[T]he capital city is eyeing new development projects, including the construction of a 348-space parking garage in the city’s downtown, following state approval for a Tax Increment Financing district.
Montpelier City Manager Bill Fraser said a new parking garage next to the Capitol Plaza Hotel and a new Hilton-family Hampton Inn and Suites behind the current hotel are the only developments taking advantage of the TIF district at this point.
“We’ve reached out to other people but that is as far as we’ve gone,” Fraser said.
A TIF designation, which is approved by the Vermont Economic Progress Council board, allows a city to use the additional local tax revenue generated by new private development to help fund public infrastructure, like road improvements, parking or upgrades to sewer systems, that are provided to spur a particular development. Voters must authorize municipal TIF “bonds” to finance the construction.
Montpelier’s TIF district will only include the city’s downtown core and the Barre Street corridor.
The Montpelier City Council hopes there will be a ballot question to approve the TIF bond for the garage on Nov. 6.
Barre, St. Albans, Hartford, Burlington and other cities in Vermont are using TIF to leverage private investments.
Fred Bashara, the owner of the Capitol Plaza Hotel, has been planning to build the new Hampton Inn at the site behind the Capitol Plaza for almost a year, but he said the development hinges on the city approving and paying for the parking garage.
“If the bond doesn’t go through, we will not be able to build the hotel,” Bashara said.
But some are concerned that this is nothing more than a financial handout taken from the state’s education fund to incentivize private development and that it can be abused by private enterprises.
Bashara said it’s important for voters to realize the hotel is paying its fair share of the costs for the garage and that the funding is not coming out of residents’ pockets.
The hotel plans to enter into a 30-year contract with the city to rent 200 spaces from the parking garage for $300,000 per year, or $9 million over the life of the contract, according to Bashara.
This would allot about 160 parking spaces to the city.
Bashara also said he has donated the land where the garage will be located to the city — he estimated the cost of the land at $500,000 — and the remaining parking spaces at street level have been given to the city, with the plan for those to be metered parking.
“We aren’t getting a free ride. We are paying our fair share, if not more,” Bashara said. “Economically it’s good for everybody. You’ll always have the naysayer who says they don’t need it, they don’t want it. But I can’t help that.”
The city is discussing other possible TIF projects, including water and sewer improvements and extensions down Barre Street to serve potential housing developments at the 100-acre Sabin’s Pasture property.
The TIF district approval comes just weeks after Caledonia Spirits announced it had broken ground on its site for a new distillery and visitors center on Barre Street, just across from the open Sabin’s Pasture property.
Though Caledonia Spirits did not receive any TIF funding, the City Council had unanimously approved $466,700 in spending for several infrastructure improvements to the proposed building site for the new distillery.
Sabin’s Pasture has been the subject of public debate over its use for years. In August, Montpelier Mayor Anne Watson said zoning had been revised to open up housing development possibilities on the area of the property close to Barre Street to address the city’s housing shortage.
Watson said that Montpelier’s approval as a TIF district has the ability to create projects in the city which have been discussed for years but have seen little action taken.
“This is very exciting,” Watson said, “the fact that this is opening up possibilities where they didn’t exist before. The city has been talking about development in these areas for quite some time and I would love to see some movement on it.”
Former Barre mayor Thomas Lauzon, who saw Barre get approved for a TIF district during his time in city government, said he is excited for Montpelier and that critics who complain about taking money from the education fund have a short-sighted view of the financial situation.
“I know there are those in the Legislature who lament that some of the education fund goes back to the municipality to pay for the infrastructure, but that is really short-range thinking. Over the long term, the payback to the municipality and the state is huge,” Lauzon said.
Lauzon owns the old Gulf gas station on State Street, in Montpelier, and has been working with the City Council to get permits to demolish and rebuild on the property.
Lauzon said his project is not contingent on TIF money and that the only way he might take advantage of it would be from leasing parking garage space from the city.
Lauzon believes downtown Montpelier is perfect for additional development, if city residents decide to support TIF spending.
“I never realized how great development possibilities are in Montpelier,” Lauzon said. “They are having this robust community discussion about the community spaces. If they do it, I think they will be glad, but only if they start to develop the downtown with more housing.”
Public comment on the parking garage project continues to discuss the structure’s facade as well as the parking layout. Watson said she plans to create small working groups to continue discussing the structure in the coming weeks.