talk at the same time. I am, as Sotera mentioned, to burn up from the joint fiscal office in addition to tax increment financing. I'm on the revenue team, so it's my first time in this committee this session and I think ever. But I'm on the revenue team. I work on consumption taxes, so sales and use, mail in rooms, tobacco, cannabis, those types of things. So if you have questions about those outside of tips, I'm more than happy to answer them. [Chair Michael Marcotte ]: Okay. It should be good to go. [20 seconds of silence] [Ted Crittenden ]: Okay. So, yes, this is gonna be, an introduction to tax increment financing districts. A lot of, material on basic mechanics of the program, components of the TIF program in Vermont. And then we'll move into diving into some of the fiscal central fiscal effects and considerations when thinking about the impact of tax increment financing use on the education funds. John Gray is here to chime in with helpful context and pieces that I maybe am not able to cover or forget about while talking. So we will begin. So broadly speaking, tips have been in use for quite a while. They started in California in nineteen fifty two. Their use really increased in the nineteen seventies and nineteen eighties as, the amount of federal funds that were available for infrastructure, decreased. All states except for Arizona have some form of TIF. There are a lot of different permutations, combinations, and how to or states have decided to use increment financing as a tool. They are, according to some sources, the most widely used government program for financing economic development in the United States. In Vermont, because we have our unique statewide education fund, it also means that the considerations and thinking about TIF are unique compared to other states. Right? So municipal decisions to use a TIF and BEPs you the approval of those TIF districts, mean that any impacts associated from those TIFs in retaining education property tax increment, impacts taxpayers across the state. Broadly speaking, there are these kind of four basic steps, to implementing a TIF. But in a in a sentence, municipalities use them to finance economic development by diverting a portion of the growth in future property tax revenues within a specific area. So when you implement a TIF, you freeze taxable value at a certain amount called the original taxable value. Any incremental growth in property value above that original taxable value is these are projects in the district. So in a little more detail, when a municipality is thinking about a TIF, they're seeking to improve a geographic area. This could be a downtown plot, blighted land. Many states have kind of a blight requirement for brownfields, and they seek to improve that geographic area by putting in new infrastructure. So that's sidewalks, parking, street lights, sewer, a whole host of potential projects. And the municipality finances those projects through bonding, through borrowed funds. And ideally, this third step is ideally, the project stimulates private development, which drives increases property values in that district and the municipality uses that growth in value, so the tax revenue that comes from that growth in value, to pay the debt service on the bonds they took out to finance their infrastructure projects. And this, Vepsi, created this visual figure of the mechanics of it. I think it's it really does a good job of showing how this works. So I mentioned the original taxable value. This is this blue rectangle here. When the tiff is created values are frozen at the original taxable value. And then as property development occurs property values increase they are able to retain this increment. In Vermont seventy percent of the increment goes to finance the debt that was incurred for improvements made in the district. Okay. Thirty percent is, remitted back to the statewide education fund. And then once the retention period ends, I'm using a lot of terms that I'll cover in the next slide, which is a period of twenty years, the full amount of taxable value is to the education fund. And so [Jonathan Cooper ]: Is it is it [Ted Crittenden ]: only education property dispute for that too? No. There is education. I because of JFO, we spend a lot of time thinking about statewide effects. I tend I focus on the education frontier, but it's both municipal and statewide property taxes. [Edye Granning ]: Excellent. So you had the thirty percent starting at about year five. Is that because there's no increase in taxable value till then, or is that in the statute? [Ted Crittenden ]: That is just the nature of the the figure and the way it's created. Once incremental values are created, it it goes in that seventy thirty split. [Edye Granning ]: So it's so okay. So it's in general, it takes about five years to see any value increase once this has started? Like, that's [Ted Crittenden ]: There is no it could be it depends on how quickly the projects go into effect. You know, Killington is already seeing a very small amount of increment generation, and they were, you know, approved in twenty twenty two. It was it showed up on the twenty twenty four grand list. So it could certainly happen earlier than five years. But it generally takes a little time for things to boot up and start generating increment, but it I can't say with any precision when that happens. [Edye Granning ]: K. So it's it's my question was it's not part of the current statute. It is just how it has been generally going. [Hans van Wees ]: I think that's what that [Emily Carris-Duncan ]: John Rayops of Legislative Council. I I think, it it's not part of statute. I think it may just be in part the diagrammatic nature, which is meant to predict how the particular values might flow. And then the timelines beneath are useful because when we think about, like, the instance in which we only talk about five year period in this context is that incurrence of first debt. But to your specific question, you could generate value immediately. And in any effect, let's say development doesn't development isn't happening because improvements haven't happened yet. There's still gonna be growth in property value, and and there's still gonna be the freeze in place. So you're expecting some increment immediately to go to the municipality even absent the effects of development spurring property tax growth. So the five year is, I think, just a a function of looking at the diagram, which is meant to simplify the particular pieces. Yeah. Okay. That's it. Mhmm. [Jonathan Cooper ]: Good. It might be beneficial just to give a timeline explanation of it because you have to go through the BEPSI to get approval, then you have to if you find a project, then you have to go and get it approved by the the municipality, the voters for the bond, and and go through all that process. Might might be for education wise for for folks that haven't gone through the the Chestnut community. [Ted Crittenden ]: Yes. And we'll go into more of the process pieces in in later slides. Absolutely. This is more to give a general idea of how TIFF like, the increment [Hans van Wees ]: piece in a TIFF district. [Ted Crittenden ]: And, yeah, we'll go into more Vermont specifics in later slides. [Emily Carris-Duncan ]: And I think like Ted was pointing out, the bottom Yep. Pieces of this diagram are