Capital city receives TIF approval
MONTPELIER — State officials awarded the Capital City coveted Tax Incremental Finance district status at a hearing Thursday despite strong criticism of a parking garage proposal that will be the first project to benefit from the new development tool.
Approval of TIF status came with a unanimous vote by the Vermont Economic Progress Council at a meeting at National Life, attended by city officials and their economic consultants, as well as a lone dissenter, Montpelier resident Stephen Whitaker.
TIF funding, using municipal education property taxes to support infrastructure improvements — such as roads, sidewalks, sewer, water and utilities — can encourage a developer to build in the city because of reduced overheads.
The first project likely to benefit from TIF in Montpelier would be the Bashara family which owns the Capitol Plaza Hotel & Conference Center on State Street and is planning a new Hampton Inn & Suites hotel and garage development.
The Bashara family has a permit to build a $17 million, 81-room, five-story hotel and an adjoining four-story parking garage on 2.8 acres behind the Capitol Plaza. But the family needed help with the cost of the garage and asked the city to partner on the project. To make the hotel project TIF-eligible, it must include a public infrastructure component with a public benefit, such as the garage.
The city agreed to do so but increased the size of the proposed garage from 230 to 350 parking spaces to accommodate the parking needs of both hotels and a proposed nearby housing project by Christ Episcopal Church. It would mean a net increase of 160 spaces in a city that has suffered a perennial parking problem.
But at Thursday’s VEPC meeting, Whitaker asked the council to delay the vote on TIF status for Montpelier to allow more time for a public review of the parking garage. Whitaker claimed the city had taken “shortcuts” in public debate of the parking garage component in its rush to ask voters to approve a $10 million bond for the garage in the November midterm elections. Whitaker also criticized the city for helping to fund a private development at taxpayer expense, and said the Joint Fiscal Office and State Auditor Doug Hoffer had both recently questioned whether developers would not build “but for” the TIF advantage.
“To have this being driven for private gain of a particular hotelier, who opposed a hotel before, is just wrong,” Whitaker said.
Whitaker also said an adjacent proposed riverside park would be isolated and dominated by the increased size of the garage project.
Whitaker said a better location for a garage would be “the pit,” a parking area between Court and State streets that could still serve both hotels and provide better egress for vehicles. Nor had there been consideration of other transportation initiatives, such as satellite parking and light passenger rail service in the region, he added.
Fraser acknowledged the city had revised the size of the garage and reached a “tentative agreement” with the Bashara family on the project. The City Council had voted 6-1 to approve the garage project, which is still subject to a successful bond vote in November, he added.
Fraser disputed there had been shortcuts in the process, noting there had been numerous council discussions about the garage.
Fraser also noted that the Thursday hearing was called specifically to consider the city’s request for TIF approval.
The city’s financial prospectus of the proposed garage covering the cost of the bond through TIF, lease arrangements with the Bashara family and other prospective tenants, and revenue from public parking were found to be acceptable, said Ken Jones, senior research analyst with the Agency of Commerce and Community Development.
“The revenue numbers are sufficient to provide for the repayment of the bond and for the operating expenses of the garage,” he said.
The TIF approval includes four conditions: The city must annually report job creation related to the project; the city should seek other non-TIF revenue funding such as state and federal grants, impact fees and parking revenue mechanisms; TIF funds will only support infrastructure improvements for private development in the high-density portion of Sabin’s Pasture; and the city must report any significant increase in the cost of the intersection upgrade at Main and Barre streets to accommodate a new recreation path associated with the Taylor Street transit center and housing complex. The city agreed to the conditions.
Speaking after the TIF designation was approved, City Manager Fraser praised the work of city staff and consultants, adding, “We appreciate their consideration. This has obviously been a big initiative for the city. This will be a big moment for our economic development initiatives.”
Montpelier Mayor Anne Watson and hotel developer Fred Bashara also welcome the TIF approval.
“This is a huge milestone for us,” Watson said. “I’m so grateful to have this tool to leverage re-development and better use Montpelier’s limited space.”
Fred Bashara Jr. added: “The family is happy and very, very excited that it went through. (The city) is not doing this for me alone; they’re doing it for the entire city, merchants and business people, (and) people traveling into the city.”
A public forum to discuss the garage project will be held at City Hall at 6:30 p.m. Wednesday.