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State audits special tax district in Hartford

Valley News Staff Writer
Published: 1/3/2021 8:58:11 PM
Modified: 1/4/2021 7:53:41 AM

WHITE RIVER JUNCTION – The town of Hartford appears to be managing its special tax district to spur development in downtown White River Junction well, though it inadvertently underpaid the state Education Fund because of a mapping error, according to the State Auditor’s Office.

A 29-page audit of Hartford’s downtown tax increment financing district found that the town “appropriately” financed $915,666 of so-called TIF district costs from fiscal year 2016 through fiscal year 2019.

That included almost $800,000 in road and streetscape improvements, wastewater upgrades and work on municipal parking lots.

But the town kept “slightly too much” of the tax revenue stemming from the assessed value from the improvements, resulting in an underpayment to the State Education Fund of about $2,175, a small fraction of the taxes paid from the district, according to the audit, which was released on Wednesday.

“These errors occurred because eight parcels were inadvertently excluded when Hartford determined which parcels were within the TIF district boundaries at the time the district was created in 2011. We made recommendations to resolve this matter, including amending the list of parcels that comprise the original taxable value for the TIF,” State Auditor Doug Hoffer said in a cover letter to the audit.

Part of a state-sponsored program to spur development, the White River Junction TIF district was approved by the Vermont Economic Progress Council in 2011, and the town had issued more than $3 million in bonds through FY 2019 for public improvements. Another $5.5 million was approved subsequently, according to the audit report.

In TIF programs, cities and towns can incur debt to make infrastructure upgrades to attract or facilitate new development, then use the increased revenue from the district’s property taxes to pay off the debt, though some of the incremental gains in tax value still have to go to the state Education Fund and municipal coffers.

White River Junction has seen a spurt of development that has benefited from the improvements, including new office buildings on Prospect Street, the Barrette Center for the Arts and The Village at White River Junction senior-living community.

The audit did fault the town on one procedural note regarding the $27 million Village at White River Junction facility, which benefited from TIF improvements to the local sewer system and an extension of Currier Street.

The audit said Hartford reimbursed the developer of The Village for $279,191 in engineering and construction work related to Currier Street improvements. Although the reimbursement had been authorized by the Selectboard and by voters, the town “did not have a documented agreement that addressed the types of costs and total dollar amount to be reimbursed,” even though town policy says they generally should be obtained for procurements greater than $20,000, the audit said.

In a Dec. 21 letter responding to the findings and included in the audit report, interim Town Manager John MacLean and Hartford Director of Planning and Development Lori Hirshfield said the issue did not merit a formal audit finding.

“The town believes it was not outside the bounds of the Town’s Purchasing Policy as this was a reimbursement not requiring a procurement process,” they wrote.

Under state law, this was the first of three audits by the State Auditor’s Office to be done during the course of the tax district’s expected 20-year lifecycle. Asked to assess how Hartford has done with the TIF district, Hoffer said via email on Thursday that, “Overall, Hartford has done a good job” and that the reimbursement issue “is a matter of internal control but does not represent a serious flaw in the administration of the TIF district.”

Hartford can issue TIF debt through March 2024 and retain some of the incremental gains through fiscal year 2034.

More broadly, Hoffer said he had “mixed feelings” about TIF districts, which are being used in a number of Vermont communities. (Claremont has benefited from a similar TIF program in New Hampshire).

“Everyone acknowledges the value of promoting growth in our downtowns, but two issues are worthy of consideration,” Hoffer said. One is whether the new development would occur anyway, without the infrastructure investments funded by the TIF program.

And his other concern is that the TIF program “effectively treats the Education Fund as a bank.”

“The Ed Fund increment withheld by TIF towns (now about $6 million per year) represents lost revenue that must be paid by non-TIF towns,” said Hoffer, a Democrat first elected in 2012. “It’s complicated.”

 News staff writer John P. Gregg can be reached at jgregg@vnews.com.




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