 I bet again. Hi, thank you. Hi. Hi. Thank you. Thank you. Okay. Okay. This is the employee incentive program. And is, I wanted to do just a committee discussion of this one. This one I believe is going to a tropes and I was hoping. Let me see if we've got any documents on this one. And David. I can help. I can help the discussion along. Madam chair. I was hoping we had somewhere a section by section. I thought we did. Do. Where is it? It's on the committee website. Under David Hall. Yes. I'm sorry. I didn't mean to offend you. I was going to amend it. No, that's the bill. And the other one is the side by side of the summary. There it is. Okay. Good. All right. And David should be joining us shortly. Okay. So, madam chair. If I might. Yes. Yeah. You want to. and finance is jurisdiction. We've talked about both of them. They're the many TIFFs or the project based TIFFs and the downtown tax credit. The last time we talked about, and I brought back the conversations from finance to Senate economic development and we've taken a position on some of the discussion that's taken place. So on the easy one, I think, is the downtown tax credit where I think we acknowledge that it's not good timing to be asking for significant increase in the downtown tax credits. They are at 2.6 in statute right now annually. As it came out of our committee, it went up to 4 million. And we did that primarily because the administration wanted to expand the scope of those downtown tax credits to include to be eligible to neighborhoods as well. And we didn't want to dilute the amount of money that was going to downtowns. Nevertheless, they've said, well, the neighborhoods won't use up very much and it's gonna be a phase in. So they didn't think there would be much dilution even though they've never told me they don't want the 4 million, but we're backing off the 4 million. So we're just gonna leave it at 2.6, but I have some language I asked David to draft. As I said, I would last time, just some soft language to bring attention to the money committees that this is a program that is valuable. We're expanding it in scope and if times change, let's say in the bigger budget in September, they might want to look at the larger number, but that's what we're doing there. And on the project-based tips, we feel, we continue to feel very strongly that they're a good economic tool. The administration continues to support that. We feel that the Ed Fund, if anything will improve and these small communities would be eligible for these economic development like the Westford project. So we haven't suggested removal of that section. All the other stuff in the bill, we're gonna strike a bunch of this stuff because they don't make sense appropriation-wise, but we'll tell the Appropriations Committee that. The Committee said that. But there's no, those are the only two things I see in the bill that really are finance-related issues. Okay, I'm glad that, because we've done that downtown tax credit. I think we just went up last year, didn't we? We went up 200,000 last year, yep. Yeah, we've gone up pretty regularly. I would like more information on the tips, I think. Well, we have Megan's, Megan, last time we spoke about it, we asked Megan to sort of price out the Westford thing and show how the money would flow. I think she's- Yeah, it's not the Westford thing, okay? I guess my concern are the towns. We've been talking about Westford and I think I understand they need money to do their match to get their septic systems. Now, there are other ways we could get their money. We used to do grants for water filtration systems, wastewater. City of Montpelier got the last clean water grant from the feds. I think the thing that disturbed me at the end of that was Joan Goldstein talking about her town with 100 users and they couldn't afford to put that in. They got one of the grants because with only 100 users, they couldn't afford to maintain the system. And I think that's one of the concerns. Who's doing the financial counseling for these small towns who may consist of three or four select people that may have absolutely nothing beyond high school math to deal with? They don't have a planning, they have a town clerk who's elected, but not any kind of a... She can do bookkeeping, but not necessarily any advanced finance. Who's doing the counseling to make sure that when they put in that water system that they understand that they're going... Do you have to also have a fund to maintain it? When you get a subsidized mortgage, there is a rigorous home inspection because the banks won't let you, they will not finance a project unless they're sure you have... That there's no known major expenses like a new roof or a bad septic system coming up. And I want to know who's doing that work with the individual towns. I think if I could... Senator Pearson, do you have... I have Senator Pearson to the head of question. Well, I defer to Senator Soraki, but I'd love Megan and Veggie to help us understand this because I would have assumed that was part of the application process. You're raising interesting questions that we should understand the answer to. Yeah, Megan. Megan, you're muted. There you go. Brilliant, so just... Megan Sullivan, executive director of the Vermont Economic Progress Council. That was absolutely a huge concern when we were coming up with this idea. We know that the TIF district program is cumbersome. We know TIF is cumbersome. There's a lot to understand. And narrowing it in scope helps that a lot. When you only have one debt incurrence, you only have one project, but still we