really good. And, obviously, they presuppose some knowledge. But if you come back to look at this after the process, the bottom piece is super helpful for thinking about those kind of areas that you have discussed. [Kim Donahue ]: If I could just [Jessica Hartleben ]: I'm sorry to interject. I'm Jessica Hartley, but I'm the executive director of Pepsi on the line. And I'm also happy to provide specific examples because we do have towns that have used this process. So happy to provide examples from specific tip districts to the committee. [Chair Michael Marcotte ]: Thanks, Jeff. [Jessica Hartleben ]: Uh-huh. And to answer representative granting question, you know, it does take five years. Well, the districts have five years to incur their funds debt. And then depending on when the towns, as Ted mentioned, start their development projects, you will see increment generated based on the the type of development that's being created in the district. So the original taxable value, those those property taxes ed property taxes are always going back to the Ed Fund, and it's only the thirty percent of the increase that is going to the Ed Fund and then the seventy percent of not only the education tax, but the municipal tax is, going into the TIF fund to pay back the bond that the that the community had, voted for to do these infrastructure improvements. [Chair Michael Marcotte ]: But what John had just brought up as well is that even before incurring debt, at the time you freeze that property, property values tend to rise depending on what's going on. And so what happens to those dollars after after the the value has been frozen? Are they how are they how are they looked at? And are they bank somewhere to can to help pay for the to help pay the the bond down? [Jessica Hartleben ]: Yes. So any any increment that's generated after the original taxable value has been set, those amounts are calculated by PVR through the tax department. And then, again, they would be the thirty percent would go into the TIF fund, if you will, for the town to pay back the bond. But, again, our data does not show that property tax values are growing at such a rate that you're gonna see huge increases in property tax values until after the development has occurred. So just to back up a little bit, bef before a TIF district is created, the municipalities spend a lot of time doing market and feasibility studies and also looking at whether, they have development that's ready to go. Because if a project is not ready to go, you're wasting valuable time to generate increment to pay back that bond. So, that's where Vepsi comes in. Vepsi looks at that. Vepsi, reviews feasibility studies and, market analysis prior to a TIF district being created. And we're actually doing this right now because Rutland has applied to be a new TIF district. So I can get you real time studies about what we're doing right now with Rutland, and you can see the process play out over the next few months. [Ted Crittenden ]: Thank you. So, yes, to rewind a bit and, share some of the key terms that I will be talking about so we all are on the same page. The taxable value, wanna make a distinction between the taxable value, original taxable value. So taxable value is just the assessed value of a project or property that is subject to stateness while other taxes. The original taxable value is the amount, the value of property that exists before the establishment of a TIF district. The increment is the difference between a property's current and original taxable value, and then the tax increment, additional tax is a very important piece here, is the difference between the property taxes due on the current taxable value and, property taxes due on the original taxable value. Improvements, this is a specific definition that's in statute that I'll return to, but it means it's kind of contained. Related costs are the expenses incurred and paid by the municipality to finance and construct new infrastructure. This is exclusive of the actual cost of construction of infrastructure, and then the retention period is the period of time a municipality is entitled to capture a portion of the total tax increment to finance their infrastructure improvements. So in Vermont, how can money that is generated as a result of growth and incremental value be used? This is largely on infrastructure improvements. And as I mentioned, there's a specific definition that is in statute twenty four BSA eighteen ninety one. And the key piece here is infrastructure that will serve a public purpose and will fulfill the purpose of the TIF districts themselves. So this includes utilities, transportation, public facilities, amenities. It can be land property acquisition and demolition and site preparation. There's a piece also that, allows, improvements to help finance debt service early in a TIF district's creation. And a key piece here is also that under in the current TIF statute, increments or incremental tax revenue cannot be used to subsidize private developer costs. Some states do allow that. That's great. Experts have mentioned [Chair Michael Marcotte ]: Great portion on that. [Michael Boutin ]: Oh, yep. Going back to the the prior slide there. And, yeah, public infrastructure is what the target is and and how to how to help with that. What if what if I think that, you know, smaller towns maybe in particular, if a town wanted to create a piece of land and do the infrastructure around, you know, developing that piece of land, could they, you know, then be able to use that developed know, infrastructure developed land for some private and and and then make it available to a private developer like AM store and that kind of thing. Is that possible, or is that not permitted to have that? [Jonathan Cooper ]: Gotcha. [Ted Crittenden ]: So we Yeah. I would lean to Maybe I should jump in. Yeah. [Emily Carris-Duncan ]: So I I think the best way to answer that is that the first constraint here, that the infrastructure serves a public first purpose Right. Would be the piece that might limit you from being able to do that. But I mean, the concept behind why TIFFs works is that that improvement drives private development. So it is contemplated by the existence of of TIS that it's leading to enhancements to private development. So that's not something that's formed to the concept of TIS. But if you were doing something that had no public purpose, you're literally just providing infrastructure to help a developer. It doesn't do anything for the public. That is not permitted under this definition of improvements. Does that help? Or [Michael Boutin ]: I can see the gray area. Okay. [Chair Michael Marcotte ]: So I'll follow-up later. Yeah. Sure. [Ted Crittenden ]: The next question is how long Can a Town incur debt and retain increment On the debt incursion side, it must occur five years as it must occur within five years after district creation or the district is default. However, the municipality can ask and receive a five year extension if they have not incurred debt within the first five years. Once debt has occurred, districts have ten years after the creation to incur their amount of debt. However, this is with the caveat that various legislative actions during COVID nineteen extended incursion periods because districts were having trouble lining up development, maintaining