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Vermont League of Cities and Towns urges project‑based TIF ("CHIP") to fund housing infrastructure
Summary
Samantha Sheehan of the Vermont League of Cities and Towns told the House Ways & Means Committee that project‑based tax increment financing (called CHIP in testimony) would let municipalities fund water, sewer and street work needed to unlock housing development without relying on state appropriations or immediate tax increases.
Samantha Sheehan, municipal policy and advocacy specialist for the Vermont League of Cities and Towns, told the House Ways & Means Committee on May 1 that municipalities need a new, project‑specific tax increment financing authority to fund infrastructure that enables housing development.
"When we build housing and address scarcity, the property revaluation also goes up, but it is not revenue neutral," Sheehan said, explaining that new housing adds tax capacity while routine revaluation does not. She said project‑based TIF — which she and others called CHIP in testimony — would let towns invest in drinking water, sewer, pedestrian infrastructure and site preparation to attract developers.
Sheehan laid out examples to show the difference between market‑driven reappraisal and real grand‑list growth from development. She said Burlington’s 10‑year rolling average of new housing rose substantially in the 2012–2022 period, but the city’s grand list growth attributable to development (adjusted for reappraisal) hit 2 percent only once in that span. She also pointed to Stowe’s recent municipal reappraisal, which increased the certified grand list from about $2 billion to $5.5 billion and produced a corresponding drop in combined state and municipal property tax rates from roughly 2.43 to 1.33.
Sheehan told the committee municipalities view project‑based TIF as a way to: avoid relying on scarce state appropriations, avoid raising existing tax rates for current residents, and increase other local revenues tied to development (parking, utility customers, permit fees, and local option receipts). She said project‑based TIF is intended to be time‑limited and focused on single developments rather than the larger district approach of traditional TIF.
Sheehan described the municipal workflow that creates taxable capacity: up‑zoning and permit changes create development potential; owners subdivide or sell; municipalities extend infrastructure; developers build housing; and new property tax capacity is added to the grand list. She stressed that the infrastructure typically must be in place before higher‑density permits can be issued.
Committee members and attendees asked technical questions about reappraisal mechanics, homestead vs. non‑homestead rates, and whether retained increment amounts might be viewed as a state appropriation; Sheehan reiterated that the municipal proposal is structured to avoid needing line‑item state appropriations. She closed by urging the committee to consider a project‑based TIF authority to help small and rural towns pursue targeted infrastructure investment for housing.
The testimony combined state‑level context (equalization/CLA and VHFA research) with municipal examples and did not include a committee vote or formal action on CHIP at this meeting.
