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Subchapter 001: INDEBTEDNESS GENERALLY
§ 1751. Definitions
As used in this chapter:
(1) “Municipal corporation” shall include a city, town, village, town school district,
graded school district, or other incorporated, union, or unified school district or
any entity providing educational services which is eligible to receive State aid under
16 V.S.A. chapter 123, a fire district, a union municipal district created under an intermunicipal agreement
entered into and approved as provided in subchapter 3 of chapter 121 of this title,
a regional mass transportation authority created under chapter 127 of this title,
a local housing authority created under section 4003 of this title, a consolidated water or sewer district created under chapter 91 or chapter 105 of
this title, or the unified towns and gores of Essex County.
(2) “Legislative branch” shall mean the mayor and board of aldermen of a city, the selectboard
of a town, the trustees of a village, the board of school directors of a school district,
the trustees or prudential committee of a graded school or fire district, and the
Board of Governors of the unified towns and gores of Essex County, and, with respect
to other municipal corporations, the governing body designated by statute.
(3) “Improvement” shall include, apart from its ordinary signification:
(A) The acquiring of land for municipal purposes, the construction of, extension of, additions
to, or remodeling of buildings or other improvements thereto, also furnishings, equipment,
or apparatus to be used for or in connection with any existing or new improvement,
work, department, or other corporate purpose, and also shall include the purchase
or acquisition of other capital assets, including licenses and permits, in connection
with any existing or new improvement benefiting the municipal corporation, and all
costs incurred by the municipality in connection with the construction or acquisition
of the improvement and the financing thereof, including capitalized interest, underwriters
discount, the funding of reserves, and the payment of contributions to establish eligibility
and participation with respect to loans made from any State revolving fund, to the
extent such payment is consistent with federal law.
(B) Pursuant to subchapter 2 of chapter 87 of this title, projects relating to renewable
energy, as defined in 30 V.S.A. § 8002(17), or to eligible energy efficiency projects undertaken by owners of real property
within the boundaries of the town, city, or incorporated village. Energy efficiency
projects shall be those that are eligible under section 3267 of this title. (Amended 1989, No. 111, § 1, eff. June 22, 1989; 1997, No. 62, § 61, eff. June 26, 1997; 2007, No. 4, § 2; 2009, No. 45, § 15f, eff. May 27, 2009; 2013, No. 161 (Adj. Sess.), § 72.)
§ 1752. Bonds; issuance
Debt may be incurred and bonds issued under this subchapter for any improvement, but
no bonds shall be issued for the purpose of providing funds for ordinary expenses
of any municipal corporation, except as otherwise provided.
§ 1752a. Privately owned municipality-supported libraries
By a majority vote of those present and voting at an annual or special meeting warned
for the purpose, a municipality may issue municipal bonds under this chapter for the
cost of capital improvements to any privately owned municipality-supported library
situated within the municipality for use of residents of the municipality; and such
improvements shall be considered “improvements” for the purposes of this chapter. (Added 1987, No. 56, eff. May 15, 1987.)
§ 1753. Use of bond proceeds
(a) If after bonds have been issued and no expenditure of the proceeds has been made for
the purpose or purposes for which the debt was incurred, or if a balance remains after
the completion of the project or projects for which the debt was authorized, a municipal
corporation by a majority of the voters present and voting on the question at a meeting
or meetings of such municipal corporation held for that purpose, may authorize the
expenditure of the proceeds or portion thereof for any purpose or purposes for which
bonds may be issued; provided, however, that if the proceeds obtained from the issuance
of bonds or any balance thereof, is not appropriated as aforesaid, then the same shall
be used to pay the principal of the loan as it matures.
(b) The warning calling the meeting provided in this section shall state the amount of
the proceeds and the purpose for which they are to be used, and shall fix the place
where and the date on which the meeting shall be held and the hours of opening and
closing of the polls. Notice of the meeting shall conform to section 1756 of this title, and the conduct of the meeting and the qualifications of voters shall conform to
section 1758 of this title. (Added 1969, No. 104, eff. April 19, 1969.)
§ 1754. Validation
All outstanding bonds and notes of a municipal corporation issued prior to June 1,
1935, are hereby declared legal and binding obligations in accordance with the terms
thereof.
§ 1755. Submission to voters
(a)(1) On a petition signed by at least ten percent of the voters of a municipal corporation
the proposition of incurring a bonded debt to pay for public improvements shall be
submitted to the qualified voters thereof at any annual or special meeting to be held
for that purpose, or, when the legislative branch of a municipal corporation at a
regular or special meeting called for such purpose shall determine by resolution passed
by a vote of a majority of those members present and voting, that the public interest
or necessity demands improvements, and that the cost of the same will be too great
to be paid out of the ordinary annual income and revenue, by vote of a majority of
those members present and voting, it may order the submission of the proposition of
incurring a bonded debt to pay for public improvements to the qualified voters of
such municipal corporation at a meeting to be held for that purpose.
(2) The warning calling the meeting shall state the object and purpose for which the indebtedness
is proposed to be incurred, the estimated cost of the improvements, and the amount
of bonds proposed to be issued, and shall fix the place where and the date on which
the meeting shall be held and the hours of opening and closing the polls.
(b) A municipal corporation may not submit to the voters more than twice in any one-year
period the proposition of incurring a bonded debt to pay for the same or a similar
public improvement, except that a proposition voted on for the first time at an annual
meeting that is reconsidered may be voted on in the subsequent annual meeting. (Amended 1969, No. 58, § 2, eff. April 14, 1969; 1971, No. 89, § 1; 1973, No. 235 (Adj. Sess.), § 3; 2017, No. 50, § 53.)
§ 1756. Notice of meeting; authorization
(a)(1) The clerk of the municipal corporation shall cause notice of such meeting to be published
in a newspaper of known circulation in such municipality once a week for three consecutive
weeks on the same day of the week, the last publication to be not less than five nor
more than ten days before such meeting.
(2) Notice of such meeting shall also be posted in five public places within such municipality
for two weeks immediately preceding such meeting.
(b) When a majority of all the voters present and voting on the question at such meeting
vote to authorize the issuance of bonds for said public improvements, the legislative
branch shall be authorized to make such public improvements and issue bonds as hereinafter
provided. Blank and defective ballots shall not be counted in determining the question. (Amended 1969, No. 193 (Adj. Sess.), § 1.)
§ 1757. Validation
(a) Whenever the qualified voters of a municipal corporation, as defined in this subchapter,
have voted by the requisite majority to authorize issuance of bonds to pay for any
public improvement, and such proceedings are defective because of failure to comply
with any of the statutory requirements therefor, although the required length of notice
and notice of the purpose of such meeting has been had, such omissions may be cured
by a resolution of such legislative branch by a vote of two-thirds of all its members
at a regular or a special meeting called for that purpose, stating that the defect
was the result of oversight, inadvertence, or mistake of law or fact.
(b) When such omission has been so supplied by such resolution, all bonds or other financing
within the terms of the action of the qualified voters shall be as valid as if the
statutory requirement had been complied with.
§ 1757a. Validation of consolidated water or sewer districts and bonds voted for construction
(a) No action shall be brought directly or indirectly attacking, questioning, or in any
manner contesting the legality of the formation, or the existence as a body corporate
and politic, of any consolidated water or sewer district created pursuant to chapter
91 or 105, respectively, of this title, after six months from the date of the recording
in the office of the Secretary of State of the certificate required by section 3342 or 3673 of this title, as the case may be; nor shall any action be brought directly or indirectly attacking,
questioning, or in any manner contesting the legality or validity of bonds, issued
or unissued, voted by any such district or by any other municipal corporate entity,
after six months from the date upon which voters in any such district or other municipal
corporate entity met pursuant to warning and voted affirmatively to issue bonds to
defray costs of sewer or water improvements or upon vote of a question of recission
thereof whichever occurs later.
(b) This section shall be liberally construed to effect the legislative purpose to validate
and make certain the legal existence of all consolidated water or sewer districts
in this State and the validity of bonds issued or authorized by consolidated or other
municipal corporate entities for water or sewer purposes, and to bar every right to
question in any manner the existence of any such district or other municipal corporate
entity or the validity of a bond voted by it for water or sewer purposes, and to bar
every remedy therefor notwithstanding any defects or irregularities, jurisdictional
or otherwise, after expiration of the six-month period. (Added 1975, No. 57, § 1, eff. April 18, 1975.)
§ 1758. Conduct of meetings
(a) Meetings of voters in municipal corporations under this subchapter shall be conducted
in the same manner as the annual city and town meetings are conducted. The qualifications
of voters at such meetings shall be the same as the qualifications of voters at annual
city and town meetings. The vote on the question of issuing bonds for such improvements
shall be by Australian ballot. The form of the ballot to be used shall be substantially
as follows:
I. Shall the bonds of the .......... of .......... in an amount not to exceed .......... be issued for the purpose of .................... ?
If in favor of the bond issue, make a cross (x) in this square □.
If opposed to the bond issue, make a cross (x) in this square □.
In the discretion of the legislative branch, the form of the ballot may also state
the maximum rate of interest to be paid on the bonds, in which case the form of the
ballot to be used shall be substantially as follows:
I. Shall bonds of the .......... of .......... in an amount not to exceed .......... bearing interest not to exceed .......... percent, be issued for the purpose of .................... ?
If in favor of the bond issue, make a cross (x) in this square □.
If opposed to the bond issue, make a cross (x) in this square □.
(b) If a school board submits to its voters the proposition of incurring a bonded debt
to pay for an improvement, the form of the ballot shall be as set forth in subsection
(a) of this section, however:
(1) If the entire costs of the improvement are not eligible for State construction aid
pursuant to 16 V.S.A. chapter 123 because the costs exceed the maximum allowed by
formula established by the State Board of Education, the ballot text set forth in
subsection (a) shall be preceded by the following introductory sentences:
The .......... school board proposes to incur bonded indebtedness for the purpose of .......... at the estimated total project cost of $ .......... . It is estimated that ........ percent of the project will not be eligible for State school construction aid because
its (unit costs and/or allowable space) cause it to exceed the maximum cost for state
participation under the State Board of Education’s formula for school construction.
Therefore, the ...... percent of the project that is estimated to be ineligible under the formula shall
be built at 100% school district cost without State participation. The cost of the
portion of construction which is ineligible under the formula is $ .......... .
(2) The ballot may contain language conditioning commencement of the improvement by the
school board on receipt of final approval by the State Board of Education for State
construction aid under 16 V.S.A. § 3448(a)(5).
(3) The warning and ballot shall contain the following set forth in bold-faced type:
State funds may not be available at the time this project is otherwise eligible to
receive State school construction aid. The district is responsible for all costs incurred
in connection with any borrowing done in anticipation of State school construction
aid.
(c) A public informational hearing adhering to the requirements of 17 V.S.A. § 2680(g) shall be held to discuss the proposition of a school district incurring a bonded
debt to pay for an improvement. At such hearing, the school board shall distribute
to the participants a written estimate of the percentage of the costs of the improvement
that will not be eligible for State school construction aid because its unit costs
or allowable space, or both, cause it to exceed the maximum cost for State participation
under the State Board of Education’s formula for school construction. (Amended 1969, No. 58, § 3, eff. April 14, 1969; 1981, No. 239 (Adj. Sess.), § 29; 1995, No. 62, §§ 59, 61, eff. April 26, 1995; 1995, No. 185 (Adj. Sess.), §§ 7a, 79, eff. May 22, 1996; 1999, No. 29, § 54, eff. May 19, 1999; 2005, No. 147 (Adj. Sess.), § 44; 2017, No. 74, § 88.)