project costs, just, you know, I to the the piece of making sure that infrastructure projects are shovel ready. It was really hard to do during COVID, so the legislature extended encouraging periods. I'm sorry. Once debt is incurred, you have ten years to incur? Yes. Oh, sorry. Once once debt is incurred, they have ten years after creation of the district to incur debt. So the clock start so if Killington, for example, I'm gonna use them just for the sake example. Their district is created in twenty twenty two. They've already incurred their debt, so they have from twenty twenty two to twenty thirty two to incur debt. Additional debt. Additional debt. Okay. Nice. Yeah. I see. [Kirk White ]: Yeah. Mhmm. Yep. Thank you. [Emily Carris-Duncan ]: Yeah. Okay. [Joe Carton ]: Yeah. [Ted Crittenden ]: The retention period, so how long they're able to to hold on to municipal and statewide education property taxes, That period is twenty years after they incur their first debt. Also, like extensions to encouraging periods, there have been extensions to retention periods. Berry and Hartford received extensions in act seventy two of twenty twenty three. Barry's extension was four years, Hartford was for two. And the Burlington waterfront can retain longer for three city place parcels and they have that ability to do so until two thousand and thirty five. And in general, so this table here summarizes both the the debt and retention periods for the the TIF districts that are currently active. In general, the Vepsi annual reports that they put out, they put out one every year, are a really helpful source of information on, what is occurring in TIF districts. [David "Dave" Bosch ]: Quick question on that. That last correct. That debt period, Tom, that is the period in which they can incur debt. Exactly. I'm I'm curious. Is it set up that retention would end regardless of the calendar if they repaid their debt within that time, or do they continue to retain even if they've managed to somehow repay their debt earlier? [Ted Crittenden ]: So as I will John can correct me if I'm wrong, but the district is retired once all debt has also been retired. So the they would no longer retain Boomer Mann. Yeah. Absolutely. Okay. [Chair Michael Marcotte ]: Thank you. Mhmm. So I I remember that there's no prepayment on bond debt anyway. You can't prepay it, can you? You have to pay every year. You have fixed amount you have to pay, and you can't can't pay down the principal. [Emily Carris-Duncan ]: Yeah. I'm I'm not sure, but you would have little incentive to do so. It's the way that I would [Chair Michael Marcotte ]: Yeah. [Ted Crittenden ]: Under current statute. So under current statute, TIF districts can retain eighty five percent of their municipal tax increment and no more than seventy percent of their statewide education tax increment. However so this piece is these amounts are from x nine twenty seventeen. Older districts that were created before twenty seventeen are allowed to retain different amounts. Many of the districts that are active were created prior to twenty seventeen, so they retain seventy five percent of their debt. And yeah. So older districts have a different amount that they can retain. Vermont's TIF districts, three out of eight are located in Chittenden County. The any new TIF district must meet two of three location criteria. This is in statute. They must be in high density area, a designated downtown, or an economically distressed area, so two of those three requirements. There are also additional rules in statute. If in this municipality already has a TIF, they can't create another one. There are no more than two TIF districts per county, and only six districts beyond the ones already listed in twenty four BSA eighteen ninety two. There's a whole list, and it includes the the currently active ones can be established in most of the active ones. This map here just wanted to note it shows the location of both, current and retired TIF districts. [Joe Carton ]: You know [Michael Boutin ]: why why the two per county? [Joe Carton ]: Where is that? [Emily Carris-Duncan ]: What what is [David "Dave" Bosch ]: she gonna send address? [Ted Crittenden ]: So my I can't speak to past intent. My sense is there was concern that because TIF is largely an instrument that is available to larger municipalities, it's harder for smaller municipalities to to do a TIF. The concern is that, you know, outside of the ones that already created, you would have most a lot of them occurring in Chittenden County or near to Chittenden County. There wouldn't be a lot of they wanted to to to hopefully maintain more geographic equity in TIF district use around the state. [David "Dave" Bosch ]: Thank you. What are the numbers next to the symbols reflect on this map? [Ted Crittenden ]: So these are just showing the the locations. There would be a key here, but I just didn't I wasn't able to snip it out of the annual report. [David "Dave" Bosch ]: So it's not like the number of store tiffs or anything like that because I don't see an of an eleven. So I'm just curious if there was some sequencing that I'm missing. [Chair Michael Marcotte ]: No. No. Absolutely. That's a good question. So I was involved in the twenty seventeen. To give you a little more context that, you know, let me we were worried about Chittenden County being able to pull a lot more tips away from other areas of the state. But even this language can be overwritten by the legislature. So Chittenden County, Burlington came in or South Burlington, you know, Milton and they had the big community, Colchester, said that they really got something cooking on the books that they could come and petition the legislature to to actually allow them to create another TIF district. So, you know, we we use not withstanding. Yep. So that I mean and we were talking about that because, you know, we're not all of discussion about Chittenden County all the time, we have we in this committee have to realize that Chittenden County is our economic engine for the state. And so we need to do what we can to help that engine keep running. And but we also recognize that we wanna spread the wealth around the state as much as we can to. So that's that's what our thoughts were with them. And knowing that we could not withstand the language if something really came up that that we really shouldn't be putting another TIF district in Chippen County or any other counts. [Michael Boutin ]: Do you have any sense of I'm thinking of scale in terms of the administrative infrastructure needed by municipality's exploitative. Seems like it would tend towards larger municipalities. Can you give me agree with that? Some sort of level of magnitude of, you know, how big how big a municipality would you have to have, to be able to support that? And has any thought been given to allowing some of the smaller municipalities to sort of combine their administrative potential administrative infrastructure to support? [Joe Carton ]: That's it. [Ted Crittenden ]: So that's a good question. I'm gonna take a a very broad crack at it. We also have Jessica Hartleben here who will be able to, I think, provide any additional context that I missed. To your first question, yes. It is there are between audit requirements, the full application process, there is a a pretty substantial