Bill would let developers or towns finance infrastructure with project-based tax-increment financing to spur housing

John Gray, Office of the Legislative Council, outlined a plan in S.127 to let towns or private sponsors finance infrastructure for a single housing project and be repaid from the property tax increment the project produces.

The proposal—described in the bill as a Community and Housing Infrastructure Program (CHIP)—would allow a municipality to create a narrowly defined housing development site, authorize infrastructure improvements tied to that site and retain a portion of the future property-tax increase (the increment) to repay financing for up to 20 years.

Why it matters: Supporters said CHIP could unlock projects that currently stall because small towns lack water, sewer or road extensions and cannot afford large up-front public investments. Critics warned the move risks diverting education fund revenues, could expose towns to new financial complexity and needs clearer safeguards and rulemaking before it is widely used.

Key features of the draft bill and debate

- Project focus: Unlike traditional TIF (tax-increment financing) districts that cover broad areas, CHIP would be project-based. A housing development site can be a single parcel and adjoining lots where the infrastructure is intended to stimulate housing construction. John Gray said the intent is to tie the increment to a specific project so there is no “background growth” issue typical of larger TIF districts.

- Who can finance: A “sponsor” may be the municipality, a private developer or a…