Housing finance expert urges expanded TIF, longer tax stabilization and sales-tax relief to close Vermont's workforce housing gap

BURLINGTON, Vt. — David White, president of Weitenberg Real Estate Advisors, told the House Committee on General and Housing on Jan. 16 that the state's most important remaining obstacle to building workforce housing is a financing gap that leaves projects 'underwater' after construction and proposed an array of tools to close it.

White said his firm has worked across Vermont for more than three decades on downtown revitalization and public-private partnerships and that tax increment financing is the single most powerful community development tool the state has. "I am absolutely unequivocally a huge, supporter of tax increment financing," he told the committee. "I believe sincerely it is the single most powerful community development, economic development tool we have in the state of Vermont."

Why it matters: Committee members heard that many workforce projects generate rents that are too high for the local workforce but too low to attract private capital. White argued that changing financing rules and targeted incentives could unlock projects that otherwise would not be built.

What White recommended

- Expand and modernize tax increment financing (TIF). White said many projects would not happen without TIF and noted that retention rates on older TIFs can be lower (he cited a 25% share previously described) while newer TIF rules can retain a higher percentage (he cited 30% in the example discussed). He also listed administrative improvements he would support to help smaller towns use TIF.

- Create project-based TIF and a community housing infrastructure program (referred to in testimony as "CHIP" or a community housing infrastructure approach). White said a project-based tool would let small towns apply TIF-style rebates against the incremental tax revenue from a single project instead of establishing a whole district, making the mechanism simpler to use in communities with limited development capacity.

- Offer longer tax stabilization for housing projects. White said Vermont's current short tax-stabilization windows (he noted a three-year option under recent statutes) help early cash flow but do not change the long-term appraised value lenders use to underwrite projects. He proposed longer stabilization terms (he cited 15 years as an example) so lenders would base underwriting on a projected stabilized tax environment.

- Waive sales tax on construction materials used in eligible housing projects. White offered a numerical example: if materials are roughly half of hard development costs and sales tax is 6%, removing that tax would close roughly 3 percentage points of a 20% financing gap.

- Encourage employer-backed preleasing (master leases) with a tax credit. White described models where large employers or institutions prelease units (or commit to a number of units) to reduce market risk and suggested a tax credit for employers that commit to multi-year master leases as an incentive to underwrite new workforce housing.

What he did not claim

White characterized these ideas as a 'shopping list' of concepts under discussion and said he had no single, fully baked legislative proposal. He repeatedly stressed that many projects rely on a complex capital stack; TIF or other tools typically fill a key residual gap but do not by themselves fund an entire project.

Committee follow-up

White agreed to provide the committee with more detailed materials and examples of programs used in other states. Committee members asked clarifying questions during the hearing about how TIF interacts with the Education Fund and how a longer stabilization period would affect lender underwriting.

Ending

White said he is working with housing advocates and the administration and that he would return with more detailed, written suggestions to the committee.