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Newport to consider tax increment financing to fund downtown development

Newport Explores Tax Increment Financing to Revitalize Downtown Core

By [Your Name], Staff Journalist

NEWPORT, Vt. — In a bold move aimed at breathing new life into its historic downtown, the city of Newport is actively considering the implementation of a Tax Increment Financing (TIF) district to fund much-needed development projects. This initiative, discussed at a recent city council meeting, could mark a significant turning point for the community, which has long grappled with economic stagnation and the challenges of rural revitalization in Vermont's Northeast Kingdom.

Tax Increment Financing, commonly known as TIF, is a public financing method that allows municipalities to capture the increased property tax revenues generated by development within a designated district and reinvest those funds back into infrastructure, public improvements, and economic development projects. Unlike traditional taxes that flow into general funds, TIF earmarks the "increment" — the difference between the base property value before development and the enhanced value after — for specific uses within the district. This tool has been successfully employed in various Vermont communities, such as Burlington and Montpelier, to spur growth without immediately burdening existing taxpayers.

The proposal in Newport comes at a time when the city is seeking innovative ways to address its downtown's decline. Once a bustling hub for trade and tourism, thanks to its proximity to Lake Memphremagog and the Canadian border, Newport's Main Street has seen better days. Empty storefronts, aging infrastructure, and a shrinking population have plagued the area, exacerbated by the economic fallout from the COVID-19 pandemic and broader shifts in retail and manufacturing. Local officials believe that a TIF district could provide the financial catalyst needed to attract private investment, create jobs, and enhance the quality of life for residents.

At the heart of the discussion is a comprehensive plan outlined by city planners and economic development experts. The proposed TIF district would encompass a core area of downtown Newport, including Main Street, parts of Bluff Road, and adjacent blocks. Initial projects under consideration include the renovation of historic buildings for mixed-use purposes, such as retail spaces on the ground floor with affordable housing above; improvements to public spaces like parks and waterfront access; and infrastructure upgrades, including better sidewalks, lighting, and utilities to support new businesses.

City Manager Laura Dolgin, a key proponent of the TIF initiative, emphasized its potential during the council meeting. "Newport has incredible assets — our natural beauty, our community spirit, and our strategic location," Dolgin said. "But we've been held back by a lack of funding for catalytic projects. TIF allows us to leverage future growth to pay for today's improvements, creating a virtuous cycle of investment and prosperity." Dolgin pointed to successful TIF districts in other Vermont towns, like Winooski, where similar financing has led to vibrant commercial corridors and increased tourism.

The mechanics of TIF in Newport would involve establishing a baseline assessment of property values in the district. Any increase in those values due to development would generate incremental tax revenues, which could be bonded against to fund upfront costs. For instance, if a derelict building is redeveloped into a boutique hotel or artisanal market, the resulting rise in property taxes would be funneled back into the district rather than the city's general fund. This approach ensures that the funding is self-sustaining, with the increment typically captured for a set period, often 20 years, after which the full tax revenues revert to the municipality.

Supporters of the plan argue that it's essential for Newport's survival in a competitive economic landscape. The Northeast Kingdom has faced persistent challenges, including high unemployment rates and outmigration of young people. According to recent data from the Vermont Department of Labor, Orleans County's unemployment rate hovers around 4.5%, higher than the state average, with many residents commuting to larger cities for work. A revitalized downtown could create local job opportunities in sectors like hospitality, retail, and small manufacturing. Moreover, enhancing the waterfront and cultural amenities could boost tourism, drawing visitors from nearby Montreal and Boston who seek authentic Vermont experiences.

Local business owners have voiced enthusiasm for the proposal. Sarah Jenkins, owner of a Main Street café, shared her perspective: "We've been struggling to keep the lights on with foot traffic down. If TIF brings in new shops, events, and visitors, it could be a game-changer. Imagine a thriving farmers' market or outdoor concerts by the lake — that's the Newport we all want." Jenkins is part of a coalition of downtown merchants who have petitioned the city council to move forward with the TIF application, which would require approval from the Vermont Economic Progress Council (VEPC), the state body overseeing TIF districts.