§ 1759. Denominations; payments; interest
(a)(1) Any bond issued under this subchapter shall draw interest at a rate not to exceed
the rate approved by the voters of the municipal corporation in accordance with section 1758 of this title, or if no rate is specified in the vote under that section, at a rate approved by
the legislative body of the municipal corporation, the interest to be payable as determined
by the legislative body of the municipal corporation. The bonds or bond shall be payable
serially, the first payment to be deferred not later than from one to five years after
the issuance of the bonds and subsequent principal payments or debt service payments,
which include both principal and interest payments, to be continued annually in substantially
level or declining amounts, as determined by the legislative body of the municipality,
so that the entire debt will be paid in not more than 20 years from the date of issue.
(2) In the case of bonds issued for the purchase or development of a municipal forest,
the first payment may be deferred not more than 30 years from the date of issuance
of the bond. After any deferral period, the bonds or bond shall be payable annually
in substantially level or declining annual debt service as the legislative body of
the municipal corporation may determine, so that the entire debt will be paid in not
more than 60 years from the date of issue.
(3) In the case of bonds issued for any capital project that has a useful life of at least
30 years, the entire debt will be paid in not more than 30 years from the date of
issue.
(b) General obligation bonds authorized under this subchapter for the purpose of financing
the improvement, construction, acquisition, repair, renovation, and replacement of
a municipal plant as defined in 30 V.S.A. § 2901 shall be paid serially, the first payment to be deferred not later than from one
to five years after the issuance of the bonds, and subsequent principal payments or
debt service payments, which include both principal and interest payments, to be continued
annually in substantially level or declining amounts, as determined by the legislative
body of the municipal corporation, so that the entire debt will be paid not more than
40 years from the date of issue, notwithstanding other permissible payment schedules
authorized by this section. (Amended 1963, No. 136; 1969, No. 58, § 1, eff. April 14, 1969; 1969, No. 177 (Adj. Sess.), § 1, eff. March 5, 1970; 1979, No. 138 (Adj. Sess.); 1985, No. 123 (Adj. Sess.), eff. April 18, 1986; 2007, No. 75, § 41; 2013, No. 50, § E.131.2; 2025, No. 57, § 8, eff. July 1, 2025.)
§ 1760. Bonds validated—Over five percent
Notwithstanding the interest rate limitation set forth in section 1759 of this title prior to April 14, 1969, if any municipal corporation has prior to that date authorized
bonds to bear interest at a rate of interest in excess of five percent, but not more
than six percent, the authorization so voted is hereby ratified and confirmed and
declared to be legal and valid, and such municipal corporation may issue such bonds
at a rate of interest not exceeding the rate stated in the vote authorizing the issuance
of the bonds. (Added 1969, No. 58, § 4, eff. April 14, 1969.)
§ 1761. Higher rates
If any municipal corporation has authorized bonds to bear interest at a rate of interest
not in excess of six percent prior to March 5, 1970, and any of such bonds remain
unsold on that date, the legislative branch of the municipal corporation may approve
an increase in the rate of interest of such authorized but unsold bonds and the increase
in such rate of interest is hereby declared to be legal and valid, and such municipal
corporation may issue such bonds which shall bear interest at the rate of interest
approved by the legislative branch which increased rate of interest is declared to
be legal and valid. (Added 1969, No. 177 (Adj. Sess.), § 2, eff. March 5, 1970.)
§ 1762. Limits
(a) A municipal corporation shall not incur an indebtedness for public improvements which,
with its previously contracted indebtedness, shall, in the aggregate, exceed ten times
the amount of the last grand list of such municipal corporation. Bonds or obligations
given or created in excess of the limit authorized by this subchapter and contrary
to its provisions shall be void.
(b) However, the provisions of this subchapter as to the debt limit shall not apply to
bonds issued under section 1752 or 1754 of this title, relating to the ordinary expenses of a municipality. (Amended 2011, No. 155 (Adj. Sess.), § 10.)
§ 1763. Specifications
The legislative branch shall determine the rate of interest or the manner of determining
the same, the date, the denominations, the time and place of payment, and the form
of bonds and notes to be used by the municipal corporation. The legislative branch
may provide that the bonds be sold on bids fixing the rate of interest or the manner
of determining the same from time to time for the period during which said bonds or
notes shall remain outstanding, and if so sold, the accepted bid shall fix the rate
of interest the bonds are to bear or the manner by which such rate of interest shall
be determined periodically. When bonds are to be registered they shall be registered
as provided by this chapter. (Amended 1985, No. 125 (Adj. Sess.), § 3, eff. April 18, 1986.)
§ 1764. Taxes to meet interest and payments
At the time of assessing the general tax levy, in addition to all other taxes, the
legislative branch shall provide annually for the assessment and collection each year,
until such bonds are paid, of a tax sufficient to pay the interest on such bonds and
such part of the principal as shall become due prior to the time the taxes are due
in the next following year.
§ 1765. Advertisement
(a)(1) Except as provided in section 4650 of this title, bonds issued under this subchapter shall be sold at par, premium, or discount, and
accrued interest, after being advertised at least once not less than five nor more
than 30 days before the date of sale in a newspaper published in the county or within
50 miles of the municipal corporation issuing the bonds and, in case of issues exceeding
$1,000,000.00, also in some financial paper published in Boston, Massachusetts, or
New York, New York.
(2) The advertisement shall state the amounts, date, and denominations of the bonds, dates
of maturity, rate of interest, or that the bidding shall be based thereon, and the
time and place where the bonds are to be sold.
(b)(1) The legislative branch may reject any and all bids.
(2) In case all bids are so rejected, they may advertise and call for new bids in the
manner hereinbefore provided, or in case, after the bonds have been advertised for
sale as provided in this subchapter, no bids have been received, or all bids have
been rejected and the whole or any part of the bonds remain unsold, those unsold may,
within 60 days from the date of the public sale, be sold by the legislative branch
at private sale at not less than par and accrued interest.
(c) If no bids are received at the public sale, the legislative branch may at any time
advertise and call for new bids or may sell the unsold bonds at private sale in the
manner hereinbefore provided and may award the bonds bearing a rate of interest not
in excess of the maximum rate provided in section 1759 of this title, notwithstanding any limit imposed by the voters at the meeting at which the bonds
were authorized. (Amended 1969, No. 58, § 5, eff. April 14, 1969; 1989, No. 111, § 2, eff. June 22, 1989.)
§ 1766. Bonds; by whom signed
Such bonds shall be signed by the mayor and treasurer of an incorporated city, by
the treasurer and selectboard or trustees, as the case may be, of a town or village,
by the treasurer and trustees or prudential committee, as the case may be, of an incorporated
school district, lighting or fire district, and by the treasurer and board of school
directors of a town school district. The coupons to such bonds shall be signed by
or bear the facsimile signature of the treasurer. When such municipal corporation
has a corporate seal, such seal shall be affixed to such bonds, otherwise such bonds
need not be sealed.
§ 1767. Computation of amount
(a)(1) In determining the amount of municipal indebtedness permitted by this subchapter,
obligations created for current expenses, for a water supply or for electric lights,
and temporary loans created in anticipation of the collection of taxes and necessary
for meeting current expenses shall not be taken into account.
(2) Sinking funds and other monies set aside for the sole purpose of paying outstanding
bonds shall be deducted.
(b) The provisions of this section and of section 1762 of this title shall not apply when the charter of a municipal corporation or special act otherwise
limits its indebtedness.
§ 1768. Form of bond and coupon
The form of bond issued under this subchapter shall be substantially as follows:
FORM OF BOND
The (insert name of municipal corporation) in the county of _____ _____ and of Vermont promises to pay to the bearer hereof on the ________ day of ________ the sum of ______ dollars, with interest thereon at the rate of ________ percent per annum, payable semi-annually on the presentation and surrender of the
interest coupons hereto attached. Both principal and interest of this bond are payable
at the ________ bank in the (city, town, or village) of ________ State of ________ . This bond is issued by the (insert name of municipal corporation) under and by virtue
of chapter 53 of Title 24 of Vermont Statutes Annotated, and acts in amendment of
and in addition thereto and the ordinance (or resolution) of (insert name of municipal
corporation) duly passed on the ________ day of ______ 20__ . This bond is one of the series of bonds of like tenor, except as to ________ numbered from ________ to ________ and issued for the purpose of defraying the cost of ________ as described in the ordinance or resolution in (insert name of municipal corporation).
It is hereby certified and recited that all acts, conditions, and things required
to be done precedent to and in the issuing of these bonds have been done, have happened,
and have been performed in regular and due form, as required by such law and ordinance
(or resolution), and for the assessment, collection, and payment hereon of a tax to
pay the same, when due, the full faith and credit of (insert name of municipal corporation)
are hereby irrevocably pledged.
In testimony whereof the (name of municipal corporation) has caused this bond to be
signed by its ________ and ________ and the seal of (insert name of municipal corporation) affixed hereto this ______ day of _____ .
_______________
_______________
Treasurer.
COUPON
No. ____
On the ____ day of ____ the (insert name of municipal corporation) in the State of Vermont promises to pay
to bearer as provided in such bond, the sum of ____ dollars at the ____ (bank) ____ , being ____ months’ interest due that day on bond No. ____ dated ____ .
__________
Treasurer.
§§ 1769, 1770. Repealed. 2011, No. 155 (Adj. Sess.), § 11.
§ 1771. Refunding bonds; authorization
A municipal corporation that has outstanding and unpaid orders, notes, bonds, or coupons,
lawfully issued, may issue other negotiable notes or bonds to pay or retire the same.
Such bonds shall be signed, sold, made payable, and mature in the same manner as an
original issue of bonds of a municipal corporation is signed, sold, made payable,
and mature, as provided in this subchapter.
§ 1772. Refunding bonds; procedure and limitations
(a) Such municipal corporation by its legislative branch, by resolution or ordinance,
shall determine the necessity for issuing refunding bonds, the amount of legal outstanding
indebtedness to be refunded, what amount of new bonds shall be issued, at what time
and place they shall be payable, the rate of interest thereon, or that the rate of
interest shown by the accepted bid shall determine the rate of interest thereon, and
when payable, the form of bond, which shall be substantially in the form provided
in this subchapter, and whether the bonds shall be registered or have interest coupons
attached. Such new bonds shall not be used or sold except to provide means for paying
or retiring such outstanding indebtedness in accordance with the provisions of subsection
(b) of this section.
(b) A municipal corporation by its legislative branch, by resolution or ordinance, may
issue refunding bonds for the purpose of paying any of its bonds or notes at maturity
or upon acceleration or redemption. The refunding bonds may be issued at such time
prior to the maturity or redemption of the refunded bonds as the municipality deems
to be in the public interest. The refunding bonds may be issued in sufficient amounts
to pay or provide the principal of the bonds being refunded, together with any redemption
premium thereon, any interest accrued or to accrue to the date of payment of the bonds,
the expenses of issue of the refunding bonds, the expenses of redeeming the bonds
being refunded, and such reserves for debt service or other capital or current expenses
from the proceeds of the refunding bonds, as may be required by the resolutions under
which bonds are issued. (Amended 1983, No. 24, § 2, eff. April 6, 1983; 2017, No. 74, § 89.)
§ 1773. Temporary loans
(a) If a municipal corporation votes to issue bonds in accordance with law, the officers
authorized to issue the same, upon resolution of the legislative branch of the municipal
corporation, may make a temporary loan, in the name of such municipal corporation,
for a period of not more than one year in anticipation of the money to be derived
from the sale of such bonds and may issue notes therefore. Temporary notes issued
under this subsection for a shorter period than one year may be renewed or refunded
by the issue of other notes maturing not more than one year from the date of the original
loan except as stated in subsection (b) of this section. The maximum maturity date
of the authorized bond issue need not be reduced because of a temporary loan hereunder
except as stated in subsection (b) of this section.