kind of administrative need for those asks. Municipalities also frequently contract out or have outside providers, help them kind of prepare their documentation, make sure everything's put together. There is it's it's hard to know. Right? Like, if it's a certain you may have a smaller town that has the ability they may have an administrator, the ability to take on more capacity. It's not necessarily like a population. Nexus, it's hard to it's hard to tell on that front. No. I I can say that all of the places that already have TIFs, I think outside of Killington have a population above five thousand people. I mean, that's very broad. Again, I wouldn't wanna say that, you know, there there's a certain amount of population that's, like, you're absolutely ready for a TIF unless it's more challenging. I the the idea of for smaller municipalities, there have been many either mini TIFs, project based TIFs. So TIFs that operate on a smaller scale that might be more administratively feasible for smaller municipalities to to implement has been an idea that's been presented before the legislature. It's been talked about in the legislature for quite a long time. Yeah, that would that would be how I [Chair Michael Marcotte ]: answered those two questions. Appreciate it. Yep. [Joshua Sharpe ]: My understanding of TIF I'm from Milton, so I don't I at at first, I didn't really develop it, but I've experienced the benefits of TIF, is a lot of pushback is because it takes from the education fund. One of the questions I have is we have before us in this biennium, Governor Scott has and the AOA has come up with a new education plan. Has anyone seen the impact of that on the TIF in terms of because now we're gonna be funding education differently. Does how does that interact with this concern that there's no that that it's taking from education funding? [Ted Crittenden ]: That is a fantastic question, and one that, you know, I think some policy certainty or conversation would help understand what happens, and with existing TIF districts. Very broadly speaking, you're gonna create with TIF districts the same amount of increments. And, you know, there are certain policy conversations that are maybe a statewide property tax rate. Like, those things would inter intersect with the TIF depending on how you you implement a new funding model. However, that said, it's far too early to really comment on on what the the pieces, but the basic mechanics of a TIF that you have frozen value, a a certain amount of incremental growth occurs, thirty percent of that value goes to the education fund. It all depends on the the the pieces of how you raise and calculate that that revenue would be different, but the mechanics of [Chair Michael Marcotte ]: a tip check will be the same. [Ted Crittenden ]: So to talk about some some recent legislative action that happened in Vermont's CHIP program, the the main piece is act sixty nine of twenty seventeen. It create as I meant it said, as I mentioned, the current increment retention periods. It added that instead of one location criteria, new districts have to be two of those, listed in thirty two BSA fifty four zero four a, and it it implemented that cap of new districts of ed sex. More recent legislative action has centered more on debt incursion and retention periods, and you'll see a string of actions during COVID to extend debt incursion periods to give districts more flexibility to incur debt as there was uncertainty and and ability to to implement infrastructure projects. So from here, I'm gonna transition because I'm at JFO to fiscal considerations. The main piece, and I think what happens when when folks are thinking about the fiscal effects of TIF and particularly the fiscal effects on the statewide education fund is your people will talk about the but for requirement, and this is referring to a specific piece of statute, that Pepsi is to review each application to determine that the infrastructures improvements proposed to serve the TIF and the proposed development would not have occurred as as proposed or would have occurred in a different and less desirable manner but for utilization of TIF. So the the piece here is that the TIF is needed to drive infrastructural improvements that will lead to development. When thinking about these fiscal impacts, there are two key questions. One of them is how much development would have occurred elsewhere in the state without use of TIF? And then the second one is what level of background growth would have occurred in the TIF district without any associated developments. Right? So is is the district was it stagnant before creation of the TIF? [David "Dave" Bosch ]: In [Chair Michael Marcotte ]: that in that question of would it occur in other parts of the state, like, a counter to that is [Ted Crittenden ]: would this be a place that we want that growth to occur within the state? Exactly. I'm gonna talk about the the nexus between TIFs and the statewide development goals and and a lot of the concerns or the the you know, there's a lot around TIFs that, encourage development to occur in our designated downtowns and compact urban areas and or geographic areas of the state. Exactly. Yep. So, yes, we're gonna spend a lot of time thinking about counterfactuals, and it this may start to feel a little esoteric. I apologize. That is the nature of of TIFF to to think about what is, a, what is happening, and, b, what would have happened to get a sense of, some of the potential costs in terms of foregone revenue and the benefits. So when you think about this question of how much development would have occurred elsewhere in the state, If a hundred percent would have occurred elsewhere, then use of TIF represents some foregone revenue for the education fund. So I'll go into some examples that'll make that a little more clear. If none of it would have helped happened elsewhere, then TIF generates benefits. And, again, hopefully, the examples will below will will help illustrate that. So one potential example is you have that housing developer who's looking to build in Chittenden County and they're looking between building in Winooski or building the same the exact same project in the South Burlington territory. If that development happens in Winooski, a hundred percent of the value from that development is gonna go to the education fund. But if it happens in the South Burlington district because a certain proportion of the revenue goes to serve district debt and certain a certain portion goes to the education fund, only twenty five percent is going to the education fund. So location matters for the first twenty years. Exactly. Then afterwards, the yes. It's just the same. To get to this, it's zero percent would have occurred elsewhere. You have a manufacturer who's looking to locate a new facility in New England, and they're looking between Hartford, the Hartford TIF because maybe the Hartford TIF provided some sort of infrastructure advantage for them. There there's you know, it's attractive to the developer for some reason, or they're gonna build in New Hampshire right across the river. If they if that TIF district successfully encourages the manufacturer to build in Vermont, there's a twenty five percent that the twenty five percent of incremental revenue that's going to the education fund is a benefit