S 296

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1S.296
2 Introduced by Senator Harrison
3 Referred to Committee on
4 Date:
5 Subject: Taxation and finance; education property tax; tax increment
6financing; municipal and county government; indebtedness;
7Community and Housing Infrastructure Program; development
8agreement
9 Statement of purpose of bill as introduced: This bill proposes to require
10 minimum protections for municipalities in development agreements
11 undertaken for projects financed by tax increment financing, including a tax
12 increment guarantee secured to the satisfaction of the municipality.
13    An act relating to development agreements for tax increment financing
14 It is hereby enacted by the General Assembly of the State of Vermont:
15 Sec. 1. 24 V.S.A. § 1902 is added to read:
16 § 1902. DEVELOPMENT AGREEMENT; MUNICIPAL PROTECTIONS
17    (a) Guarantee. A developer for a project financed with tax increment
18 financing shall guarantee in its development agreement with the municipality
19 that the project will generate sufficient tax increment to fund the municipality’s
20 debt service payments on its financing for the project for the duration of the
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1 TIF district or housing development site. If the developer has no assets of its
2 own, the parent company of the developer that owns project assets shall
3 provide the same guarantee.
4    (b) Security. The guarantee shall be secured to the satisfaction of the
5 municipality and may be evidenced by a letter of credit, performance bond,
6 special assessment lien, mortgage, personal or corporate guarantee, or
7 alternative form of security satisfactory to the municipality.
8    (c) Additional protections. A developer for a project financed with tax
9 increment financing shall additionally provide at least one of the following
10 provisions in its development agreement with the municipality:
11(1) a protection for the taxable value of the property subject to
12 development, such as casualty insurance, reconstruction in the event of
13 destruction, or a prohibition on contesting the property’s assessed value;
14(2) a protection to ensure the municipality may proceed with the project
15 on its own in the event of developer failure, such as license or ownership of
16 engineering or architectural plans; or
17(3) an equity position in the developer, such as through a profit-sharing
18 arrangement.
19 Sec. 2. 24 V.S.A. § 1909 is amended to read:
20 § 1909. HOUSING INFRASTRUCTURE AGREEMENT
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1    (a) The housing infrastructure agreement for a housing infrastructure
2 project shall:
3(1) clearly identify the sponsor for the housing infrastructure project;
4(2) clearly identify the developer and the housing development for the
5 housing development site;
6(3) obligate the tax increments retained pursuant to section 1910c of this
7 subchapter for not more than the financing and related costs for the housing
8 infrastructure project;
9(4) provide that any housing unit within the housing development be
10 offered exclusively as a primary residence until all indebtedness for the
11 housing infrastructure project of which the housing development is part has
12 been retired, provided that this condition shall be satisfied by biennially
13 providing a landlord certificate or homestead declaration; and
14(5) provide for performance assurances to reasonably secure the
15 obligations of all parties under the housing infrastructure agreement; and
16(6) comply with the requirements for development agreements pursuant
17 to section 1902 of this title.
18    (b) A municipality shall provide notice of the terms of the housing
19 infrastructure agreement for the municipality’s housing infrastructure project
20 to the legal voters of the municipality and shall provide the same information
21 as set forth in subsection 1910a(e) of this subchapter.
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1 Sec. 3. EFFECTIVE DATE
2   This act shall take effect on passage.
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