However, the proposal is not without its critics. Some residents worry about the long-term implications of diverting tax revenues, even if it's from future increments. Longtime Newport resident Tom Hargrove expressed concerns at the meeting: "What happens if the development doesn't pan out? We're essentially borrowing against hypotheticals. And who benefits — big developers or the average taxpayer?" Hargrove's sentiments echo broader debates about TIF nationwide, where detractors argue it can lead to gentrification, displace low-income residents, or fail to deliver promised economic benefits if projects underperform.

To address these concerns, city officials have committed to a transparent process, including public hearings and impact studies. A feasibility study commissioned by the city estimates that the TIF district could generate up to $5 million in incremental revenues over the first decade, funding projects worth double that through bonding. This could include green initiatives, such as energy-efficient building retrofits, aligning with Vermont's climate goals. Additionally, the plan incorporates safeguards like affordability requirements for new housing to prevent displacement.

Newport's exploration of TIF is part of a larger trend in Vermont, where rural communities are turning to creative financing to combat depopulation and economic decline. The state legislature has supported TIF expansions in recent years, recognizing its role in fostering sustainable growth. For example, the town of Bennington used TIF to revitalize its Putnam Block, transforming a blighted area into a mixed-use development that now houses offices, residences, and cultural spaces. Newport aims to replicate such successes, tailoring the model to its unique lakeside identity.

As the city moves forward, the next steps involve drafting a formal TIF plan for submission to the VEPC. This will include detailed projections, community input sessions, and environmental assessments. If approved, implementation could begin as early as next year, with initial projects breaking ground shortly thereafter.

The debate over TIF in Newport underscores a fundamental question facing many small towns: How to balance innovation with fiscal responsibility in pursuit of renewal? For a community like Newport, nestled in the scenic hills of Vermont, the answer could lie in harnessing tools like TIF to unlock its potential. Residents and leaders alike are hopeful that this initiative will not only fund development but also reignite the spirit of a town ready for its next chapter.

In the coming months, as public forums continue, the conversation will likely intensify. Proponents see TIF as a lifeline, a way to invest in the future without raising taxes today. Skeptics demand assurances that benefits will be equitably distributed. Whatever the outcome, Newport's consideration of TIF highlights the ingenuity required to thrive in Vermont's evolving economic landscape.

Expanding on the historical context, Newport's downtown has roots dating back to the 19th century, when it served as a key railroad junction and lumber hub. The decline began in the mid-20th century with the shift away from rail transport and the closure of major employers. Efforts to revive the area have included past grants for facade improvements and cultural festivals, but these have been piecemeal. TIF represents a more systemic approach, potentially integrating with state programs like the Vermont Downtown Action Team grants.

Economically, the impact could be profound. A study by the Northeast Kingdom Collaborative projects that successful downtown revitalization could add hundreds of jobs and millions in annual revenue. This aligns with Governor Phil Scott's emphasis on rural economic development, as outlined in his administration's priorities.

Community engagement is crucial. The city has launched an online portal for feedback, encouraging residents to share ideas for projects. Suggestions range from a community arts center to enhanced bike paths connecting downtown to the lakefront. Youth groups, including students from North Country Union High School, have advocated for spaces that cater to younger demographics, such as co-working hubs for remote workers.

Challenges remain, including securing private partnerships. Developers like those from the Vermont Rural Ventures have expressed interest, but they seek assurances of TIF support to mitigate risks. Environmental considerations, given the proximity to Lake Memphremagog, will also play a role, with plans incorporating sustainable practices to protect water quality.

Ultimately, Newport's TIF pursuit is a testament to resilience. As one council member put it, "We're not just building buildings; we're building a future." Whether this vision materializes will depend on collaboration, careful planning, and the community's collective will. For now, the city stands at a crossroads, poised to transform its downtown into a beacon of progress in the Green Mountain State.

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