(b) A temporary note issued under subsection (a) of this section may be renewed or refunded
to mature more than one year from the date of the original temporary loan. In such
a case, the authorized amount of the bond issue shall be reduced each year or portion
thereof after the first year during which the temporary loan remains outstanding by
a factor at least equal to the amount which will reduce the authorized amount of bonds
to zero through equal annual payments over the maximum maturity allowed by law for
such bonds, or such lesser maturity as may be determined by the legislative branch
of the municipality. The amount of the temporary loan outstanding at any time shall
not exceed the current authorized amount of the bond issue. The legislative branch
of the municipal corporation shall, in each year in excess of any one year period,
include in the next annual apportionment or assessment of taxes an amount equal to
the amount of the reduction to be used either for the purpose of the original authorized
bond issue or to satisfy the temporary note. With the approval of the voters, the
period after which the authorized amount of the bond issue shall begin to be reduced
may be extended to no more than three years. Temporary notes issued under this subsection
shall mature no later than one year from their original date and any renewal or refunding
thereof shall mature no later than ten years from the date of the original loan.
The maximum maturity date of the authorized bond issue shall be reduced by a period
equal to the period of temporary borrowing in excess of one year from the date of
the original temporary note and for so long as the notes remain unsatisfied or outstanding.
(c) Pending the receipt of revenue in the form of grants-in-aid from any source, a municipal
corporation through its legislative branch, by resolution or ordinance, may issue
revenue anticipation notes in anticipation of the grants-in-aid to be received. The
notes may be issued on such terms and conditions and at such times as the legislative
branch shall determine. The proceeds of the notes may be used only for the purpose
for which the grants-in-aid are anticipated, and no note may mature more than one
year from its date; provided, however, that a note issued under this subsection may
be refunded or renewed from time to time by the issuance of a note or notes dated
before the date upon which the total grant-in-aid is received. (Amended 1967, No. 242 (Adj. Sess.), § 1, eff. Feb. 13, 1968; 1969, No. 285 (Adj. Sess.), § 12, eff. April 9, 1970; 1975, No. 165 (Adj. Sess.); 1979, No. 94 (Adj. Sess.), § 1, eff. March 7, 1980; 1991, No. 51.)
§ 1774. Record by treasurer
The treasurer of each governmental unit as defined in section 4551(5) of this title shall keep a record of every obligation assumed by that unit. (Amended 1977, No. 155 (Adj. Sess.), § 2, eff. March 29, 1978; 1999, No. 71 (Adj. Sess.), § 2.)
§ 1775. Cancellation and record of old bonds
When old notes, orders, or bonds are taken up, as provided in this subchapter, the
treasurer of the municipal corporation shall keep a record of the same, and such old
notes, orders, or bonds shall be cancelled.
§ 1776. Record
All ordinances or resolutions required by this subchapter to be enacted by the legislative
branch of a municipal corporation shall be duly recorded in the office of the clerk
of such municipal corporation.
§ 1777. Regulations
When a municipal corporation has established or provided a sinking fund for the retirement
of a bond issue or other debt, the fund so established or provided shall be kept intact
and separate from other monies at the disposal of such corporation, shall be accounted
for as a pledged asset for the purpose of retiring such obligations, and shall not
be appropriated or used for the current expenses of such corporation.
§ 1778. Registered obligations; authority to issue
A municipal corporation may issue registered bonds. If an original issue of bonds
by such municipal corporation is registered, they shall be registered as hereinafter
provided.
§ 1779. Registration on request
A municipal corporation, at the written request, duly acknowledged, of the owner or
holder of one or more bonds, promissory notes, or certificates of indebtedness issued
by it and payable to bearer or to a person or corporation named, or bearer, may change
such bonds, notes, or certificates into registered obligations, payable only to the
person or corporation whose name is properly indorsed thereon, as hereinafter provided.
§ 1780. Certificate of registration indorsed; when
When it shall be determined by a municipal corporation to issue registered bonds,
the legislative branch of the municipal corporation shall direct the treasurer of
such municipal corporation to indorse upon the back of each of such bonds over his
or her official signature a certificate of registration in substantially the form
hereinafter provided, inserting in the appropriate places the date of such registration,
the name and address of the registered holder, and his or her own signature as transfer
agent. Thereafter such bond shall be transferable only upon the books of such municipality
upon presentation to the treasurer thereof with a written assignment duly acknowledged
or proved.
§ 1781. Change of coupon bonds to registered bonds
In case a municipal corporation shall have issued coupon bonds and the owner or holder
thereof has requested that such bonds be changed to registered bonds as herein provided,
then upon written request of such change, duly acknowledged, the treasurer of such
a municipal corporation, if directed by the city council of the city, selectboard
of the town, school directors of the town school district, or other corresponding
officers of the municipal corporation of which he or she is such treasurer, as the
case may be, shall cut off and destroy the coupons on the bonds presented for registration
and indorse upon the back of each of such bonds over his or her official signature
a certificate of registration in substantially the form prescribed by section 1782 of this title, inserting in the appropriate places the date of such registration, the name and
address of the registered holder, and his or her own signature as transfer agent.
Thereafter such bond shall be transferable only upon the books of such municipality
upon presentation to the treasurer thereof with a written assignment duly acknowledged
or proved.
§ 1782. Registered bonds; form of certificate
In all cases where bonds are registered the following shall be the form of
CERTIFICATE OF REGISTRATION
It is hereby certified that upon the written request of the holder of the within bond,
the coupons attached thereto, being ___________ in number, of ___________ each have been this day cut off and destroyed and that the within bond is hereby
converted into a registered bond with the interest thereon payable _______________________________________ annually, and that such interest, as well as the principal, is payable to the registered
holder thereof, his or her legal representatives, successors, or assigns at the time
and place expressed on the face of such bond.
The within bond when registered is transferable only upon the books of the treasurer
of _______________________________________ upon presentation to the treasurer with a written assignment duly acknowledged or
proved.
Date _________________________________________ 20 ___________ .
Treasurer of _________________________________________
_________________________________________
Date of registration.
_________________________________________
Name and address of registered holder.
Signature of treasurer who acts as transfer agent. (Amended 2017, No. 74, § 90.)
§ 1783. Registered bonds; indorsement conclusive evidence of authority
The indorsement of such certificate of registration upon any bond, note, or certificate
by such treasurer shall be conclusive evidence that such treasurer was directed by
the proper officers of the municipal corporation of which he or she was treasurer
to convert such bond into a registered obligation. (Amended 2017, No. 74, § 91.)
§ 1784. Registered bonds; treasurer to keep record
The treasurer of every such municipal corporation shall keep a register showing the
number, date, amount, rate of interest, time when payable, and the name of the registered
holder of the bonds, notes, and certificates originally registered or changed to registered
obligations. (Amended 2017, No. 74, § 92.)
§ 1785. Registered bonds; conversion not to affect liability
Such conversion shall in no respect or degree weaken or impair the obligation of such
municipal corporation to pay such bond, note, or certificate so converted. (Amended 2017, No. 74, § 93.)
§ 1786. Borrowing to pay current expenses in anticipation of taxes
(a) A municipal corporation, by its legislative branch, may borrow money by the issuance
of its notes or orders for the purpose of paying current expenses of the municipal
corporation. Such notes or orders, however, must mature within one year from date.
(b) A municipal corporation may also borrow money in anticipation of taxes in an amount
not to exceed ninety percent of the amount of taxes assessed for such year and may
issue its notes or orders therefor to mature not more than one year from the date
of the note or order.
(c) The assistant judges may borrow money in the name of the county in anticipation of
taxes.
§ 1786a. Borrowing for public improvements and capital assets
(a) The voters of a municipality may authorize specific public improvements and the acquisition
of capital assets and finance the same, temporarily or permanently, through debt instruments
other than bonds for a term not to exceed the reasonably anticipated useful life of
the improvements or assets as provided in this section.
(b) If the improvements or assets are to be financed for a term of five years or less,
they shall be approved by the voters at an annual or special meeting duly warned for
the purpose in accordance with the provisions of 17 V.S.A. chapter 55. However, the requirement of this subsection shall not apply to purchases made by
selectboards under the provisions of 19 V.S.A. § 304(a)(3).
(c) If the improvements or assets are to be financed for a term of more than five years,
the procedural provisions of sections 1755, 1756, and 1757 of this title shall apply. A vote on the question shall be held at a duly warned annual or special
meeting and shall be by Australian ballot. The ballot shall be in substantially the
following form:
“Shall the voters authorize (describe public improvement or acquisition) in an amount
not to exceed ($ ........ ) to be financed over a period not to exceed (number of years).”
(d) Public improvements or assets approved under subsection (c) of this section may be
financed for a period of five years or less.
(e) Debt instruments authorized under this section may be refunded in the manner provided
in sections 1771 and 1772 of this title. (Added 1995, No. 2, § 1, eff. Feb. 23, 1995; amended 2001, No. 64, § 22, eff. June 16, 2001.)
§ 1787. Application of chapter; charters and special acts to control
This chapter shall not affect rights allowed a municipal corporation by its charter
provisions, nor any rights granted by special act of the Legislature. This chapter,
except where inconsistent with such charter or special act, shall apply to the method
of exercising all such rights. (Amended 1989, No. 111, § 3, eff. June 22, 1989.)
§ 1788. Existing powers continued; emergencies
The existing power of a municipality to authorize public improvements by a majority
vote in a meeting duly called and held and to finance the same temporarily by the
issue of orders or notes, and to issue bonds therefor, is not repealed nor affected
by the provisions of this subchapter. Such municipality may refund all or any portion
of such temporary orders, notes, or bonds in the method provided by sections 1771 and 1772 of this title. Nevertheless, no public improvement which has been voted upon in the method provided
by sections 1755 and 1756 of this title shall be voted upon in any such meeting, except in cases of emergency, in which the
vote stating the emergency shall be conclusive evidence of its existence. The existing
power of a municipality to refund obligations representing indebtedness accumulated
in the ordinary administration of the affairs of such municipality, whether incurred
for public improvements or for current expenses, and with or without vote of such
municipality, is not repealed nor affected by the provisions of this subchapter, except
that the method of such refunding shall be as provided in sections 1771 and 1772 of this title.
§ 1789. Alternative financing of assets
(a) A municipality, including a fire district, either singly or as a participant in an
interlocal contract entered into under sections 4901 and 4902 of this title, may acquire personal property, fixtures, technology, and intellectual property by
means of leases, lease-purchase agreements, installment sales agreements, and similar
agreements wherein payment and performance on the part of the municipality is conditioned
expressly upon the annual approval by the municipality of an appropriation sufficient
to pay when next due rents, charges, and other payments accruing under such leases
and agreements.
(b) The legislative body of the municipality shall enter into leases and agreements identified
in subsection (a) of this section on behalf of the municipality and under such terms
as it deems to be in the best interest of the municipality.
(c) The undertaking of a municipality to make payments under a lease or agreement identified
in subsection (a) of this section shall not be a general or special obligation of
the municipality, but shall be treated as a current operating expense. Payments made
or to be made under such lease or agreement shall not be taken into account in calculating
the debt limit of a municipality for any purpose. (Added 2007, No. 79, § 5, eff. June 9, 2007.)
§ 1790. Emergency borrowing; all-hazard event or state of emergency
The legislative body of a municipality may borrow money, in the name of the municipal
corporation, by issuance of its notes or orders for the purpose of paying expenses
of the municipal corporation or for public improvements associated with an all-hazards
event or a declared state of emergency pursuant to 20 V.S.A. chapter 1. The notes or orders shall be for a period of not more than five years or a term
not to exceed the reasonably anticipated useful life of the improvements or assets
financed by the notes or orders. (Added 2025, No. 57, § 7, eff. July 1, 2025.)
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Subchapter 002: INDEBTEDNESS FOR PUBLIC UTILITY PURPOSES
§ 1821. Definitions
When used in this subchapter:
(1) “Bond” means any bond or note issued by the municipal corporation and payable out
of the net revenues from the operation of a public utility project.
(2) “Cost of operation and maintenance” shall mean the expenses for operation, maintenance,
repairs, and ordinary replacements properly and directly attributable to the operation
or ordinary maintenance of the public utility project.
(3) “Net revenues” shall mean revenues less cost of operation and maintenance.
