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On December 14, the Moran development team presented to the
City Council a financing plan for the Moran project, during a
special two-hour Council work session. While the plan will
continue to evolve over time, the major components are now
established. Importantly, the City’s share of the Moran project
is financed with no increases in property tax rates.
This page includes all of the materials that were handed-out
during the December 14 City Council work session, as well as
some additional information regarding the project’s financing.
Many of
the documents mentioned are posted
in PDF format. If you do not have a copy of
Adobe
Acrobat Reader,
you can
download it now
for free.
Development Budget
The “sources and uses” budget is an overall budget snapshot –
what the funds will be spent on (uses), and where the money will
come from (sources).
Tax Increment Financing (TIF)
Established in Burlington in 1996, TIF is an economic
development tool to finance public infrastructure improvements
that are necessary for private development to occur. TIF is an
important aspect of the Moran project, and will allow the City
to finance some of the public components of the project.
New Markets Tax Credits (NMTC)
Currently the largest economic development program in the
nation, NMTC provides an incentive to invest in qualified
projects such as Moran, in exchange for federal tax credits.
After a seven year “compliance period,” the investment stays in
the project, just as a grant would. NMTCs will bring well over
three million dollars to the Moran project, possibly more.
Brownfields Economic Development Initiative (BEDI) and
Section 108
The City has been awarded a $1 million BEDI grant through the
U.S. Department of Housing and Urban Development (HUD) one of
just seven projects chosen nationally under this highly
competitive program that promotes the redevelopment of abandoned
industrial sites. BEDI grant funds must be used in conjunction
with a HUD “Section 108” federally-guaranteed loan, which is a
financing tool for cities to invest in economic development
projects. HUD has preliminarily approved a $2 million Section
108 loan for Moran, to be paid back with proceeds from the Tax
Increment Financing district (see above).
Local Funds Spent on Project
To date, the City Council has appropriated $215,856 from the
general fund and $305,000 from the capital budget (for
maintenance of city
facilities), plus we have spent an additional $27,687 from the
general fund on miscellaneous costs (mostly property maintenance
and costs associated with soliciting public input). Two-thirds of that amount will be reimbursed by
the tenants if the project moves to construction. The
expenditure of these local funds have enabled the City to
progress through the schematic and design development phases of
the project, and has leveraged significant federal and state
grants for other predevelopment activities, including
environmental clean-up of the site. The City is allowed to use up to 25% of
its BEDI grant
and Section 108 funds for additional predevelopment expenses – which is expected
to cover all or most costs until a decision is made whether to
close on the deal and commence construction.
Questions about the financing plan? Please contact
Kirsten Merriman Shapiro at kmerriman@ci.burlington.vt.us.
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