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The purpose of the Allocation Plan is to set forth the process
and criteria under which specific economic development projects will be selected
to receive allocations of federal commercial revitalization tax deductions. The
federal commercial revitalization tax deductions are available in 2002 through
2009 by reason of Burlington's federal designation as a Renewal Community.
In accordance with the requirements of the Community Renewal Act of 2000,
this Allocation Plan describes the application and allocation decision-making
process.
As part of the Community Renewal Act of 2000, Congress authorized
that up to 40 communities could be designated as Renewal Communities. When
Congress set the rules for the competition, it indicated that the areas
designated would be based on 1990 Census information; only Census tracts that
met minimum 1990 poverty and unemployment rates could only be nominated. Four
census tracts in Burlington were qualified under these rules. As a result, the
State of Vermont and the City of Burlington nominated Census tracts 3,4,5,and10
(Downtown and the Old North End) to be designated as a Renewal Community.
The Commercial Revitalization Deduction (CRD) allows a taxpayer who
constructs or substantially rehabilitates a qualified building in the Renewal
Community and who receives an allocation under this Plan to choose to treat
qualified revitalization expenses by either:
a) Deducting half of those expenses for the tax year the building is placed
in service; or
b) Amortizing all those expenses ratably over a 120-month period beginning
with the month the building is placed in service.
The Renewal Community tax incentives are available January 1, 2002 through
December 31, 2009. The designation generally remains in effect until December
31, 2009. The CRD is available to buildings placed in service by December 31,
2009.
The Allocation Plan is approved by the Mayor of the City of
Burlington.
The Community & Economic Development Office of the City (CEDO) has the
administrative responsibility and authority for the Commercial Revitalization
Deduction Program (CRDP), including the development of the City of Burlington's
Allocation Plan. CEDO is also charged with the responsibility of monitoring the
compliance of the Program.
The Commercial Revitalization Deduction Allocation Committee (CRD-AC) was
established to allocate Commercial Revitalization Deductions to specific
projects in accordance with the Allocation Plan.
The CRD-AC is comprised of the Director of the Community and Economic
Development Office or his or her designee, the City Treasurer or his or her
designee, and the City Attorney or his or her designee.
Burlington's Commercial Revitalization Deduction Program
is designed to stimulate growth and development in the Renewal Community. The
primary objectives of the Commercial Revitalization Deduction Program is to:
1. Revitalize and improve the Renewal Community. 2. Enhance permanent
full-time employment opportunities within the Renewal Community and the
surrounding region. 3. Preserve and enhance the tax base for the City of
Burlington. 4. Promote high density commercial and housing development in the
commercial center.
The development of this Allocation Plan is principally guided by:
1. The requirements of the law; and 2. The degree to which the projects are
in compliance with current City plans, including: a. The Consolidated Plan For
Housing And Community Development; b. Renewal Community Course of Action; c.
Municipal Development Plan; d. Waterfront Urban Renewal Plan; and e. The Legacy
Plan.
The City of Burlington's Community and Economic
Development Office (CEDO) will act as a clearinghouse and coordinate all
activity regarding the Renewal Community's Commercial Revitalization Deduction
Program.
The City is authorized under federal law to allocate up to $12 million in
CRD's annually. The City will make allocations annually on a calendar year
basis. Allocations can be made to projects that have been placed in service
between January 1, 2002 and December 31, 2009.
Parties interested in applying for CRDs must first
submit a Letter of Intent to CEDO. The form of this letter and the timing for
its submission will be published by CEDO to initiate the application round. The
letter will include the following:
1. Project Name
2. Location
3. Uses
4. Occupancy Date
5. Proposed Sources of Financing
6. Evidence of Site Control
7. Taxpayer identification number of the taxpayer receiving the allocation
The purpose of this pre-application phase will be for CEDO to identify the
amount of deductions being sought and accompanying issues early on in the
process.
CEDO will notify applicants as quickly as possible if additional information
is required.
CEDO will initiate application rounds by public notice and
by individual notice to each party who has submitted a Letter of Intent.
Completed Applications must be submitted by the published deadline date.