compared to what would have happened if the development happens in New Hampshire. So Hartford was, yes, current statue is thirty percent. You're correct. But because Hartford was created before twenty seventeen, they have a different retention percentage. And the tricky part is there are just an infinite number of examples that occur between these two examples. So a TIF district might provide the infrastructure that allows a project to move forward more quickly than it would have without the district. So, you know, you have a larger a larger housing development. The TIF district helps its infrastructure that smooths, the process of building the housing, that would have happened more slowly outside of the district. The additional infrastructure might mean that more density is able to be built. So the developer is they say, you know, I'm looking at this and with the infrastructure and the TIF, I'm able to do twelve units, but outside the district, I can only do four. And so that's one piece of the counterfactual. [Chair Michael Marcotte ]: Herb? [Michael Boutin ]: Alright. Thank you. But yeah. Going back to the the other slide, getting back to my, fire question general about, you know, what what can it what kind of investment in infrastructure, [Brian Maggiato ]: I I think it's [Chair Michael Marcotte ]: available for [Michael Boutin ]: the, the examples that you give, sound to me like private development. So I'm just trying to understand what the public purpose and and the private Yep. Result. And, again, I'm just trying to think to how a smaller town might be able to manage. [Emily Carris-Duncan ]: So my answer as just the person reading it, not the person who runs the program, is that public purpose is fairly expansive. In this case, the way you would characterize this is maybe receiving a housing benefit. It might be helpful, and I know we have folks on the call, just to know Betsy has rulemaking authority. So if they built out particular pieces of how they read these statutes and think through what the public purpose of getting is, it might be help it's gonna be more helpful than just my reading of of the words. But I would just note that to your point, I think people pretty readily accept that housing developments that are providing housing folks are meeting on a a public purpose even if it's owned by private developer. Right? The state of improvement is still public, and it's being used to bring a public good. But, yes, private hands receive money. [Chair Michael Marcotte ]: I appreciate that. Thank you. That's something [Jessica Hartleben ]: that we're happy to come in and talk to you about specific projects related to how public infrastructure is created to help invest in then private development. At this point, the private developer, to your question, is not receiving any of the TIF funds directly. The TIF funds are being used to create the infrastructure. So think about creating water and sewer infrastructure so that a private developer could come in and actually build an affordable housing unit. Think about the roads that need to be built if you're creating a new private development in a town. Think about the streetscapes, the lights, the landscaping that goes around. All of those are what they call related costs. For example, in South Burlington, they're creating the new bike path and walk path that will go over interstate eighty nine to generate, additional, pedestrian and bike use. So there are many, many public benefits to using these TIF dollars to generate public good and, certainly to create housing, which, is desperately needed in our state. But I would be happy to come back and give you more specific examples about that. [Joe Carton ]: Thank you. [Jonathan Cooper ]: And I might be wrong, but I think regarding smaller communities and administering the TIF administering the TIF, I think funds out of the TIF can pay for the admin position or to cover those. Is that correct? [Emily Carris-Duncan ]: I so from the municipal increment, you can pay direct personnel costs or the municipal personnel costs related to the administration project, But it is exclusively from that municipal income, and it doesn't come from the education. But, yeah, you're gonna have direct cost. [Jonathan Cooper ]: Right. So it I as we were talking about smaller communities not being able to to administer them, that's a option available. And I I might be mixing my what's current and what I'm trying to do. You can also purchase properties So [Emily Carris-Duncan ]: that's part of the definition of improvements is that land acquisition, demolition, site preparation. That's part of the definition, and that's from a smaller existing. Yes. Mhmm. [Ted Crittenden ]: The other piece is there in thinking through the counterfactual on the fiscal impacts, is in trying to understand, and we'll go into this in more detail when when talking about different ways to measure the fiscal impact of of of TIFs, is is what level of background growth in the area that is included in the TIF district would have occurred without any associated developments. So thinking of a world without TIF, how fast would properties have grown? So one example this is just one example. There's a spectrum of of kind of counterfactual conditions. The Burlington TIF district is is is quite large in terms of original taxable value. So there's the the TIF district started with a hundred and seventy million dollars in in value in two hundred and forty seven parcels over sixty one acres. And so understanding some of the fiscal effects, you wanna know so JFO, as part of previous reports, looked and and saw that CLA adjusted growth was about five percent between two thousand three and twenty eleven when the district was created. And so it is if that background growth rate was a were to occur, the education fund without use of TIF would have received a hundred percent of that increase. And so the question is, in many cases, are TIFs generating enough additional growth through developments in the district to to kind of beat those counterfactual growth rates is what we're looking at on the JFO side. And so, yes, as I hinted, there there are kind of three sources of information on before I say that, I wanna be very clear in in saying that the the true fiscal impact of TIF districts in the education fund when considering this counterfactual piece, it's impossible to truly know that without really rigorous you know, there there has been work done in other states to to get at some of these outcomes and property value growth and and economic development outcomes, but it's certainly above my statistical pay grade. So we're gonna talk through you'll hear different numbers associated with the impact of TIFFs. So my main goal with this this this piece of my slides is is to when you hear certain numbers, hopefully, have some context of what those numbers refer to and how they're being used. So one is in DEFC annual reports. They, catalog how much, increment is occurred, how much increment is forecasted return, and of of that or forecasted to occur. And of that increment, how much is going to tick district debt? How much is going to patient fund? That's one piece of information. And in fiscal year twenty three, looking at the data, you know, they they show that from TIF districts overall, nearly one point four million dollars in