know that there's assistance needed, which is why we went to the regional development corporations and the regional planning commissions to talk about what their role could be in assisting the communities on this. And they were certainly supportive and continued to be supportive of this proposal and of their ability to work with communities who may be participating in this. Related costs are allowed in the TIF district program and would be continued to be allowed in this so that towns could have that assistance. I think the other piece is that the annual audits so that we will know quickly if there are issues that are going to be required through this with independent auditors. So we have thought of that. We know that these are going to be communities who at least have the capacity that they have a village center or designated downtown. They already have some structure in place, but if they have a part-time finance person or a full-time planner who does some of the finance that we have other expertise in the region who will be able to assist with making sure the record-keeping is set up, how it needs to be set up, and with the financial piece of the debt service. Section five, because I want to see how that is laid out. Know where that starts in the bill, Michael or Megan? It's section five. I think it's section five in its entirety. Yeah, I know it's section five. I'm looking for the page for section five. Oh, I don't know if Becky might have. Finding things on the Economic Progress Council that may have gone too far. Madam Chair, I think it's page seven. Okay, it is page seven. And is there a reason why you have 15 of these that just seems ever done 15 tips all told? Why do you get 15? Quite frankly, Madam Chair, the administration's proposal, as I recall it, is larger. Okay, this is Economic Development's proposal at this point. Okay, no, I'm saying, let me finish in saying that we brought it down from what had been suggested because we viewed this as a pilot project. It's 15, if I'm not mistaken, it's 15 projects over a five-year period. But they could all happen in one year. I believe it's five per year at most, a limit of five per year. Right, okay. That's in Subjection B, Subsection B. Madam Chair, may I ask Senator Sorokin a quick question? Yes. Senator Sorokin, so what did you hear as the downside of this, of moving in this direction? I think I'm not sure we heard it in my experience both in finance and in economic development. We heard about these administrative hurdles that were barring the small communities from getting into this program. So it's just bigger cities that have qualified. But I think in some ways, because there are some people who don't like TIFFs and feel like projects would be built regardless of the TIFF help. And so therefore the Education Fund is losing some tax revenue. I don't personally necessarily buy into that theory and I buy into it even less for a small community like this. Right, for a small TIFF, yeah. What happens, Senator, to start out with, I like TIFFs. So if I have questions, you have a problem. What happens if the town builds a septic system? And if this works like a TIFF, they're planning on paying their share out of the increased value from the increase in the grand list, is that correct? They would be looking to pay a portion. So this is gap financing because this is smaller because we're only isolating a few parcels. This is really looking at what is the piece of a project that's left that makes it unaffordable for communities. So in the example we have, there is a cost to the users. The user rate goes up, I think it's about $750. There's grant money and what it is they're financing with the increment is that last piece that they can't get over the hurdle of. Right, but the example you gave us said that, there were some guys that might like to build housing sometime, but the example that you had was there was somebody that wanted to put a restaurant, rehab a building downtown, put a restaurant with a couple of apartments. All right, that's an existing building. Is that what if that guy gets COVID and doesn't, is sick and doesn't rehab it? What if nobody, you know, the economy right now is very shaky if we go into a recession or a depression and nothing gets built for five years except the Seward's treatment plan? Who's or how is that town paying that gap financing? So I think on one level there's before towns move forward with infrastructure projects, you know, even if it's ones that they're doing on their own. They tend to have, you know, there's a lot of people that put their heads into when we move forward with something and have some sort of assurity that what they're planning for is going to happen. You know, I think in the situation that we have in Burlington, they have been approved for their debt, but they're not going to incur the debt until they know that this project is moving forward. What situation in Burlington? Well, the city place. So there's an example. They're not coming in for many tips. No, but I'm using that as an example of sort of one project that when the, you don't know what the development is that's coming or you were sure about there are changes. They're not just moving forward with incurring the debt and spending the money anyways. They're being prudent with making sure that the development is happening. And I think with project based tips similarly. I don't think I'd use that as an example because they tore down what was occupied property and now they have a big hole in the center of downtown with no occupied property. And somebody at some point that's