(4) “Project” shall mean an undertaking for the acquisition, construction, reconstruction,
improvement, financing, enlargement, extension, or betterment of any of the following
public utility systems:
(A) Water systems or facilities as defined in chapter 89 of this title.
(B) Sewage disposal systems or facilities as defined in chapter 97 or 101 of this title.
(C) Systems or facilities for the generation, production, transmission, or distribution
of gas (natural, artificial, or mixed) for lighting, heating, or power for public
and private uses, as provided in 30 V.S.A. chapter 79 or by charter or special act.
(D) Systems or facilities for the generation, production, transmission, or distribution
of electric energy, including the ownership, operation, and management of a municipal
plant as defined in 30 V.S.A. § 2901 and other generation, production, transmission, and distribution facilities located
within and without the State.
(E) Systems, facilities, and equipment for the collection, treatment, or disposal of solid
waste, including sanitary landfills, and the generation, transmission, distribution,
and sale of all products and forms of energy derived therefrom.
(5) “Revenues” mean all revenues, rates, fees, charges, rents, or other income and receipts
received by the municipal corporation from any source, or accrued to the municipal
corporation, or any department, board, or agency thereof, in connection with the management
and operation of a public utility project or system, and shall also include any interest
received on any monies or securities of the municipal corporation which are pledged
to the payment of the municipal corporation’s bonds, and any federal or State grants-in-aid
with respect to such project or system. (Amended 1989, No. 111, § 5, eff. June 22, 1989.)
§ 1822. Powers; approval of voters
(a) In addition to the powers it may now or hereafter have, a municipal corporation otherwise
authorized to own, acquire, improve, control, operate, or manage a public utility
or project and to issue bonds pursuant to this subchapter, may also, by action of
its legislative branch, exercise any of the following powers:
(1) to borrow money and issue bonds for the purposes of acquiring, improving, maintaining,
financing, controlling, or operating the public utility or project, or for the purpose
of selling, furnishing, or distributing the services, facilities, products, or commodities
of such utility or project;
(2) to enter into contracts in connection with the issuance of bonds for any of the purposes
enumerated in subdivision (1) of this subsection;
(3) to purchase, hold, and dispose of any of its bonds;
(4) to pledge or assign all or part of any net revenues of the public utility or project,
to provide for or to secure the payment of the principal of and the interest on bonds
issued in connection with such public utility or project;
(5) to do any and all things necessary or prudent to carry out the powers expressly granted
or necessarily implied in this subchapter, including without limitation those powers
enumerated in section 1824 of this title.
(b)(1) The bonds authorized under this section shall be in such form, shall contain such
provisions, and shall be executed as may be determined by the legislative branch of
the municipal corporation, but shall not be executed, issued, or made, and shall not
be valid and binding, unless and until at least a majority of the legal voters of
such municipal corporation present and voting at a duly warned annual or special meeting
called for that purpose shall have first voted to authorize the same.
(2) The warning calling such a meeting shall state the purpose for which it is proposed
to issue bonds, the estimated cost of the project, the amount of bonds proposed to
be issued under this subchapter therefor, that such bonds are to be payable solely
from net revenues, and shall fix the place where and the date on which such meetings
shall be held and the hours of opening and closing the polls.
(3) The notice of the meeting shall be published and posted as provided in section 1756 of this title.
(4) When a majority of all the voters voting on the question at such meeting vote to authorize
the issuance of bonds under this subchapter to pay for such project, the legislative
body shall be authorized to issue bonds or enter into contracts, pledges, and assignments
as provided in this subchapter.
(5) Sections 1757 and 1758 of this title shall apply to the proceedings taken hereunder, except that the form of ballot to
be used shall be substantially as follows:
Shall bonds of the (name of municipality) to the amount of $_____ be issued under subchapter 2 of chapter 53 of Title 24, Vermont Statutes Annotated,
payable only from net revenues derived from the (type) public utility system, for
the purpose of paying for the following public utility project?
If in favor of the bond issue, make a cross (x) in this square □.
If opposed to the bond issue, make a cross (x) in this square □.
(c) The bonds authorized by this subchapter shall be sold at par, premium, or discount
by negotiated sale, competitive bid, or to the Vermont Municipal Bond Bank.
(d) Notwithstanding the provisions of subsection (b) of this section, the legislative
branch of a municipal corporation owning a municipal plant as defined in 30 V.S.A. § 2901 may authorize by resolution the issuance of bonds in an amount not to exceed 50 percent
of the total assets of said municipal plant without the need for voter approval. Nothing
in this subsection shall be interpreted as eliminating the requirement for approval
from the Public Utility Commission pursuant to 30 V.S.A. § 108, where applicable. (Amended 1989, No. 111, § 6, eff. June 22, 1989; 2019, No. 81, § 1.)
§ 1823. Payment exclusive; effect
(a) The bonds issued and contracts entered into in connection therewith as authorized
in section 1822 of this title and the interest thereon shall be payable solely and exclusively from net revenues
derived from the public utility system or project and shall not constitute general
indebtedness of the municipal corporation nor be an obligation or liability upon the
municipal corporation to pay the same from any funds of the municipal corporation
other than such net revenues. No holder or holders of any contracts entered into
or bonds issued under this subchapter shall ever have the right to compel any exercise
of the taxing power of the municipal corporation to pay such contracts or bonds, or
the interest thereon. A statement referring to the limited nature of the contract
or bond and reciting that it had been entered into or issued under this subchapter
shall be made plainly to appear in or upon each contract or bond.
(b) The bonds or contracts authorized by this subchapter shall not be affected by the
restrictions and limitations of subchapter 1 of this chapter relating thereto. (Amended 1989, No. 111, § 7, eff. June 22, 1989.)
§ 1824. Specific provisions
(a) Generally. Any pledge of net revenues or bond proceeds and earnings thereon made by a municipal
corporation under this subchapter shall be binding from the time when the pledge is
made. Net revenues or bond proceeds and earnings thereon to be pledged and thereafter
received by the municipal corporation shall immediately be subject to the lien of
the pledge without any physical delivery thereof or further act, and the lien of any
pledge shall be binding against all parties having claims of any kind in tort, contract,
or otherwise against the municipal corporation, irrespective of whether the parties
have notice thereof. Neither the resolution nor any other instrument by which a pledge
is created need be filed or recorded except in the records of the municipal corporation.
(b) Special covenants. The contracts and bonds entered into and issued under section 1822 of this title may contain provisions relating to:
(1) pledging all or any part of the net revenues of the public utility system or project
in order to secure the payment of the bonds, or any part thereof, subject to such
agreements with bondholders as may then exist;
(2) the imposition or maintenance of rates, fees, or charges, subject to regulatory requirements,
to generate revenues at least sufficient to provide for the costs of operation and
maintenance of the public utility system and for payment of principal of and interest
on all bonds issued in connection with such public utility as the same shall become
due;
(3) the imposition or maintenance of rates, fees, and charges, subject to regulatory requirements,
as a multiple of principal and interest payments on bonds of the municipality issued
under this subchapter;
(4) periodic review of the financial condition of the public utility system for the purpose
of estimating whether its revenues will be sufficient to comply with agreements with
the holders of its bonds;
(5) limitations, terms, and conditions with respect to the refunding or redemption of
the bonds;
(6) limitations, terms, and conditions with respect to the issuance of additional bonds
in connection with the public utility system for which the bonds are issued, except
bonds secured by a subordinate pledge of net revenues;
(7) limitations on the purpose to which the proceeds of sale of bonds may be applied and
pledging the proceeds to secure the payment of the bonds or of any issue thereof;
(8) the procedure, if any, by which the terms of any agreement with bondholders may be
amended or abrogated, the amount of bonds the holders of which must consent thereto,
and the manner in which consent may be given;
(9) requirements for the maintenance and operation of the utility system in accordance
with prudent utility practice and regulatory requirements;
(10) vesting in a trustee or trustees, within or without the State, the right to receive
all or any part of the net revenue pledged and assigned to, or for the benefit of,
the holder or holders of bonds issued hereunder, and to hold, apply, and dispose of
the same; and vesting in the trustee or trustees such rights, powers, and duties in
trust as the trustee may need to recover the amounts pledged to the holders of the
municipal corporation’s bonds and to enforce any covenants made by the municipal corporation
to secure its bonds, and limiting or abrogating the right of the holders of its bonds
to appoint a trustee under this subchapter or limiting the rights, powers, and duties
of the trustee;
(11) prescribing what acts or omissions of the municipality shall constitute “events of
default” and the terms and conditions upon which any or all of such bonds shall become
or may be declared due before maturity and as to the terms and conditions upon which
such declaration and its consequences may be waived;
(12) limitations on the rights, liabilities, powers, and duties arising upon the breach
by it of any covenant, conditions, or obligations;
(13) a definition, subject to regulatory requirements, of the standard of care, maintenance,
and operation of the public utility project, including the maintenance of insurance
and the application of proceeds of policies of insurance and condemnation awards thereon;
(14) the pledge of proceeds to be derived upon the sale or disposition of the public utility
project for the purpose of paying bonds issued by the municipal corporation for such
project or defeasing the lien securing said bonds;
(15) limitations on the right of the municipal corporation to encumber, sell, lease, or
otherwise dispose of property used in public service operations of the public utility
system; except for the sale, lease, or disposition of a part of such property, which
in the reasonable judgment of the municipality has become unserviceable, obsolete,
worn out, or no longer necessary in the operations of the public utility system or
has been replaced by other property, and except for encumbrances in connection with
bonds secured by a subordinate pledge of net revenues;
(16) the bonds to be issued, the issuance of its bonds in escrow or otherwise, and the
use and disposition of the proceeds thereof; provisions for the replacement of lost,
destroyed, or mutilated bonds; prohibitions against extending the time for the payment
of its bonds or interest thereon and to redeem its bonds and provisions for their
redemption and the terms and conditions thereof; and
(17) the creation of special funds for construction or operating costs, debt service, reserve,
or similar purposes and covenanting as to the use and disposition and investment of
the monies held in such funds. (Amended 1989, No. 111, § 8, eff. June 22, 1989; 2017, No. 74, § 94.)
§ 1825. Construction
Nothing contained in this subchapter shall be so construed as authorizing the establishment
or operation of a public utility. The provisions of this subchapter shall apply only
to a public utility authorized by a special act or under the general law. Bonds may
be issued hereunder for public utility projects of the municipal corporation notwithstanding
that any other law may provide for the issuance of bonds for like purposes. This
subchapter is remedial in nature and the powers hereby granted shall be liberally
construed to effectuate the purposes hereof, and to this end the municipal corporation
shall have powers necessary and prudent to carry out the purposes hereof in addition
to the powers expressly conferred in this subchapter. (Amended 1989, No. 111, § 9, eff. June 22, 1989.)
§ 1826. Actions barred
(a) No action shall be brought directly or indirectly attacking, questioning, or in any
manner contesting the legality or validity of municipal revenue bonds for public utility
purposes, issued or unissued, voted by any municipality or by any other municipal
corporate entity, after six months from the date upon which voters in any such municipality
or other municipal corporate entity met pursuant to warning and voted affirmatively
to issue bonds to defray costs of municipal utility purposes or upon vote of a question
of recission thereof whichever occurs later.
(b) This section shall be liberally construed to effect the legislative purpose to validate
bonds issued or authorized by municipalities or other municipal corporate entities
for public utility purposes, and to bar every right to question in any manner the
validity of a bond voted by it for public utility purposes, and to bar every remedy
therefor notwithstanding any defects or irregularities, jurisdictional or otherwise,
after expiration of the six-month period. (Added 1975, No. 57, § 2, eff. April 18, 1975.)