in revenue and incremental revenue went to the education fund. So that's one one figure. The JFO model attempts to answer that question that I was talking about before is that, you know, if TIF districts were growing at the rate they were growing before the different the the district was created, and comparing that to what is what has happened and what is forecasted to happen in those district. You know, what is the difference between what the education fund would be getting in those two cases? And so in the previous JFO report, they found between five and a half and seven and a half million in foregone revenue that didn't go to the that wouldn't go to the education fund between fiscal years twenty three and twenty eight, and between four and seven million dollars between twenty nine and thirty four. And to be abundantly clear, this is just within the context of the education fund. JFO, we don't look at secondary impacts and sales tax. There might be personal like, you know, like, if there's more housing and more people move to that district, we just don't we're looking at the the main kind of property tax, kind of primary effects of TIFs. And then finally, every year at the January meeting of the emergency board, JFO and the Department of Taxes produce a consensus estimate of the upcoming the maximum impact of TIF district on the education fund for the coming fiscal year. So we just did that for fiscal year twenty six. I will talk about that a little later. But to provide those estimates, we're taking the most conservative approach and assuming that all RAM less growth would have occurred somewhere else. And so the amount of TIF district debt that's being retained is, to to pay for or sorry. The amount of TIF increment that's being repaid to retained to pay for debt, is, is essentially a cost. [Hans van Wees ]: I think this is probably out of out of your out of your wheelhouse, but I'm I guess I I'm kind of wondering, do we have any kind of mapping or data that shows, like, over time because you said that tips have [Emily Carris-Duncan ]: been around, like, since the fifth days. [Hans van Wees ]: Do we have any sense of, like, how economic development sort of, like, change? Do we have any maps or data on what that I guess, like, what the what the result is of all of these many years of doing this. [Ted Crittenden ]: Sure. And to be clear, so TIFF started as a concept account. Concept. So we need to [Hans van Wees ]: How long is the ad on the? [Ted Crittenden ]: It was so the statewide component of, like, TIF in its current form came along with the creation of the statewide education fund. You know, like, there was a municipal program because, you know, there before the statewide education fund, individual municipalities could choose to do a TIF, and it was limited to funds within that municipality. I don't know. John, do you know when the municipal program started? [Emily Carris-Duncan ]: I don't know when the meeting did, but the nineties for, like, a mindset around that. So that way and it is important to draw up. There is [Chair Michael Marcotte ]: some of the [Jessica Hartleben ]: I believe that one of the TIF districts in Burlington started in nineteen ninety six. [Joe Carton ]: K. The [Emily Carris-Duncan ]: difference between the statewide and the municipal, we still have on the books the municipal specific TIF, which is not exactly what we're talking about here. That doesn't have impacts on the Ed Fund, and these values can proceed in this way that's just dealing with municipal taxing, but it doesn't affect the Ed Fund. [Ted Crittenden ]: But to your second question around mapping, would you be curious in seeing it in terms of size of districts, where they are, how they [Hans van Wees ]: Curious to see, like, where where the districts are, how much growth has actually happened, like, within those districts, if that's had any kind of spillover effect and if it's sort of a rolling change that can be mapped at all. [Ted Crittenden ]: So in terms of mapping to see visually where TIF districts are, I know I can provide a link. There's with there's a layer on ArcGIS where you can see where the districts are statewide. To the second piece, I would really encourage to to see so Vepsi in their annual reports have a lot of information around what has happened in terms of incremental property growth. They also have projections on what's expected to occur for each district and kind of as a statewide overall program. So a lot of that information, you can find it in the annual report. Unfortunately, there there are metrics in the report that also look at job creation, which is reported by towns. So, yes, they do have quite a few pieces on that, on the economic development indicators that I'm curious about. Thanks. Mhmm. [Jonathan Cooper ]: We have a GIS mapping software that's available to the public. [Ted Crittenden ]: So it's been through the oh, I don't know specifically who it's through through, but there's, like, a web based ArcGIS kind of viewer that you can do, and the state has quite a few different layers. You can look at designated areas and downtowns or village centers. You can layer on TIF districts. So I can certainly send that tool around to committees to play around with it. I have a lot of fun with it. [Jonathan Cooper ]: As do I for Bexar City. I it just you can't go outside of [Joe Carton ]: Bexar City with it. Okay. [Ted Crittenden ]: Yeah. That we use. Yeah. This is statewide. [Jessica Hartleben ]: We also have some data that we can provide to the committee as well, specifically around, Winooski who just closed their district, and we have a lot of aerial photos that show the before and the after, of the TIF district. [Hans van Wees ]: That'd be great. Thanks, Jessica. [Chair Michael Marcotte ]: Yeah. So let's let Ted get through. You got thirteen more slides and I [Emily Carris-Duncan ]: need to eat. To [Chair Michael Marcotte ]: eat into your lunch. So I think, you know, let's let Ted get through it. If you have questions, write them down. We'll certainly bring Ted back and Jess back in, John, to continue the discussion when there's gonna be a lot more talk about tips in the next few [Ted Crittenden ]: weeks. Absolutely. Yes. And and, yes, this is moving into kind of more of the fiscal piece. Yeah. There are a lot of also kind of process questions that as mentioned earlier, the about the nuts and bolts of going from DEPTC approval and the criteria they're looking at. So, absolutely, lot of lot of different places to explore through TIF. So I talked about the we talked a bit about Pepsi's information and what's in there in your report. I would say that those using the the data that are available for amounts of increment that go to the education fund as an as an impact statement is more challenging just because it requires assuming that grainless growth is if you're using those as impact statements. Right? So saying you're essentially saying that none of the development would have happened without TIFF by saying, oh, the thirty percent of increment that's getting delivered to the education fund wouldn't have happened without TIF. Previous TIF reports have found that there was some level of growth in TIF districts before they're created. There's certainly a range. So then the other piece, JFO created a model to understand a bit more of