After reviewing all timely Applications, the CRD-AC may:
1. Award a CRD allocation from the current year's annual $12 million
Commercial Revitalization expenditure ceiling;
2. Issue a binding commitment to
award a CRD allocation to such project beginning in a later specified taxable
year; or
3. Make a reservation of a CRD allocation from the current and/or
future year's annual Commercial Revitalization expenditure ceiling.
A reservation is not a binding commitment for an allocation. The CRD-AC will
review the reservation at least annually based on information provided by the
applicant. The CRD-AC shall retain authority to revise or retract a reservation
if it is subsequently judged infeasible for the applicant to meet any of the
conditions set forth in the reservation; or if financial information provided by
the applicant indicates, in the opinion of the CRD-AC, that a lesser or greater
amount of tax deduction allocation is needed for project feasibility; or if
there is an substantial change in the project meeting the threshold
requirements, readiness criteria and/or evaluation criteria.
The CRD-AC will make awards and reservations based on:
1. The threshold requirements, readiness criteria and evaluation criteria;
and
2. The desired outcome of allocating the entire amount of the annual
Commercial Revitalization expenditure ceiling for each year of the Renewal
Community designation.
The CRD-AC reserves the right to issue less than the maximum deduction
allocation award or reservation otherwise supportable by the project's eligible
basis.
An applicant must meet the following basic threshold
requirements:
1. The applicant has established the need and demand (i.e. market
feasibility) for the type and cost of the project that is being proposed
preferably by a disinterested party, at the developer's expense.
2. The applicant must demonstrate the capacity to undertake the development
as proposed either through its own experience and capacity or through the use of
experienced consultants.
3. The applicant must provide justification that the CRD is economically
necessary in order for the project to be undertaken.
4. The Project is in compliance with current City plans.
The development must meet a "readiness to
proceed" threshold in order to ensure that the project will utilize the
allocation of the CRD in a timely way. Projects will be evaluated on both
permitting and funding readiness. Projects can demonstrate "readiness to
proceed" with a site plan, preliminary plat, or conditional use approval in
hand. Financial capability to undertake project must be evidenced, including
evidence of financial readiness.
Other indicators for readiness are that the project is supported by a sound
business plan and that the business has sound finances with a history of
operating profits and financial solvency. Detailed project financial
documentation may be required at various stages.
Applicants must meet the threshold requirements and the
readiness to proceed criteria as outlined above, and will be evaluated on the
threshold requirements and readiness criteria.
In addition, the project will be evaluated as follows:
1. Enhances the tax base for the City of Burlington.
2.
Creates long-term, permanent employment.
3. Retains existing jobs that would
otherwise be lost.
4. Meets or exceeds the prevailing compensation level
including wages and benefits for the particular employment sector.
5. Provides a
needed community service or product that will be beneficial to the City, its
neighborhoods and citizens.
6. Provides training of low and moderate-income
individuals.
7. Creates other public benefits, such as access to open space,
public parking, or other community facilities.
8. Restores a historic building
listed on the federal or state historic registry.
9. Restores or removes a
vacant or blighted building(s) especially if it has been vacant or substantially
vacant for over three years.
10. Demonstrates support from the community and
active involvement of residents and nonprofit groups within the Renewal
Community.
1. Restores a building located in an historic district.
2. Supports a locally-owned and controlled business.
3. Restores a building
located on a main artery and is highly visible.
4. Demonstrates that the
business is socially responsible i.e., gives back to the community financially,
has innovative employee benefit programs etc.
5. The project has funds invested
from Vermont based individuals or institutions.
Notwithstanding compliance with any and
all of the Allocation Plan, the reservation and allocation of CRD's is a choice
of the City of Burlington and is made on a case-by-case basis.
CRD's are not a right under Vermont Law or City
ordinance and meeting these Criteria does not create a right or an entitlement
for any applicant.
Each project is limited to no more than than an aggregate
total of $10 million in CRDs. In addition, the CRD-AC will attempt to balance
the need for CRD's on an annual basis, and as a result may decide to reserve and
allocate less than requested by an applicant.