§ 1827. Enforcement of bond obligations
The municipal corporation shall have power by resolution of its legislative body,
adopted in connection with the issuance of the bonds and subject to approval under
30 V.S.A. § 108 to confer upon any holder or holders of a specified amount or percentage of bonds,
including a trustee or trustees for such holders, the right in the event of an “event
of default” as defined in any contract with the holder or holders of such bonds or
the trustee or trustees therefor:
(1) By suit, action, or proceedings in any court of competent jurisdiction to obtain the
appointment of a receiver of the public utility system of the municipal corporation
or any part or parts thereof. If such receiver be appointed he or she may enter and
take possession of such public utility system of the municipal corporation or any
part or parts thereof and operate and maintain the same, and collect and receive all
revenues thereafter arising therefrom in the same manner as the municipal corporation
itself might do and shall deposit such monies in a separate account or accounts and
apply the same in accordance with the obligations of the municipal corporation as
the court shall direct. All actions of receivers authorized under this section shall
be subject to the same regulatory requirements applicable to the municipal utility.
Provided, however, that notwithstanding the appointment of a receiver the municipal
corporation shall retain the right subject to regulatory requirements to fix the rates,
fees, and charges to be charged by the public utility system, the revenues from which
are pledged to pay bonds and the interest thereon, and to receive from the receiver
from time to time that portion of any revenues collected which shall be allocable
to the municipal corporation on account of costs for public utility system maintenance,
operation, repair, and regulation or other costs payable by the municipal corporation.
(2) By suit, action, or proceedings in any court of competent jurisdiction to require
the legislative body of the municipal corporation and the treasurer of the municipal
corporation to account as if it, he, or she were the trustee of an express trust.
Any such resolution shall constitute a contract between the municipal corporation
and the holders of bonds of such issue. (Added 1989, No. 111, § 10, eff. June 22, 1989.)
§ 1828. Rights of holders
Any holder or holders of bonds issued under this subchapter, including a trustee or
trustees for holders of such bonds, shall have the right in addition to all other
rights:
(1) By extraordinary relief or other suit, action, or proceedings in any court of competent
jurisdiction to enforce his, her, or their rights against the municipal corporation,
the legislative body, any other proper officer, agent, or employee of any of them,
including the right to require the municipality, the legislative body, and any proper
officer, agent, or employee of any of them, to the extent consistent with the reasonable
operation of a public utility, to fix and collect rates and charges subject to State
and federal regulatory approval, adequate to carry out any agreement as to, or pledge
of revenues, and to require the municipal corporation, the legislative body and any
officer, agent, or employee of any of them to carry out any other covenants or agreements
and to perform its and their duties under this subchapter.
(2) By action or suit to enjoin any acts or things which may be unlawful or a violation
of the rights of such holder of bonds. (Added 1989, No. 111, § 11, eff. June 22, 1989.)
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Subchapter 005: STATEWIDE TAX INCREMENT FINANCING
§ 1891. Definitions
As used in this subchapter:
(1) “Municipality” means a city, town, or incorporated village.
(2) “District” or “TIF” means a tax increment financing district.
(3) “Legislative body” means the mayor and alderboard, the city council, the selectboard,
and the president and trustees of an incorporated village, as appropriate.
(4) “Improvements” means the installation, new construction, or reconstruction of infrastructure
that will serve a public purpose and fulfill the purpose of tax increment financing
districts as stated in section 1893 of this subchapter, including utilities, transportation,
public facilities and amenities, land and property acquisition and demolition, and
site preparation. “Improvements” also means the funding of debt service interest payments
for a period of up to two years, beginning on the date on which the first debt is
incurred.
(5) “Original taxable value” means the total valuation as determined in accordance with
32 V.S.A. chapter 129 of all taxable real property located within the tax increment
financing district as of the creation date as set forth in section 1892 of this subchapter,
provided that no parcel within the district shall be divided or bisected by the district
boundary.
(6) “Related costs” means expenses incurred and paid by the municipality, exclusive of
the actual cost of constructing and financing improvements, that are directly related
to the creation and implementation of the tax increment financing district, including
reimbursement of sums previously advanced by the municipality for those purposes.
Related costs may include direct municipal expenses such as departmental or personnel
costs related to creating or administering the district to the extent they are paid
from the tax increment realized from municipal and not education taxes and using only
that portion of the municipal increment above the required percentage in servicing
the debt as determined in accordance with subsection 1894(f) of this subchapter.
(7) “Financing” means debt incurred, including principal, interest, and any fees or charges
directly related to that debt, or other instruments or borrowing used by a municipality
to pay for improvements in a tax increment financing district, only if authorized
by the legal voters of the municipality in accordance with section 1894 of this subchapter.
Payment for the cost of district improvements may also include direct payment by the
municipality using the district increment. However, such payment is also subject to
a vote by the legal voters of the municipality in accordance with section 1894 of
this subchapter and, if not included in the tax increment financing plan approved
under subsection 1894(d) of this subchapter, is also considered a substantial change
and subject to the review process provided by subdivision 1901(2)(B) of this subchapter.
If interfund loans within the municipality are used as the method of financing, no
interest shall be charged. Bond anticipation notes may be used as a method of financing;
provided, however, that bond anticipation notes shall not be considered a first incurrence
of debt pursuant to subsection 1894(a) of this subchapter.
(8) “Committed” means pledged and appropriated for the purpose of the current and future
payment of tax increment financing incurred in accordance with section 1894 of this
subchapter and related costs as defined in this section. (Added 1985, No. 87; amended 2005, No. 184 (Adj. Sess.), § 2a; 2007, No. 190 (Adj. Sess.), § 54, eff. June 6, 2008; 2013, No. 80, § 2; 2019, No. 14, § 66, eff. April 30, 2019; 2023, No. 72, § 33, eff. June 19, 2023.)
§ 1892. Creation of district
(a) Upon a finding that such action will serve the public purposes of this subchapter
and subject to subsection (d) of this section, the legislative body of any municipality
may create within its jurisdiction a special district to be known as a tax increment
financing district. The district shall be described by its boundaries and the properties
therein and the district boundary shall be shown on a plan entitled “Proposed Tax
Increment Financing District (municipal name), Vermont.” The legislative body shall
hold one or more public hearings, after public notice, on the proposed plan.
(b) When adopted by the act of the legislative body of that municipality, the plan shall
be recorded with the municipal clerk and lister or assessor, and the creation of the
district shall occur at 12:01 a.m. on April 1 of the calendar year so voted by the
municipal legislative body.
(c) A municipality that has approved the creation of a district under this section may
designate a coordinating agency from outside the municipality’s departments or offices
to administer the district to ensure compliance with this subchapter and any statutory
or other requirements and may claim this expense as a related cost. However, the coordinating
agency shall not be authorized to enter into any agreement or make any covenant on
behalf of the municipality.
(d) The following municipalities have been authorized to use education tax increment financing
for a tax increment financing district:
(1) the City of Burlington, Downtown;
(2) the City of Burlington, Waterfront;
(3) the Town of Milton, North and South;
(4) the City of Newport;
(5) the City of Winooski;
(6) the Town of Colchester;
(7) the Town of Hartford;
(8) the City of St. Albans;
(9) the City of Barre;
(10) the Town of Milton, Town Core; and
(11) the City of South Burlington.
(e) On or before January 15, 2018, the Joint Fiscal Office, with the assistance of the
consulting Legislative Economist, the Department of Taxes, the State Auditor, and
the Agency of Commerce and Community Development in consultation with the Vermont
Economic Progress Council, shall examine and report to the General Assembly on the
use of both tax increment financing districts and other policy options for State assistance
to municipalities for funding infrastructure in support of economic development and
the capacity of Vermont to utilize TIF districts moving forward.
(f) The report shall include:
(1) a recommendation for a sustainable statewide capacity level for TIFs or comparable
economic development tools and relevant permitting criteria;
(2) the positive and negative impacts on the State’s fiscal health of TIFs and other tools,
including the General Fund and Education Fund;
(3) the economic development impacts on the State of TIFs and other tools, both positive
and negative;
(4) the mechanics for ensuring geographic diversity of TIFs or other tools throughout
the State; and
(5) the parameters of TIFs and other tools in other states.
(g) Beginning in 2021 and every four years thereafter, on or before January 15, the Joint
Fiscal Office, with the assistance of the consulting Legislative Economist, the Department
of Taxes, and the Agency of Commerce and Community Development in consultation with
the Vermont Economic Progress Council, shall examine the recommendations and conclusions
of the tax increment financing capacity study and report created pursuant to subsection
(e) of this section, and shall submit to the Emergency Board and to the House Committees
on Commerce and Economic Development and on Ways and Means and the Senate Committees
on Economic Development, Housing and General Affairs and on Finance an updated summary
report that includes:
(1) an assessment of any material changes from the initial report concerning TIFs and
other tools and an assessment of the health and sustainability of the tax increment
financing system in Vermont;
(2) short-term and long-term projections on the positive and negative fiscal impacts of
the TIF districts or other tools, as applicable, that are currently active or authorized
in the State;
(3) a review of the size and affordability of the net indebtedness for TIF districts and
an estimate of the maximum amount of new long-term net debt that prudently may be
authorized for TIF districts or other tools in the next fiscal year.
(h) Annually, based on the analysis and recommendations included in the reports required
in this section, the General Assembly shall consider the amount of new long-term net
debt that prudently may be authorized for TIF districts in the next fiscal year and
determine whether to expand the number of TIF districts or similar economic development
tools in addition to the previously approved districts referenced in subsection (d)
of this section and the six additional districts authorized by 32 V.S.A. § 5404a(f). (Added 1985, No. 87; amended 2013, No. 80, § 3; 2017, No. 69, § J.2, eff. June 28, 2017; 2018, No. 11 (Sp. Sess.), § H.30.)
§ 1893. Purpose
The purpose of tax increment financing districts is to provide revenues for improvements
that serve the district and related costs, which will stimulate development or redevelopment
within the district, provide for employment opportunities, improve and broaden the
tax base, or enhance the general economic vitality of the municipality, the region,
or the State. (Added 1985, No. 87; amended 2005, No. 184 (Adj. Sess.), § 2b; 2007, No. 190 (Adj. Sess.), § 55, eff. June 6, 2008.)
§ 1894. Power and life of district
(a) Incurring indebtedness.
(1) A municipality approved under 32 V.S.A. § 5404a(h) may incur indebtedness against revenues of the tax increment financing district at
any time during a period of up to five years following the creation of the district.
If no debt is incurred during this five-year period, the district shall terminate,
unless the Vermont Economic Progress Council grants an extension to a municipality
pursuant to subsection (d) of this section. However, if any indebtedness is incurred
within the first five years after the creation of the district, then the district
has a total of ten years after the creation of the district to incur any additional
debt.
(2) Any indebtedness incurred under subdivision (1) of this subsection may be retired
over any period authorized by the legislative body of the municipality.
(3) The district shall continue until the date and hour the indebtedness is retired or,
if no debt is incurred, five years following the creation of the district.
(b) Use of the education property tax increment. For only debt incurred within the period permitted under subdivision (a)(1) of this
section after creation of the district, and related costs, up to 70 percent of the
education tax increment may be retained for up to 20 years, beginning with the education
tax increment generated the year in which the first debt incurred for improvements
financed in whole or in part with incremental education property tax revenue. Upon
incurring the first debt, a municipality shall notify the Department of Taxes and
the Vermont Economic Progress Council of the beginning of the 20-year retention period
of education tax increment.
(c) Use of the municipal property tax increment. For only debt incurred within the period permitted under subdivision (a)(1) of this
section after creation of the district, and related costs, not less than 85 percent
of the municipal tax increment shall be retained to service the debt, beginning the
first year in which debt is incurred, pursuant to subsection (b) of this section.
(d) Approval of tax increment financing plan. The Vermont Economic Progress Council shall approve a municipality’s tax increment
financing plan prior to a public vote to pledge the credit of that municipality under
subsection (h) of this section. The tax increment financing plan shall include all
information related to the proposed financing necessary for approval by the Council
and to assure its viability and consistency with the tax increment financing district
plan approved by the Council pursuant to 32 V.S.A. § 5404a(h). The tax increment financing plan may be submitted to and approved by the Council
concurrently with the tax increment financing district plan. If no indebtedness is
incurred within five years after the creation of the district, the municipality may
submit an updated executive summary of the tax increment financing district plan and
an updated tax increment financing plan to the Council to obtain approval for a five-year
extension of the period to incur indebtedness; provided, however, that the updated
plan is submitted prior to the five-year termination date of the district. The Council
shall review the updated tax increment financing plan to determine whether the plan
has continued viability and consistency with the approved tax increment financing
plan. Upon approval of the updated tax increment financing plan, the Council shall
grant an extension of the period to incur indebtedness of no more than five years.