that background growth piece and wanted to show and talk about within that model. There are two different ways it can fall. And this is an example in this graph of a TIF district, that is the estimated property growth without TIF generates more revenue than what have would have gone to the education fund or that that would go to the education fund with this level of property value growth. And right. So JFO, our model is trying to understand, okay, with the level of growth that is has occurred and is likely to occur in in TIF districts based on their the the information they send to Pepsi, there's a certain amount of growth. Education funds can get thirty percent of that. Does the thirty percent that goes to the education fund, is that more or less than the what would have been sent to the education fund with existing property value growth. In this case, in this figure, existing baseline property value growth is higher than the amount of increment that goes to the education funds. There is a cost in foregone revenue. Districts for which this is the case are likely to have high original taxable values or high counterfactual growth rates. So for high original taxable value, if you have a very large district that has a lot and they would have been growing at three percent a year, three percent that's occurring on a very large base in taxable value adds up quickly. So it's just harder for the amount of property value growth, thirty percent of property value growth to kind of beat that growth rate. We're going esoteric. So on the flip side, there certainly could be cases in the JFO model where the amount of additional revenue or the amount of that thirty percent of increment is gonna beat property value growth, counterfactual background growth. This is likely to occur in smaller districts, so with low taxable value and low counterfactual growth rates. So, yes, it's it's easier for thirty percent of high property value growth to be what would have been delivered to the education fund. So that's in the JFO model. There's some districts that might represent foregone revenue to the education fund, some that might prove to be a benefit From the figures I presented earlier, you remember the JFO model showed that on net, there was, you know, between five and a half and seven and a half in the previous report in the near term of foregone revenue per year from the use of text. The model we present to the eboard is slightly different. We use it because we want to present policymakers with the maximum potential cost of TIF district use. It's assuming that all increments that goes to different district debt is of org on revenue. I will say that this assumption is also hard to hold a hundred percent of the time. So the for example, the TIF district in Killington was designed to bring a water system to the town that has been in the works since the nineteen eighties. Burlington City Center development, I know that's been in the works for a very long time. So we have this model. It's used to to say in an absolute worst case scenario, this might be the the magnitude of impact on the education fund coming fiscal year. So there are three different perspectives, three different results. But, again, we'd like to emphasize, right, that it's impossible to know the true impact. These are just different ways of thinking about the question. Kind of [Chair Michael Marcotte ]: view is JFO ever looked at and these are all hypotheticals. Mhmm. But at the end of at the end of a TIF district when it's resolved, The estimated payback period back pay in in additional revenues because of the district. [Ted Crittenden ]: I know the previous JFO TIF report has mentioned that the the that payback period, could be wrong. I think it depends on each individual district and where they fall on, you know, how much how much in foregone revenue they might have created or whether they're you know, because it it depends on the nature of the district. Yes. I could yes. I think I'll leave it there. [Chair Michael Marcotte ]: So, I mean, everything we're everything we do is hypothetical. Right. Hypothetically speaking, there's gotta be a payback period. And how long is that payback period back into the state hopper then? And and so and then a lot of variables in that as well. Exactly. It [Ted Crittenden ]: never requires some level of assumption about for example, Winooski would be the nearest example of something that just completed, right, and and making some assumptions of how Winooski would have grown [Chair Michael Marcotte ]: Their mothers are seeing the growth now. You know? And then we have to assume that they wouldn't have grown as much. Yeah. There's a lot of them. Yep. [Ted Crittenden ]: So broadly speaking, we've made it out of the esoteric weeds. You know, different ways, as I mentioned, of looking at this counterfactual question delivers different answers. In the JFO model, broadly speaking, this is not always true. While they're in effect, TIF districts represent various amounts of foregone revenue to the education fund. That's not always true. While active and of benefit after the district retired, so property value growth is more under a TIF than it would have been without the use of it, broadly speaking. The consensus estimate, you know, there is a JFO model. It does provide some estimates of fiscal impacts, but would say that the consensus estimate that we produced with the Department of Texas and present to the the emergency board should be used as the official estimate, as it represents the most conservative one. And so I want to to to kinda present two main questions that I spend a lot of time thinking about when when looking into TIF, particularly currently, given our high rates of landless wealth and state of the education fund and a lot of the policy conversations around land use and development in the state. So first, how does TIF interact with high rates of grand list growth? Currently, there's a lot of it. There's a lot of grand list growth occurring. The actual amount was nine point seven percent in fiscal year twenty four, and it's fourteen percent projected to fourteen percent in fiscal year twenty five and twenty six. Any newly created TIF district, if it resembles or is close to, and I know Pepsi is looking at, background growth that is occurring in the specific district area. But with high rates of granular growth, there is greater use of education fund through use of TIF. If you freeze at a certain value and property values in in the town are increasing by, you know, ten, fourteen percent, that certainly creates a risk. And this risk increases as the district is larger. The second piece is there are a lot of potential values of the TIF program. So there are different ways to look at it. One is TIF as a economic development tool. I would say that's primarily how TIFs are talked about. But there is also questions of, you know, TIF certainly has value as an infrastructure development tool solely just exclusively on its own and also TIFF in its ability to further certain planning or land use goals. So spend some time this summer looking into the evaluation literature or the academic literature, that looks at TIF as an economic development tool. The three sources I'm going to present are literature reviews. So this means they're looking at a wide range of studies and trying to