How public-private partnerships transformed a city

Photo: New ski lodge and on going construction of a new pool at Hard'Ack Recreation Area. Photo by Katie Kittell.

by Michelle Monroe, Vermont Business Magazine By just about any measure St Albans City’s economic development strategy has been a success.

In a decade, the city has added $75 million to its tax base, a roughly 60 percent increase, without increasing taxes, according to city manager Dominic Cloud.

The key to that success has been public private partnerships and a tax increment financing (TIF) district.

From the very start of its TIF in 2012, the city did not take the approach of building infrastructure and then hoping businesses would come.

Instead, it targeted its investments when it had agreements with businesses in hand.

The first project was the construction of an Ace Hardware store in the heart of downtown on an underutilized site that was also a brownfield.

The city purchased the site, demolished the existing buildings, cleaned it of pollution and sold it to Ace owner Gordon Winters with an agreement on the minimum assessed value of the building.

The project set the template for those that followed.

“Outside of hot real estate markets…in Vermont you can plan all you want and you can regulate all you want, but you won’t create the vision your community desires,” said Cloud.

By participating directly in the development process in partnership with businesses, municipalities can “tilt the playing field toward your community,” in his view.

Much of that tilting involves addressing barriers to redeveloping in a developed area such as parking and brownfields. “The community removes the obstacles and positions the property,” said Cloud.

In its second project, the city aimed for a trifecta of a new state office building, a new hotel, and, serving them both, a new parking garage. Once again, the city stepped in to buy the land, clear it of pollutants and then sell it to developers. As a bonus, the sale of the former state office building to Mylan Technologies allowed Mylan to expand, bringing a formerly publicly owned building onto the tax rolls.

When the city’s Design Advisory Board balked at the design of the hotel, feeling it wasn’t quite right for downtown, the city invested $1 million from the sale of the land for the new state office building into the hotel, becoming an equity partner. That investment enabled the construction of a building which better fit the community’s vision.

Accompanying the major investments have been streetscape projects aimed at making the downtown more walkable and attractive, while addressing traffic and stormwater issues.

Last year, three new buildings went up in the heart of downtown, directly across from city hall. The first was a commercial building whose second floor will house Community College of Vermont, bringing its St Albans students and faculty from the outskirts of the city into its center.

The other two buildings are both housing, creating 60 new apartments one block from Main Street. One of the buildings is market rate. The other is owned by the Champlain Housing Trust.

Photo: Maiden Lane Apartments, a block from Main Street in St. Albans City, has 32 full market rate apartments in the heart of downtown. It's construction was part of a TIF project. Photo by Katie Kittell.

This summer, the city is completing the last of its streetscape projects, on Kingman Street.

Photo: Kingman Street construction. Photo by Katie Kittell.

The city’s role was the same: purchasing the land, demolishing existing buildings, cleaning up any brownfields and managing the parking.

Next up is another development project, the first outside of the city’s downtown. The former Fonda site, another brownfield where paper cups and plates were once made, is being subdivided into three lots, one of which will become the new home of the American Rail Dispatch Center.

Employing roughly 60 people in high-paying jobs, the center dispatches trains around the world. It is currently located in the building which once housed the Vermont Central Railroad. But the building’s age hasn’t made it an ideal location for a high tech dispatch center. Relocation to another state was a distinct possibility before the city stepped in.

The Fonda site was partially cleared a decade ago with American Recovery and Reinvestment Act funds. Now the city has received American Rescue Plan Act funds to continue the clean-up, as well as a Northern Borders Regional Commission grant for the construction of a road to provide access to the three sites.

Work on the cleanup, which is being paid for with TIF, is scheduled to begin this fall, with construction to follow in the spring, according to Cloud.

The city hopes to retain another major employer by convincing U.S. Citizenship and Immigration Services to relocate to the remaining Fonda lots.

“The tool that makes this all possible is TIF,” said Cloud. “Everything that’s occurred in the last seven years has been talked about for the last 30.”

For those who support smart growth concentrating development in already developed areas, “TIF is the closest thing we have to a silver bullet,” Cloud said.

For those who want to avoid raising taxes, TIF has allowed the city to invest $20 million, generate $75 million in grand list growth, and not raise property taxes on residents. “We’ve done all of that without raising anybody’s tax rate,” he said.

In addition, there must be a public vote before TIF funds are spent. “None of these projects happen without a public vote,” Cloud said.

The momentum gained can extend beyond economic development to community development. City voters have also chosen to support an investment of more than $5 million in replacing neighborhood sidewalks and curbs. Voters also approved a $2 million refurbishment of city hall.

The board of the Hard’ack Recreation Area transferred ownership of the area to the city in 2016 and the city promptly began investing in improvements, including a new ski lodge and a new pool.

The sidewalks, pool and city hall weren’t paid for with TIF funds, but the existence of the TIF likely made those investments possible by creating a sense of possibility and pride in a community that had long been stagnant.