The submission of an updated tax increment financing plan as provided in this subsection
shall operate as a stay of the termination of the district until the Council has determined
whether to approve the plan.
(e) Proportionality. The municipal legislative body may commit the State education and municipal tax increments
received from properties contained within the tax increment financing district for
the financing of improvements and for related costs only in the same proportion by
which the improvement or related costs serve the district, as determined by the Council
when approved in accordance with 32 V.S.A. § 5404a(h), and in the case of an improvement that does not reasonably lend itself to a proportionality
formula, the Council shall apply a rough proportionality and rational nexus test.
(f) Required share of increment. If any tax increment utilization is approved pursuant to 32 V.S.A. § 5404a(h), not more than 70 percent of the State property tax increment and not less than 85
percent of the municipal tax increment may be approved by the Council or used by the
municipality to service this debt.
(g) Adjustment of percentage. During the tenth year following the creation of the tax increment financing district,
the municipality shall submit an updated tax increment financing plan to the Council
which shall include adjustments and updates of appropriate data and information sufficient
for the Council to determine, based on tax increment financing debt actually incurred
and the history of increment generated during the first ten years, whether the percentages
approved under subsection (f) of this section should be continued or adjusted to a
lower percentage to be retained for the remaining duration of the retention period
and still provide sufficient municipal and education increment to service the remaining
debt.
(h) Vote required on each instance of debt. Notwithstanding any provision of any municipal charter, each instance of borrowing
to finance or otherwise pay for tax increment financing district improvements shall
occur only after the legal voters of the municipality, by a majority vote of all voters
present and voting on the question at a special or annual municipal meeting duly warned
for the purpose, authorize the legislative body to pledge the credit of the municipality,
borrow, or otherwise secure the debt for the specific purposes so warned; provided
that each request to pledge the credit of the municipality for the purposes of financing
tax increment financing district improvements shall include the new amount of debt
proposed to be incurred and the total outstanding tax increment financing debt approved
to date.
(i) Notice to voters. A municipal legislative body shall provide information to the public prior to the
public vote required under subsection (h) of this section. This information shall
include the amount and types of debt and related costs to be incurred, including principal,
interest, and fees, terms of the debt, the improvements to be financed, the expected
development to occur because of the improvements, and notice to the voters that if
the tax increment received by the municipality from any property tax source is insufficient
to pay the principal and interest on the debt in any year, for whatever reason, including
a decrease in property value or repeal of a State property tax source, unless determined
otherwise at the time of such repeal, the municipality shall remain liable for the
full payment of the principal and interest for the term of indebtedness. If interfund
loans within the municipality are used, the information must also include documentation
of the terms and conditions of such loan. If interfund loans within the municipality
are used as the method of financing, no interest shall be charged. (Added 1985, No. 87; amended 1987, No. 204 (Adj. Sess.), § 1; 2005, No. 184 (Adj. Sess.), § 2c; 2007, No. 190 (Adj. Sess.), § 56, eff. June 6, 2008; 2011, No. 45, § 15, eff. May 24, 2011; 2013, No. 80, § 4; 2013, No. 174 (Adj. Sess.), §§ 8, 9, eff. June 4, 2014; 2017, No. 69, § J.3. eff. June 28, 2017.)
§ 1895. Original taxable value
(a) Certification. As of the date the district is created, the lister or assessor for the municipality
shall certify the original taxable value and shall certify to the legislative body
in each year thereafter during the life of the district the amount by which the total
valuation as determined in accordance with 32 V.S.A. chapter 129 of all taxable real
property located within the tax increment financing district has increased or decreased
relative to the original taxable value.
(b) Boundary of the district. No adjustments to the physical boundary lines of a district shall be made after the
approval of a tax increment financing district plan. (Added 1985, No. 87; amended 2013, No. 80, § 5; 2013, No. 174 (Adj. Sess.), § 10, eff. June 4, 2014; 2023, No. 72, § 34, eff. June 19, 2023.)
§ 1896. Tax increments
(a) In each year following the creation of the district, the listers or assessor shall
include not more than the original taxable value of the real property in the assessed
valuation upon which the treasurer computes the rates of all taxes levied by the municipality
and every other taxing district in which the tax increment financing district is situated;
but the treasurer shall extend all rates so determined against the entire assessed
valuation of real property for that year. In each year, the municipality shall hold
apart, rather than remit to the taxing districts, that proportion of all taxes paid
that year on the real property in the district that the excess valuation bears to
the total assessed valuation. The amount held apart each year is the “tax increment”
for that year. Not more than the percentages established pursuant to section 1894
of this subchapter of the municipal and State education tax increments received with
respect to the district and committed for the payment for financing for improvements
and related costs shall be segregated by the municipality in a special tax increment
financing account and in its official books and records until all capital indebtedness
of the district has been fully paid. The final payment shall be reported to the treasurer,
who shall thereafter include the entire assessed valuation of the district in the
assessed valuations upon which municipal and other tax rates are computed and extended
and thereafter no taxes from the district shall be deposited in the district’s tax
increment financing account.
(b) [Repealed.]
(c) Notwithstanding any charter provision or other provision, all property taxes assessed
within a district shall be subject to the provision of subsection (a) of this section.
Special assessments levied under chapters 76A or 87 of this title or under a municipal
charter shall not be considered property taxes for the purpose of this section if
the proceeds are used exclusively for operating expenses related to properties within
the district, and not for improvements within the district, as defined in subdivision 1891(4) of this title.
(d) Amounts held apart under subsection (a) of this section shall only be used for financing
and related costs as defined in section 1891 of this subchapter.
(e) In each year, a municipality shall remit not less than the aggregate tax due on the
original taxable value to the Education Fund. (Added 1985, No. 87; amended 1987, No. 204 (Adj. Sess.), § 2; 2005, No. 184 (Adj. Sess.), § 2d; 2007, No. 66, § 24, eff. July 1, 2006; 2007, No. 190 (Adj. Sess.), § 57, eff. June 6, 2008; 2013, No. 80, § 6; 2013, No. 174 (Adj. Sess.), § 11, eff. June 4, 2014; 2015, No. 57, § 63; 2023, No. 72, § 35, eff. June 19, 2023.)
§ 1897. Repealed. 2013, No. 80, § 7.
§ 1898. Powers supplemental; construction
(a) The powers conferred by this subchapter are supplemental and alternative to other
powers conferred by law, and this subchapter is intended as an independent and comprehensive
conferral of powers to accomplish the purposes set forth herein.
(b) A municipality shall have power to issue from time to time general obligation bonds,
revenue bonds, or revenue bonds also backed by the municipality’s full faith and credit
in its discretion to finance the undertaking of any improvements wholly or partly
within such district. If revenue bonds are issued, such bonds shall be made payable,
as to both principal and interest, solely from the income proceeds, revenues, tax
increments, and funds of the municipality derived from or held in connection with
its undertaking and carrying out of improvements under this chapter.
(c) Bonds issued under the provisions of this chapter are declared to be issued for an
essential public and governmental purpose.
(d) Bonds issued under this section shall be authorized by resolution or ordinance of
the local governing body and may be payable upon demand or mature at such time or
times, bear interest at such rate or rates, be in such denomination or denominations,
be in registered form, carry such conversion or registration privileges, have such
rank or priority, be executed in such manner, be payable in such medium or payment,
at such place or places, and be subject to such terms of redemption, such other characteristics,
as may be provided by such resolution or trust indenture or mortgage issued pursuant
thereto.
(e) [Repealed.]
(f) Such bonds may be sold at not less than par at public or private sales held after
notice published prior to such sale in a newspaper having a general circulation in
the municipality.
(g) In case any of the public officials of the municipality whose signatures appear on
any bonds or coupons issued under this chapter shall cease to be such officials before
the delivery of such bonds, such signatures shall, nevertheless, be valid and sufficient
for all purposes, the same as if such officials had remained in office until such
delivery. Any provisions of any law to the contrary notwithstanding, any bonds issued
pursuant to this chapter shall be fully negotiable.
(h) In any suit, action, or proceeding involving the validity or enforceability of any
bond issued under this chapter or the security therefor, any such bond reciting in
substance that it has been issued by the municipality in connection with an improvement,
as herein defined, shall be conclusively deemed to have been issued for such purpose
and such improvement shall be conclusively deemed to have been planned, located, and
carried out in accordance with the provisions of this chapter.
(i) [Repealed.] (Added 1985, No. 87; amended 1987, No. 204 (Adj. Sess.), §§ 3-6; 2005, No. 184 (Adj. Sess.), § 2f; 2007, No. 190 (Adj. Sess.), § 59, eff. June 6, 2008; 2009, No. 54, § 37, eff. June 1, 2009; 2013, No. 80, § 8.)
§ 1899. Bonds as legal investments
All banks, trust companies, bankers, savings banks and institutions, building and
loan associations, savings and loan associations, investment companies, and other
persons carrying on a banking or investment business; all insurance companies, insurance
associations, and other persons carrying on an insurance business; and all executors,
administrators, curators, trustees, and other fiduciaries, may legally invest any
sinking funds, monies, or other funds belonging to them or within their control in
any bonds or other obligations issued by a municipality pursuant to this chapter.
It is the purpose of this section to authorize any persons, political subdivisions,
and officers, public or private, to use any funds owned or controlled by them for
the purchase of any such bonds or other obligations. Nothing contained in this section
with regard to legal investments shall be construed as relieving any person of any
duty of exercising reasonable care in selecting securities. (Added 1985, No. 87.)
§ 1900. Distribution
In addition to all other provisions of this subchapter, with respect to any tax increment
financing district, of the municipal and education tax increments received in any
tax year that exceed the amounts committed for the payment of the financing for improvements
and related costs in the district, equal portions of each increment may be retained
for the following purposes: prepayment of principal and interest on the financing,
placed in a special account required by section 1896 of this subchapter and used for
future financing payments, or used for defeasance of the financing. Any remaining
portion of the excess municipal tax increment shall be distributed to the city, town,
or village budget, in proportion that each budget bears to the combined total of the
budgets unless otherwise negotiated by the city, town, or village; and any remaining
portion of the excess education tax increment shall be distributed to the Education
Fund. (Added 1987, No. 204 (Adj. Sess.), § 7; amended 2005, No. 184 (Adj. Sess.), § 2g; 2007, No. 190 (Adj. Sess.), § 60, eff. June 6, 2008; 2013, No. 80, § 9.)
§ 1901. Information reporting
Every municipality with an active tax increment financing district shall:
(1) Develop a system, segregated for the tax increment financing district, to identify,
collect, and maintain all data and information necessary to fulfill the reporting
requirements of this section, including performance measures.
(2) Throughout the year, as required by events:
(A) provide notification to the Vermont Economic Progress Council and the Department of
Taxes regarding any tax increment financing debt obligations, public votes, or votes
by the municipal legislative body immediately following such obligation or vote on
a form prescribed by the Council, including copies of public notices, agendas, minutes,
vote tally, and a copy of the information provided to the public in accordance with
subsection 1894(i) of this subchapter;
(B) submit any proposed substantial changes to be made to the approved tax increment district
plan and approved financing plan to the Council for review, only after receiving approval
for the substantial change through a vote of the municipal legislative body.
(3) Annually:
(A) Ensure that the tax increment financing district account required by section 1896
of this subchapter is subject to the annual audit prescribed in sections 1681 and 1690 of this title. Procedures must include verification of the original taxable value and annual and
total municipal and education tax increments generated, expenditures for debt and
related costs, and current balance.