draw general conclusions based on what they're seeing in various outcomes. A caveat here is that a lot of this research comes from the Midwest, so may not be directly transferable to Vermont because the Midwest uses TIF much more extensively than we do. Their TIF program is different. There are different statutory criteria. So it may not be directly applicable to Vermont, but these studies were done with some of the rigorous, Cisco tools that I was talking about, trying to understand what's happening in TIF districts, what's happening outside of TIF districts. And so one of these one of these studies is, Merriman twenty eighteen. Eighteen. So this is from the Lincoln Institute land policy, and the author investigated thirty one studies and found that of those thirty one studies, thirteen pieces of research found positive results from uses of TIF on across a wide variety of outcomes. So employment, retail sales, assessed values in district, kind of economic activity. And so thirteen found positive results on those various outcomes. The remainder showed neutral, mixed, negative results. There there's a line in there that says, you know, rigorous evaluation literature suggests that TIF has not accomplished the goal of promoting economic development kind of conclusively. They also found that TIFs take growth for surrounding areas. So in an area with the TIF, developer says, you know, there's infrastructure happening in this area or there's some sort of other reason why in the district it may be attracted to attracted to to to do there. And so the the growth doesn't necessarily isn't uniquely created. It's just being pulled from the right areas. Could that so [Chair Michael Marcotte ]: if if we're but I guess you could say that if creating growth in growth center downtown where we want it and we're we're not creating sprawl. Right? Exactly. Yeah. There is there is a benefit. It's not a monetary benefit, but it's a benefit society for the societal benefit for the municipality to and for the state, I think, to try to have more compact growth. Exactly. Yes. And I'll talk a bit about that. [Ted Crittenden ]: The another study found that TIFs are more likely to be used in communities that already have higher growth rates. Again, you know, this is may not be comparing apples to apples due to statutory requirements and approval and criteria for for that approval. They did find that TIFs, and this is kind of common across many different studies, that TIFs did positively increase property values. Property value growth is higher than what would have happened in absence of the of the TIF. This is kind of similar. So to summarize, on nearly out every outcome, TIFs have been fairly well studied. One can find evidence that either supports or rejects usage of of TIF. And particularly that's particularly true for economic development outcomes. TIFs, as I mentioned, may increase property values relative to what would have occurred without them. In Vermont, we have to ask whether that increase generates enough incremental revenue to beat that thirty percent. Does it or twenty five percent beat what would have gone to the education fund with the counterfactual growth rate if we're thinking about fiscal effects. And the final piece is that TIFs may pull development from nearby areas, but there may be policy reasons why one might want to encourage that. So it's also worth thinking about TIFF, not just as an economic development tool, but as an infrastructure development tool. As I think this is not news to anyone from municipalities based challenges in developing local infrastructure, there are certainly capacity challenges. They're also just research resource challenges. ASCII side, this is from AOA. The agency administration, more than a hundred towns do not have a manager administrator. Once you start adding many different funding sources to a capital stack, it becomes hard to manage. And metal they're funding federal funding opportunities that are designed for communities that are larger than any that are in Vermont. Chips can play an important role in a project capital stack. So when I say capital stack, I refer to just the sources of funding that are layered to create enough funding to complete some sort of infrastructure project. This is from the town of Killington. Pulling together what I was able to see is that TIF is driving a large share that's responsible for eighty percent of the project funding for this water system. And then to the what the the point the chair was making is that TIFs can also be an effective planning tool, and this is by design. The I included, some pieces of the statewide development goals in twenty four VSA forty three zero two. And these pieces that I pull have pretty close connections to the location criteria for TIFs that are in thirty two VSA, fifty four zero four a. You know, development has to be compact, high density, located in in or near existing industrial areas. And the proposed district is in an approved growth center, designated downtown, designated village, an area. So those two pieces very closely meet up with the statewide development goals. I included the map of South Burlington's TIF district so they are the ones here in the yellow dashed line that's the boundary of the TIF district. They have a new town center, which is this orange dash line, and then the neighborhood development, which is in blue. So this TIF is really layered within these designated areas. And right. So this can help drive development to compact downtowns, which is a goal that [Emily Carris-Duncan ]: has been [Ted Crittenden ]: articulated. And our the final question I'll I'll I'll ask here is are the infrastructure and development infrastructure development and potential planning benefits worth any forgone tax revenue? [Joe Carton ]: No. That's Thank you. [Chair Michael Marcotte ]: That's good. So I think what we'll do is we're gonna work on next week's agenda. So I think we'll try to get a time where you're available. Jess, you're available, maybe John. And we'll do, like, a two hour let's now start taking this apart and so everybody can really dive in and get their questions answered so we can move forward with some of the thoughts that are out. Right? [Jessica Hartleben ]: Yeah. That would be great. And it would be really helpful. I don't know if if there are specific questions. I would be happy to send, in anticipation of the meeting next week with you all, the current, Vepsi annual report. A lot of the information and data, can be found in there. And specific districts, specifically Winooski, South Burlington, Saint Albans, Hillingdon, Hartford, any of them really would be more than happy to come along with me. But if they are not available, I could certainly get whatever data points you needed. So happy to provide information to the committee so that we can continue having this discussion. [Chair Michael Marcotte ]: Yep. Sounds good. I think just data would be fine for now. And then if we wanna hear from specific communities, then we'll bring them in as well. [Jessica Hartleben ]: Sure. Yeah. [Chair Michael Marcotte ]: Okay. Great. Okay. Thank you all for joining us. Committee, thank you for letting me get into your lunch hour, but, I think it was important to set the table for us for tomorrow.

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