Earlier Audit Found Numerous Errors in the City’s Administration of the District, Including Some that Shortchanged the Education Fund, and Areas Needing Clarification from the Vermont Economic Progress Council and the Legislature
Vermont Business Magazine State Auditor Doug Hoffer released a follow up report today of the audit his office completed in 2023 of Burlington’s Waterfront TIF district. That audit found that administrative complexity, staff turnover, and poor recordkeeping had contributed to the City making millions of dollars in mistakes, resulting in the need to send nearly $200,000 to Vermont’s Education Fund.
TIF districts allow municipalities to designate an area for public infrastructure improvements, incur debt to pay for the work, and use a portion of the area’s property tax revenue growth, which would normally pay for education, to pay back the debt. During the last decade, the City has issued nearly $16 million of bonds for public improvements in the Waterfront TIF such as the Moran Frame, Waterfront Access North, Bike Path, and Waterfront Park projects.
Hoffer said: “The complexity of TIF districts, which ties the financing of municipal economic development projects to the Education Fund, proved so challenging that the best efforts of City staff couldn’t prevent millions in errors. I’m glad to see that the City has adopted a number of our recommendations, but I am concerned that they have not committed to making the Education Fund completely whole. Property taxpayers across Vermont are owed that money.”
The City has implemented or partially implemented ten of the Auditor’s thirteen recommendations, making numerous transfers of funds to the appropriate accounts and improving record-keeping.
However, one particularly significant recommendation to the City and several to the Legislature yet to be adopted:
- The City has been unwilling to send $113,724 to the Education Fund, arguing that their underpayment to the Education Fund was due to programming errors made by NEMRC, a firm that records all land parcels for Vermont. However, the Tax Department has determined that Burlington is responsible for paying what they owe to the Education Fund. The City should not benefit from NEMRC’s mistakes.
- The Legislature has not adopted three recommendations intended to address issues found in the Waterfront TIF audit which could also help protect property taxpayers in future TIF audits. Specifically, they have not clarified in statute when noncompliance with public information and public vote procedural requirements could invalidate a vote or require a municipality to take steps to correct deficiencies. Burlington had not complied with all requirements. In addition, the Legislature has not clarified whether excess education tax increment must be sent to the Education Fund at the end of FY25 (the end of most areas of the TIF District), nor the percent of tax increment that may be kept by the City for the three properties that comprise the City Center improvement project for which the Legislature authorized an extension until 2035.
Hoffer added: “Tax increment financing is not just an economic development tool; it is basically a contract between the TIF municipality and all other property tax payers in Vermont. In exchange for the right to withhold funds from the Education Fund, the municipality agrees to follow the law and the rules. When there is a gray area, it’s critical that the Legislature step in to clarify. The three recommendations we made to the Legislature still need clarification and I hope they’ll address them come January.”
A copy of the original audit can be found here.
Source: 1.6.2025. MONTPELIER, VT – State Auditor Doug Hoffer
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