BARRE — Mistakes were made on the margins, but a just-completed audit of Barre’s downtown tax increment financing (TIF) district didn’t raise any significant red flags, according to a report released by state Auditor Douglas Hoffer.
That is the top line take-away of what City Clerk Carol Dawes recently joked seemed like a never-ending audit — one required by the Legislature as a means of making sure revenue generated to finance voter-approved public infrastructure projects in communities with TIF districts is being spent as intended.
In Barre, Hoffer’s report concludes, it has been.
The report credits Barre officials with managing the city’s 9-year-old TIF district in accordance with requirements, though there are a couple of caveats.
As consequence of “mistakes,” including at least one that was attributable to timing, the city didn’t retain all of the tax increment to which it was entitled based on development that occurred within its TIF district and paid more than it should have to the school district.
The numbers were not jarring.
A report detailing the audit’s finding indicated the TIF district fund should have retained an additional $36,790 in revenue — virtually all of it because of the inadvertent omission of $1.5 million in incremental value tied to what is now the Community Bank in 2016. That omission, which was caught and corrected, accounted for just more than $47,000 in lost TIF revenue — a figure that was pared to just less than $37,000 as result of much smaller errors that occurred during the next three fiscal years.
The audit also found the city overpaid the school district by $20,962 — a mistake the audit found was tied to the timing of the resolution of a property tax appeal filed by Downstreet Housing and Community Development. The appeal was settled in Downtreet’s favor more than six months after the state used a value that was $2.4 million too high to calculate the city’s education tax liability. As a result the education fund was overpaid by roughly $21,000.
Notwithstanding the inadvertent errors, some of which were easier to explain than others, the audit concluded the city used tax increment and the interest income it generated to make debt service payments on a $2.2 million TIF bond that was approved by Barre voters in 2015 and previously blessed by the Vermont Economic Progress Council (VEPC).
Proceeds from the bond were used to finance redevelopment of Enterprise Alley, property acquisition and development costs associated with a new city-owned parking lot between Keith Avenue and Pearl Street, and property acquisition and construction of a much smaller parking lot on Campbell Place.
The latter project was the result of a substantial change VEPC conditionally approved to the city’s TIF plan at the city’s request in 2013.
According to the audit, the city has thus far retained nearly $690,000 in tax increment and accumulated an additional $47,000 in interest. That money has been used to cover debt service for TIF eligible projects leaving a balance of roughly $41,000 for future use.
The audit recommends the city transfer nearly $37,000 from the general fund to the TIF fund to make up for some of the errors and seek legislative assistance in recovering the $21,000 it overpaid the education fund.
Responding to the audit, the city agreed to make the recommended transfer and to ask local lawmakers to look into recovering money it over paid the state education fund. It also agreed to a pair of procedural and bookkeeping recommendations.
The city has until March 31, 2024, to incur additional voter-approved debt for projects needed to spur redevelopment that would boost the Grand List generating tax increment that would help pay for the improvements.
The only viable project the city could pursue under the plan approved by VEPC is the redevelopment of Merchants Row. The city has retained a consultant to evaluate whether there is another project or projects that could be pursued.
VEPC approval would be required in order to make what would be considered a substantial change to the plan and even if the city decides to pursue the previously planned investment in Merchants Row, it would first need the economic progress council to sign off on the project.