When Eric Farrell started building the Cambrian Rise housing project in 2016 on the former Burlington College campus, he expected to develop more than 1,000 apartments within 10 years.
Farrell has completed just over half of that goal: He’s erected buildings and also rehabbed a former orphanage along North Avenue, creating 567 apartments so far. But he says rising costs for materials, labor and loans have slowed the work.
Farrell hopes a proposed financing tool for developers will help him complete the roads and other infrastructure he says he needs to build the rest of the apartment complex. Lawmakers are considering a plan to allow tax increment financing, or TIF, that would use a share of property tax revenue to repay builders who borrow money to construct water, sewer, parking and other infrastructure.
Farrell said a TIF program such as one proposed by a new statewide nonprofit group called Let’s Build Homes would save him money on his projects and that he’d pass the savings on to renters.
“There is probably housing that won’t get built if you don’t have these tools,” he said.
TIF was created in the 1980s in Vermont to spur real estate development by allowing cities and towns to sell bonds to pay for water, sewer and other infrastructure up front. In theory, the projects funded this way add to the property tax base, and TIFs allow municipalities to use a portion of the resulting increased taxes to pay off the bonds. The CityPlace housing development in downtown Burlington, for instance, involves some TIF funding.
In the past few years, housing advocates have pushed for legislation that would enable scaled-down “project-based” TIF programs, but the idea has never gained much traction in the Statehouse.
The idea is back this year, with a couple of twists: The developers themselves, not necessarily municipalities, would be able to borrow money to pay for infrastructure such as roads and sidewalks. And while existing TIF districts are large and can fund many projects, the concept is to set up small, project-specific ones.
Backers are pitching the proposed smaller TIFs as helpful for developers outside Chittenden County, where little market-rate construction is under way. Despite years of attention in the Statehouse and the allocation of hundreds of millions of dollars for housing programs, construction still isn’t keeping up with demand. The reason, builders say, is rising construction costs.
“Most projects don’t pencil out without a subsidy.” Jonah Richard
Fairlee developer Jonah Richard has tapped into several state and federal programs to build affordable and market-rate housing around his Connecticut River Valley town. Richard runs Réal Hazen Construction, which has 16 full-time workers, and he blogs and testifies in the Statehouse about the expense of building in Vermont. It’s difficult to construct apartments that local people can afford, he said, even though Dartmouth Hitchcock Medical Center, just 25 minutes away, has a well-paid workforce.
“Most projects don’t pencil out without a subsidy,” Richard said.
Developers are pushing a slew of proposals in the Statehouse this year. Having tackled some of the big obstacles to construction — such as zoning and permitting reform — over the past several years, housing advocates are taking aim at the cost of putting in water, sewer, roads and other infrastructure.
Early in the session, Gov. Phil Scott introduced his version of a small TIF program, aimed at helping small developers such as Richard by letting towns build infrastructure to benefit housing developers. Around the same time, Let’s Build Homes announced its own proposals, including a small, housing-focused TIF initiative. Richard is a Let’s Build Homes board member.
Last week, lawmakers started talking about how to roll those ideas, and others, into a bill aimed at speeding up home construction.
The Senate Committee on Economic Development, Housing and General Affairs is aiming to create a housing bill by mid-March that includes project-based TIF plans, money for home renovations and construction, and other measures.
House lawmakers will then take up the bill. Rep. Marc Mihaly (D-Calais), chair of the House Committee on General and Housing, thinks a new, streamlined TIF program has a good chance of winning approval — even from lawmakers who have been skeptical of the proposal in the past.
Mihaly, a former dean of Vermont Law School, cofounded Shute, Mihaly & Weinberger, an environmental law firm, and has represented municipalities in their deals with developers. He doesn’t see TIF as a handout to builders.
“It helps reduce the cost of the development to the point where it will happen,” Mihaly said. He expects the housing bill this year to contain elements of the governor’s plan and the one from Let’s Build Homes.
“I am confident we will produce a final bill that has a project-specific TIF in it,” he said.
Many lawmakers declined to comment on the TIF proposals, saying they want to see a bill with the details first.
But State Auditor Doug Hoffer, a longtime and fierce critic of TIF, did not hold back. He outlined his concerns in a memo last week to the Senate Committee on Economic Development, Housing and General Affairs. Hoffer said his own audits of large-scale TIF districts show that their complicated funding schemes lead to accounting errors. He further recommended that lawmakers review analyses by the legislature’s nonpartisan Joint Fiscal Office, which has concluded that TIF projects have eroded revenue for the state’s education fund. Bringing education costs under control is a central goal of the Scott administration and lawmakers this year.
“We already have a lot of programs and entities that do housing,” Hoffer said in an interview, reeling off some examples, including the Vermont Housing Conservation Board and regional affordable housing agencies.
“We have a bunch of nonprofits that do a damned good job. We have federal and state tax credits that are helpful to a lot of developers. I am just wondering why we have to borrow from the ed fund to do more housing,” Hoffer said.
Let’s Build Homes counters anti-TIF arguments in its presentations, saying that because its proposal is specifically aimed at housing, it would benefit the public.
Under the Let’s Build Homes plan, qualifying projects would have to devote at least half of their floor space to housing and be built in developed areas to prevent sprawl.
Farrell’s project in Burlington includes some affordable housing, including apartments managed by the nonprofit developer Champlain Housing Trust that are slated to open next year. That satisfies Burlington’s requirement that new market-rate housing projects include a component of affordable housing. But Farrell’s buildings at Cambrian Rise are built for profit, and a one-bedroom apartment there rents for as much as $2,300 per month.
Farrell noted that the infrastructure built there by a new TIF program would belong to the city, not to him.
Sen. Alison Clarkson (D-Windsor), chair of the Senate Committee on Economic Development, Housing and General Affairs, said last Friday that she sees the new measures under discussion as tools very different from traditional TIF programs. She added that using public financing to create infrastructure for developers would benefit all Vermonters by easing the housing crisis.
“Housing is a public good,” Clarkson said.
The original print version of this article was headlined “Dollars for Developers | Housing builders want assistance to pay for infrastructure such as streets. Will it happen?”
This article appears in Mar 5-11, 2025.
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