Any significant change in a proposal, once it has been
ranked and awarded a CRD reservation, will jeopardize the CRD reservation. CEDO,
in consultation with the CRD-AC, can change the reservation for the project. Any
change that might have resulted in the project receiving a different ranking
will be considered significant. For guidance purposes, this includes things such
as anything more than a10% reduction in square footage or change to the number
of permanent full-time jobs to be created.
The project must contribute to the
implementation of the Course of Action for the Renewal Community and/or the
current Consolidated Plan for Housing and Community Development and be in
compliance with the Municipal Development Plan and/or the Waterfront Urban
Renewal Plan.
The CRD-AC will also consider the negative impact that
the proposed development may have, and may, at its sole discretion, reject an
application that might have a negative impact on the Renewal Community. For
example, if a development for a newly constructed office building is proposed in
the Renewal Community at a time when there are relatively high office vacancy
rates, the CRD-AC may, at its sole discretion, determine that constructing a new
office building may have a negative impact on the existing office stock (i.e.
vacancy rates may rise, physical conditions may deteriorate further) and,
therefore, may not reserve deductions for the proposed development on this
basis.
1. Costs and Financing: Certifications regarding projected or
actual costs and sources of funds are required at the time the Allocation is
made.
2. Statutory & Regulatory Compliance: Compliance with all statutory and
regulatory guidelines of the federal government, the State of Vermont and the
City of Burlington. The business, developer and/or proposed project shall be
current on all taxes and fees owed to the City of Burlington at the time of
application
3. Provision Of Employment: Provide permanent full time employment preferably
for Renewal Community, and/or Burlington, residents.
The Tax Community Renewal Act of 2000 adopted by
Congress requires that the CRD-AC (or its agent) provide a procedure for
monitoring developments for compliance with the requirements of the law.
In order to implement this responsibility, all Commercial Revitalization
Deduction recipients will be required to continuously comply with applicable
sections of the Internal Revenue Code, and the Treasury Regulations issued
thereunder, and will bind any successors' interest for the specified time
period.
The applicant must provide CEDO with completed monitoring reports for two
years after the project/building(s) are placed in service. The applicant must
certify in the report that the information is true and accurate.
The applicant for CRD's must be the entity
that will own the development. If this is a limited partnership it need not be
legally created when the application is filed, but the identity of all general
partners must be disclosed in the application and the application must be
submitted by at least one legally existing general partner on behalf of the
partnership. CEDO reserves the right throughout the allocation process, to
approve any changes in the identity of the general partners of the Partnership
or such changes to the partnership agreement as CEDO, at its sole discretion.
CEDO requires final cost
certifications for all projects based on the following guidelines:
· For projects less than 10,000 square feet, final cost certifications
prepared by the owner (which include back-up documentation of costs) will be
accepted.
· For projects greater than 10,000 square feet, final cost certification
must be prepared by an independent CPA. If the CPA certification is not possible
prior to the end of the calendar year in which the last building is placed in
service, CEDO will issue Final Tax Allocation Certification based on the basis
of an owner's final cost certification and supporting documentation, but
requires the CPA cost certification to be submitted as soon thereafter as
possible.
CPA prepared cost certifications are recommended for all projects.
Information about the application process and about
allocation awards and reservations will be publicly noticed and widely
distributed to all interested parties. CEDO will report annually to the City
Council on the activity of the Committee and any follow-up monitoring that has
been done.
Amendments to the Allocation Plan can be made at any time by the
Mayor.
All applicants must pay a non-refundable application fee at the time of
submission, as follows:
1. $500 for projects less than 10,000 sf
2. $1,000 for projects
10,001-70,000sf
3. $2,000 for projects 70,001 sf and up.
CEDO will require payment of one percent of the CRD committed at the time the
building is placed in service.
Information on Allocation Plan, Policies, Applications and
Program Administration:
Bruce Seifer, Assistant Director for Economic Development
Community and
Economic Development Office
Voicemail: (802) 865-7179
TTY: (802) 865-7142
Fax: (802) 865-7024
E-Mail: bseifer@ci.burlington.vt.us
Page last updated
April 04, 2008
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