(B) On or before February 15 of each year, on a form prescribed by the Council, submit
an annual report to the Vermont Economic Progress Council and the Department of Taxes,
including the information required by subdivision (2) of this section if not already
submitted during the year, all information required by subdivision (A) of this subdivision
(3), and the information required by 32 V.S.A. § 5404a(i), including performance measures and any other information required by the Council
or the Department of Taxes. (Added 2007, No. 190 (Adj. Sess.), § 62, eff. June 6, 2008; amended 2013, No. 80, § 10; 2013, No. 174 (Adj. Sess.), § 12, eff. June 4, 2014; 2015, No. 11, § 27; 2015, No. 57, § 62, eff. June 11, 2015.)
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Subchapter 007: COMMUNITY AND HOUSING INFRASTRUCTURE PROGRAM
§ 1906. Definitions
As used in this subchapter:
(1) “Affordable housing” has the same meaning as in section 4303 of this title.
(2) “Affordable housing development” means a housing development of which at least 15
percent of the units are affordable housing units. Affordable units shall be subject
to covenants or restrictions that preserve their affordability until all indebtedness
for the housing infrastructure project of which the housing development is part has
been retired.
(3) “Brownfield” means a property on which the presence or potential presence of a hazardous
material, pollutant, or contaminant complicates the expansion, development, redevelopment,
or reuse of the property.
(4) “Committed” means pledged and appropriated for the purpose of the current and future
payment of financing and related costs.
(5) “Developer” means the person undertaking to construct a housing development.
(6) “Financing” means debt, including principal, interest, and any fees or charges directly
related to that debt, incurred by a sponsor, or other instruments or borrowing used
by a sponsor, to pay for a housing infrastructure project and, in the case of a sponsor
that is a municipality, authorized by the municipality pursuant to section 1910a of
this subchapter.
(7) “Housing development” means the construction, rehabilitation, or renovation of any
building on a housing development site approved under this subchapter.
(8) “Housing development site” means the parcel or parcels encompassing a housing development
as authorized by a municipality pursuant to section 1908 of this subchapter.
(9) “Housing infrastructure agreement” means a legally binding agreement to finance and
develop a housing infrastructure project and to construct a housing development among
a municipality, a developer, and, if applicable, a third-party sponsor.
(10) “Housing infrastructure project” means one or more improvements authorized by a municipality
pursuant to section 1908 of this subchapter.
(11) “Improvements” means:
(A) the installation, construction, or reconstruction of infrastructure that will serve
a public good and fulfill the purpose stated in section 1907 of this subchapter; and
(B) the funding of debt service interest payments for a period of up to four years, beginning
on the date on which the debt is first incurred.
(12) “Legislative body” means the mayor and alderboard, the city council, the selectboard,
and the president and trustees of an incorporated village, as appropriate.
(13) “Lifetime education property tax increment retention” means the total education property
tax increment to be retained for a housing infrastructure project across its lifetime.
(14) “Moderate-income housing” means housing for which the total annual cost of renting
or ownership, as applicable, does not exceed 30 percent of the gross annual income
of a household at 150 percent of the highest of the following:
(A) the county median income, as defined by the U.S. Department of Housing and Urban Development;
(B) the standard metropolitan statistical area median income if the municipality is located
in such an area, as defined by the U.S. Department of Housing and Urban Development;
or
(C) the statewide median income, as defined by the U.S. Department of Housing and Urban
Development.
(15) “Moderate-income housing development” means a housing development of which at least
25 percent of the units are moderate-income housing units. Moderate-income units shall
be subject to covenants or restrictions that preserve their affordability until all
indebtedness for the housing infrastructure project of which the housing development
is part has been retired.
(16) “Municipality” means a city, town, or incorporated village.
(17) “Original taxable value” means the total valuation as determined in accordance with
32 V.S.A. chapter 129 of all taxable real property located within a housing development site as of its
creation date, provided that no parcel within the housing development site shall be
divided or bisected.
(18) “Related costs” means expenses incurred and paid by a municipality, exclusive of the
actual cost of constructing and financing improvements, that are directly related
to the creation and implementation of the municipality’s housing infrastructure project,
including reimbursement of sums previously advanced by the municipality for those
purposes. Related costs may include direct municipal expenses such as departmental
or personnel costs related to creating or administering the housing infrastructure
project to the extent they are paid from the tax increment realized from municipal
and not education taxes and using only that portion of the municipal increment above
the percentage required for servicing debt as determined in accordance with section
1910c of this subchapter.
(19) “Sponsor” means the person undertaking to finance a housing infrastructure project.
Any of a municipality, a developer, or an independent agency that meets State lending
standards may serve as a sponsor for a housing infrastructure project. (Added 2025, No. 69, § 20, eff. July 1, 2025.)
§ 1907. Purpose
The purpose of the Community and Housing Infrastructure Program is to encourage the
development of new primary residences for households of low and moderate income across
both rural and urban areas of all Vermont counties that would not be created but for
the infrastructure improvements funded by the Program. (Added 2025, No. 69, § 20, eff. July 1, 2025.)
§ 1908. Creation of housing infrastructure project and housing development site
(a) The legislative body of a municipality may create within its jurisdiction a housing
infrastructure project, which shall consist of improvements that stimulate the development
of housing, and a housing development site, which shall consist of the parcel or parcels
on which a housing development is installed or constructed.
(b) To create a housing infrastructure project and housing development site, a municipality,
in coordination with stakeholders, shall:
(1) develop a housing development plan, including:
(A) a description of the proposed housing infrastructure project, the proposed housing
development, and the proposed housing development site;
(B) identification of a sponsor;
(C) a tax increment financing plan meeting the standards of subsection 1910(h) of this
subchapter;
(D) a pro forma projection of expected costs of the proposed housing infrastructure project;
(E) a projection of the tax increment to be generated by the proposed housing development;
(F) a development schedule that includes a list, a cost estimate, and a schedule for the
proposed housing infrastructure project and the proposed housing development; and
(G) a determination that the proposed housing development furthers the purpose of section
1907 of this subchapter;
(2) develop a plan describing the housing development site by its boundaries and the properties
therein, entitled “Proposed Housing Development Site (municipal name), Vermont”;
(3) hold one or more public hearings, after public notice, on the proposed housing infrastructure
project, including the plans developed pursuant to this subsection; and
(4) adopt by act of the legislative body of the municipality the plan developed under
subdivision (2) of this subsection, which shall be recorded with the municipal clerk
and lister or assessor.
(c) The creation of a housing development site shall occur at 12:01 a.m. on April 1 of
the calendar year in which the Vermont Economic Progress Council approves the use
of tax increment financing for the housing infrastructure project pursuant to section
1910 of this subchapter. (Added 2025, No. 69, § 20, eff. July 1, 2025.)
§ 1909. Housing infrastructure agreement
(a) The housing infrastructure agreement for a housing infrastructure project shall:
(1) clearly identify the sponsor for the housing infrastructure project;
(2) clearly identify the developer and the housing development for the housing development
site;
(3) obligate the tax increments retained pursuant to section 1910c of this subchapter
for not more than the financing and related costs for the housing infrastructure project;
(4) provide that any housing unit within the housing development be offered exclusively
as a primary residence until all indebtedness for the housing infrastructure project
of which the housing development is part has been retired, provided that this condition
shall be satisfied by biennially providing a landlord certificate or homestead declaration;
and
(5) provide for performance assurances to reasonably secure the obligations of all parties
under the housing infrastructure agreement.
(b) A municipality shall provide notice of the terms of the housing infrastructure agreement
for the municipality’s housing infrastructure project to the legal voters of the municipality
and shall provide the same information as set forth in subsection 1910a(e) of this
subchapter. (Added 2025, No. 69, § 20, eff. July 1, 2025.)
§ 1910. Housing infrastructure project application; Vermont Economic Progress Council
(a) Application. A municipality, upon approval of its legislative body, may apply to the Vermont Economic
Progress Council to use tax increment financing for a housing infrastructure project.
(b) But-for test. The Vermont Economic Progress Council shall review each application other than those
for which the housing development is an affordable housing development to determine
whether the infrastructure improvements proposed to serve the housing development
site and the proposed housing development would not have occurred as proposed in the
application or would have occurred in a significantly different and less desirable
manner than as proposed in the application but for the proposed utilization of the
incremental tax revenues.
(c) Process requirements. The Vermont Economic Progress Council shall review a municipality’s housing infrastructure
project application to determine whether the municipality has:
(1) created a housing infrastructure project and housing development site pursuant to
section 1908 of this subchapter;
(2) executed a housing infrastructure agreement for the housing infrastructure project
that adheres to the standards of section 1909 of this subchapter with a developer
and, if the municipality is not financing the housing infrastructure project itself,
a sponsor; and
(3) approved or pledged to use incremental municipal tax revenues for the housing infrastructure
project in the proportion provided for municipal tax revenues in section 1910c of
this subchapter.
(d) Project criteria. The Vermont Economic Progress Council shall review a municipality’s housing infrastructure
project application to determine whether:
(1) at least 60 percent of the floor area of the projected housing development is dedicated
to housing; or
(2) the projected housing development meaningfully addresses the purpose of section 1907
of this subchapter.
(e) Affordability criterion. The Vermont Economic Progress Council shall review a municipality’s housing infrastructure
project application to determine whether the projected housing development is an affordable
housing development or a moderate-income housing development for purposes of the increased
education property tax increment retention percentage under section 1910c of this
subchapter.
(f) Tax increment financing plan. The Vermont Economic Progress Council shall approve a municipality’s tax increment
financing plan prior to a sponsor’s incurrence of debt for the housing infrastructure
project, including, if the sponsor is a municipality, prior to a public vote to pledge
the credit of the municipality under section 1910a of this subchapter. The tax increment
financing plan shall include:
(1) a statement of costs and sources of revenue;
(2) estimates of assessed values within the housing development site;
(3) the portion of those assessed values to be applied to the housing infrastructure project;
(4) the resulting tax increments in each year of the financial plan and the lifetime education
property tax increment retention;
(5) the amount of bonded indebtedness or other financing to be incurred;
(6) other sources of financing and anticipated revenues; and
(7) the duration of the financial plan.
(g) Approval. The Vermont Economic Progress Council shall approve or deny an application submitted
pursuant to this section not later than 90 days following the site visit conducted
as part of the application’s review. The Vermont Economic Progress Council shall only
approve tax increment financing for applications:
(1) that meet the process requirements, either of the project criteria of this section,
and, for an application for which the housing development is not an affordable housing
development, the but-for test;
(2) for which the Council has approved the tax increment financing plan; and
(3) that are submitted on or before December 31, 2035.
(h) Limit. The Vermont Economic Progress Council shall not annually approve more than $200,000,000.00
in aggregate lifetime education property tax increment retention. (Added 2025, No. 69, § 20, eff. July 1, 2025.)
§ 1910a. Indebtedness
(a) A municipality approved for tax increment financing under section 1910 of this subchapter
may incur indebtedness against revenues of the housing development site at any time
during a period of up to five years following the creation of the housing development
site. The Vermont Economic Progress Council may extend this debt incursion period
by up to three years.
(b) Notwithstanding any provision of any municipal charter, each instance of borrowing
by a municipality to finance or otherwise pay for a housing infrastructure project
shall occur only after the legal voters of the municipality, by a majority vote of
all voters present and voting on the question at a special or annual municipal meeting
duly warned for the purpose, authorize the legislative body to pledge the credit of
the municipality, borrow, or otherwise secure the debt for the specific purposes so
warned.
(c) Any indebtedness incurred under this section may be retired over any period authorized
by the legislative body of the municipality.
(d) The housing development site shall continue until the date and hour the indebtedness
is retired or, if no debt is incurred, the debt incursion period ends.
