§ 1904. Municipal tax increment financing district
(a) General authority. Notwithstanding any provision of subchapter 5 of this chapter or 32 V.S.A. § 5404a to the contrary, upon approval of the legislative body of any municipality, a municipality
may create a municipal tax increment financing district, and may incur debt to provide
funding for improvements and related costs for the district.
(b) Municipal approval; voter approval.
(1) The legislative body of the municipality shall hold one or more public hearings to
consider a municipal tax increment financing plan. Following public notice, hearing,
and opportunity to comment, the legislative body of the municipality may grant approval
of the plan.
(2) 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.
(3) The municipality may only incur debt for the project if the voters of the municipality
approve the debt obligation by a majority vote at a regular or special meeting for
which voting upon the debt obligation was properly warned.
(4) Following final voter approval, the municipality has up to five years to incur debt
pursuant to the financing plan.
(c) Life of district.
(1) A municipality may incur indebtedness against revenues of the municipal tax increment
financing district over any period authorized by the legislative body of the municipality.
(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, after the period authorized by the legislative body of the
municipality to incur indebtedness.
(d) Financing. During the life of an active district, the following apply, notwithstanding any provision
of law to the contrary:
(1) Valuation.
(A) Within 30 days of voter approval pursuant to subsection (b) of this section, the lister
or assessor for a municipality shall certify to the legislative body of the municipality
the original taxable value of a tax increment financing district as of the date the
voters approved the debt obligation.
(B) On or before June 30 following voter approval and annually thereafter, the lister
or assessor shall assess and certify to the legislative body the current value of
a project parcel.
(2) Tax rate.
(A) The lister or assessor shall use the original taxable value of a project parcel when
computing the municipal tax rate.
(B) When calculating the amount of tax due on a project parcel, the treasurer shall apply
the municipal tax rate to the current assessed value, rather than the original taxable
value.
(3) Tax increment.
(A) The “tax increment” is the amount of tax paid on a project parcel, as calculated pursuant
to subdivision (2)(B) of this subsection (d) using the current assessed value, that
exceeds the amount of tax that would have been due if the tax rate were applied to
the original taxable value.
(B) The municipality may retain any share of the municipal tax increment to service the
debt, beginning the first year in which debt is incurred.
(C) A municipal tax increment financing district created pursuant to this subchapter is
not authorized to retain any education property tax increment.
(D) A municipality shall segregate the tax increment in a special account and in its official
books and records.
(4) Use of tax increment.
(A) As of each date the municipality receives a tax payment and retains a portion of the
tax increment pursuant to this section, the municipality shall use the portion of
the municipal tax increment that is necessary to pay costs actually incurred as of
that date for debt service and related costs.
(B) If, after paying for improvements and related costs, there remains any excess portion
of the tax increment, the municipality may retain the increment to prepay principal
and interest on the financing, use for future financing payments, or use for defeasance
of the financing.
(e) Annual audit.
(1) The municipality shall ensure that the segregated account for the tax increment financing
district required by this section is subject to the annual audit requirements prescribed
in sections 1681 and 1690 of this title.
(2) Any audit procedures shall include verification of the original taxable value and
current assessed value, expenditures for project debt service and related costs, annual
and total tax increment funds generated, and allocation of tax increment funds. (Added 2017, No. 69, § J.7, eff. June 28, 2017.)