(e) A municipal legislative body shall provide information to the public prior to the
public vote required under subsection (b) of this section. This information shall
include the amount and types of debt and related costs to be incurred, including principal,
interest, and fees; terms of the debt; the housing infrastructure project to be financed;
the housing development projected to occur because of the housing infrastructure project;
and notice to the voters that if the tax increment received by the municipality from
any property tax source is insufficient to pay the principal and interest on the debt
in any year, the municipality shall remain liable for the full payment of the principal
and interest for the term of the indebtedness. If interfund loans within the municipality
are used, the information must also include documentation of the terms and conditions
of the loan.
(f) If interfund loans within the municipality are used as the method of financing, no
interest shall be charged.
(g) The use of a bond anticipation note shall not be considered a first incurrence of
debt pursuant to subsection (a) of this section. (Added 2025, No. 69, § 20, eff. July 1, 2025.)
§ 1910b. Original taxable value; tax increment
(a) As of the date the housing development site is created, the lister or assessor for
the municipality shall certify the original taxable value and shall certify to the
legislative body in each year thereafter during the life of the housing development
site the amount by which the total valuation as determined in accordance with 32 V.S.A. chapter 129 of all taxable real property within the housing development site has increased or
decreased relative to the original taxable value.
(b) Annually throughout the life of the housing development site, the lister or assessor
shall include not more than the original taxable value of the real property in the
assessed valuation upon which the treasurer computes the rates of all taxes levied
by the municipality and every other taxing district in which the housing development
site is situated, but the treasurer shall extend all rates so determined against the
entire assessed valuation of real property for that year.
(c) Annually throughout the life of the housing development site, a municipality shall
remit not less than the aggregate education property tax due on the original taxable
value to the Education Fund.
(d) Annually throughout the life of the housing development site, the municipality shall
hold apart, rather than remit to the taxing districts, that proportion of all taxes
paid that year on the real property within the housing development site that the excess
valuation bears to the total assessed valuation. The amount held apart each year is
the “tax increment” for that year. The tax increment shall only be used for financing
and related costs.
(e) Not more than the percentages established pursuant to section 1910c of this subchapter
of the municipal and State education tax increments received with respect to the housing
development site and committed for the payment for financing for improvements and
related costs shall be segregated by the municipality in a special tax increment financing
account and in its official books and records until all capital indebtedness incurred
for the housing infrastructure project has been fully paid. The final payment shall
be reported to the treasurer, who shall thereafter include the entire assessed valuation
of the housing development site in the assessed valuations upon which the municipal
and other tax rates are computed and extended, and thereafter no taxes from the housing
development site shall be deposited in the special tax increment financing account.
(f) Notwithstanding any charter provision or other provision, all property taxes assessed
within a housing development site shall be subject to the provisions of this section.
Special assessments levied under chapter 76A or 87 of this title or under a municipal
charter shall not be considered property taxes for the purpose of this section if
the proceeds are used exclusively for operating expenses related to properties within
the housing development site and not for improvements within the housing development
site. (Added 2025, No. 69, § 20, eff. July 1, 2025.)
§ 1910c. Use of tax increment; retention period
(a) Uses of tax increments. A municipality may apply tax increments retained pursuant to this subchapter to debt
incurred within the period permitted under section 1910a of this subchapter, to related
costs, and to the direct payment of the cost of a housing infrastructure project.
A municipality may provide tax increment to a sponsor only upon receipt of an invoice
for payment of the financing, and the sponsor shall confirm to the municipality once
the tax increment has been applied to the financing. Any direct payment shall be subject
to the same public vote provisions of section 1910a of this subchapter as apply to
debt.
(b) Education property tax increment.
(1) For a housing infrastructure project that does not satisfy the affordability criterion
of section 1910 of this subchapter, up to 75 percent of the education property tax
increment may be retained for up to 20 years, beginning the first year in which debt
is incurred for the housing infrastructure project.
(2) For a housing infrastructure project that satisfies the affordability criterion of
section 1910 of this subchapter, up to 85 percent of the education property tax increment
may be retained for up to 20 years, beginning the first year in which debt is incurred
for the housing infrastructure project.
(3) Upon incurring the first debt, a municipality shall notify the Department of Taxes
and the Vermont Economic Progress Council of the beginning of the retention period
of the education property tax increment.
(c) Municipal property tax increment. Not less than 85 percent of the municipal property tax increment may be retained,
beginning the first year in which debt is incurred for the housing infrastructure
project.
(d) Excess tax increment.
(1) Of the municipal and education property tax increments received in any tax year that
exceed the amounts committed for the payment of the financing and related costs for
a housing infrastructure project, equal portions of each increment may be retained
for the following purposes:
(A) to prepay principal and interest on the financing;
(B) to place in a special tax increment financing account required pursuant to subsection
1910b(e) of this subchapter and use for future financing payments; or
(C) to use for defeasance of the financing.
(2) Any remaining portion of the excess education property tax increment shall be distributed
to the Education Fund. Any remaining portion of the excess municipal property tax
increment shall be distributed to the city, town, or village budget in the proportion
that each budget bears to the combined total of the budgets unless otherwise negotiated
by the city, town, or village.
(e) Adjustment of percentage. During the 10th year following the creation of a housing development site, the municipality
shall submit an updated tax increment financing plan to the Vermont Economic Progress
Council that shall include adjustments and updates of appropriate data and information
sufficient for the Vermont Economic Progress Council to determine, based on tax increment
financing debt actually incurred and the history of increment generated during the
first 10 years, whether the percentages approved under this section should be continued
or adjusted to a lower percentage to be retained for the remaining duration of the
retention period and still provide sufficient municipal and education increment to
service the remaining debt. (Added 2025, No. 69, § 20, eff. July 1, 2025.)
§ 1910d. Information reporting
(a) A municipality with an active housing infrastructure project shall:
(1) develop a system, segregated for the housing infrastructure project, to identify,
collect, and maintain all data and information necessary to fulfill the reporting
requirements of this section;
(2) provide timely notification to the Department of Taxes and the Vermont Economic Progress
Council of any housing infrastructure project debt, public vote, or vote by the municipal
legislative body immediately following the debt incurrence or public vote on a form
prescribed by the Council, including copies of public notices, agendas, minutes, vote
tally, and a copy of the information provided to the public pursuant to subsection
1910a(e) of this subchapter; and
(3) annually on or before February 15, submit on a form prescribed by the Vermont Economic
Progress Council an annual report to the Council and the Department of Taxes, including
the information required by subdivision (2) of this subsection if not previously submitted,
the information required for annual audit under section 1910e of this subchapter,
and any information required by the Council or the Department of Taxes for the report
required pursuant to subsection (b) of this section.
(b) Annually on or before April 1, the Vermont Economic Progress Council and the Department
of Taxes shall submit a report to the Senate Committees on Economic Development, Housing
and General Affairs and on Finance and the House Committees on Commerce and Economic
Development, on General and Housing, and on Ways and Means that provides the aggregate
lifetime education property tax increment retention approved that year, describes
common reasons applicants to the Community and Housing Infrastructure Program fail
to secure approval for tax increment financing, and includes for each housing infrastructure
project approved pursuant to this subchapter the following:
(1) the date of approval;
(2) a description of the housing infrastructure project;
(3) the original taxable value of the housing development site;
(4) the scope and value of projected and actual improvements and developments in the housing
development site, including the number of housing units created;
(5) the sale prices for initial offerings of any housing units;
(6) the number and types of housing units for which a permit is being pursued under 10 V.S.A. chapter 151 (State land use and development plans) and, for each applicable housing development,
the current stage of the permitting process;
(7) projected and actual incremental revenue amounts;
(8) the allocation of incremental revenue, including the amount allocated to related costs;
(9) projected and actual financing; and
(10) an evaluation of the amount of public funds flowing to private ownership or usage.
(c) On or before January 15, 2035, the Vermont Economic Progress Council shall submit
a report to the Senate Committees on Economic Development, Housing and General Affairs
and on Finance and the House Committees on Commerce and Economic Development, on General
and Housing, and on Ways and Means evaluating the success of the Community and Housing
Infrastructure Program in achieving its purpose, as stated in section 1907 of this
chapter, including by identifying the amount and kinds of housing produced through
the Program and by determining whether housing development pursued through the Program
meets the project criteria of section 1910 of this chapter. (Added 2025, No. 69, § 20, eff. July 1, 2025.)
§ 1910e. Auditing
Annually on or before April 1 until the year following the end of the period for retention
of education property tax increment, a municipality with a housing infrastructure
project approved under this subchapter shall ensure that the special tax increment
financing account required by section 1910b of this subchapter is subject to the annual
audit prescribed in section 1681 or 1690 of this title and submit a copy to the Vermont
Economic Progress Council. If an account is subject only to the audit under section
1681 of this title, the Council shall ensure a process is in place to subject the
account to an independent audit. Procedures for the audit must include verification
of the original taxable value and annual and total municipal and education property
tax increments generated, expenditures for financing and related costs, and current
balance. (Added 2025, No. 69, § 20, eff. July 1, 2025.)
§ 1910f. Rulemaking; guidance
(a) Authority to adopt rules and guidance.
(1) The Vermont Economic Progress Council may adopt rules that are reasonably necessary
to implement this subchapter.
(2) The Vermont Economic Progress Council shall issue guidance to implement this subchapter
on or before November 15, 2025. Upon issuance, the Vermont Economic Progress Council
shall publicly post and submit to the Senate Committees on Economic Development, Housing
and General Affairs and on Finance and the House Committees on Commerce and Economic
Development, on General and Housing, and on Ways and Means any guidance documents.
(b) Authority to issue decisions.
(1) The Secretary of Commerce and Community Development, after reasonable notice to a
municipality and an opportunity for a hearing, may issue decisions to a municipality
on questions and inquiries concerning the administration of housing infrastructure
projects, statutes, rules, noncompliance with this subchapter, and any instances of
noncompliance identified in audit reports conducted pursuant to section 1910e of this
subchapter.
(2) The Vermont Economic Progress Council shall prepare recommendations for the Secretary
of Commerce and Community Development prior to any decision issued pursuant to this
subsection. The Council may prepare recommendations in consultation with the Commissioner
of Taxes, the Attorney General, and the State Treasurer. In preparing recommendations,
the Council shall provide a municipality with a reasonable opportunity to submit written
information in support of its position.
(3) The Secretary of Commerce and Community Development shall review the recommendations
of the Council and issue a final written decision on each matter within 60 days following
receipt of the recommendations. The Secretary may permit an appeal to be taken by
any party to a Superior Court for determination of questions of law in the same manner
as the Supreme Court may by rule provide for appeals before final judgment from a
Superior Court before issuing a final decision.
(c) Remedy for noncompliance. If the Secretary issues a decision under subsection (b) of this section that includes
a finding of noncompliance and that noncompliance has resulted in the improper reduction
in the amount due the Education Fund, the Secretary, unless and until the Secretary
is satisfied that there is no longer any such failure to comply, shall request that
the State Treasurer bill the municipality for the total identified underpayment. The
amount of the underpayment shall be due from the municipality upon receipt of the
bill. If the municipality does not pay the underpayment amount within 60 days, the
amount may be withheld from any funds otherwise payable by the State to the municipality
or a school district in the municipality or of which the municipality is a member.
(d) Referral; Attorney General. In lieu of or in addition to any action authorized in subsection (c) of this section,
the Secretary of Commerce and Community Development or the State Treasurer may refer
the matter to the Office of the Attorney General with a recommendation that an appropriate
civil action be initiated.
(e) Appeal; hearing officer. A hearing that is held pursuant to this section shall be subject to the provisions
of 3 V.S.A. chapter 25 relating to contested cases. The hearing shall be conducted by the Secretary or by
a hearing officer appointed by the Secretary. If a hearing is conducted by a hearing
officer, the hearing officer shall have all authority to conduct the hearing that
is provided for in the applicable contested case provisions of 3 V.S.A. chapter 25, including issuing findings of fact, hearing evidence, and compelling, by subpoena,
the attendance and testimony of witnesses. (Added 2025, No. 69, § 20, eff. July 1, 2025.)