somebody's losing money on that. My concern is we've used Westford, right? If they build their septic tank and now do they have a septic tank now and it's little and they need to build a bigger one or is this their original water system? They're building a full system. So they have, all right. So they will put it on. I assume they've got a district, a water district and they've got that all set up. But they're planning on using this TIF from increased development. Right. They're planning on keeping the part that would have been paid to the Ed fund to pay for the gap in the septic system. What happens if that development doesn't happen? The septic system is up. So you gotta pay for it. So we gave the scenario if 50% of the development didn't happen because again, I think saying that that they've been working with developers in order to make this come to fruition and they've outlined three parcels, one parcel which would be subdivided to say that the development on those parcels, all of that development at the same time would go away. You know, I think there would be a lack of due diligence done by MEPSI and the municipality if they went forward with a project and none of the development they were expecting happened. So what we gave was an example of if 50%, if they were expecting a certain level of development and only 50% of it came about, then at the end of the 20 years of making debt payments, the municipality would still need to retain their municipal increment and use municipal funds to pay off the rest of the debt. Sandra Campion. Would you agree, Megan, that this allows communities to be a little bit more tactical with their investments? I think it allows them to be tactical. It opens up new funding sources for them where match is required and they haven't been able to figure out, especially as a small community, how to get that match without raising taxes on their community and a level that would not be supported. And I think that it also opens the door to conversations. Some of the feedback I got from the RPCs was that these conversations around planning and communities often are hard. There's a hard start to them because people immediately say, well, we can't, if we don't know where the money's coming from, if we can't pay for it, how can we even discuss this? And knowing that there are going to be tools in the toolbox for communities to use to potentially say, what is it that we want for our village center? What do we want our village center to look like? Can we find the right partners to help us get there? And what do we need to do in the public part of the public-private partnership to get us there? And knowing that this tool can help leverage funds and close the gap, I think is an important piece in starting those conversations. Yeah, so what I have here from somebody in my community, I have a lot of respect for, also in addition to allowing folks to be tactical with their investments, but also to present the state with a specific project in compelling momentum instead of simple district boundary optimism and to provide developers and other partners with a clear local commitment that the men and women leading Vermont's 251 cities and towns will not offer carelessly. I think that brings up a lot of good points and a lot of good reasons why these could be a big asset. Yeah, very well said. Anderson. Senator Pearson. I got to say that I've wrestled with TIFFs over the years and I sit in a community that's taken advantage of several, but there does seem to be sort of a fairness element here where we're expanding a tool to smaller towns in a way that recognizes they've been shut out from the process that has benefited the larger communities. So I guess I'm fairly convinced that the review that you were worried about, Madam Chair, is part of the application process and the, I don't know, I wouldn't say I could sell it on the street corner, but I'd be glad to vote for this when we get there. Okay. It's a good headline. That's where we're at with Senator. It has one more committee to go through. I'd like to remind you that we do have $150 million deficit in the Ed fund right now and we're going to be taking money that may or may not. Well, but hold on because that's an important question. It's certainly going to come up as I understand that the construct does not take out of the Ed fund. It promises to keep the Ed fund whole and in fact give it more money. Unless after 20 years. Yeah, I mean, it'll be after 20 years. If the original taxable value plus 30% of the increment will continue to go to the education fund. It'll be the 70% on year one. As soon as yes, the OTV is set when they are, when debt is incurred and the OTV is set from year one, the original taxable value plus 30% of the increment will go to the education fund. But it's for 20 years. Yes. No matter how. So what if I would actually say if somebody, what if the city of Burlington, Chittany County continues to grow and spread north up the lake and somebody comes in and now because you've put in a septic system, they put in a large development of high end houses. Is all of that increment being kept? No. What increment is being kept? So it'll be the, the bill right now has 10 or fewer parcels will be identified as the area of for development and it would only be the increment for those 10 or fewer parcels that's being kept. And that's part of the reason we're looking at this is gap financing. So if, if there is significant growth outside of those 10 parcels, all of that increment would go into the education fund. What if there is significant growth within those 10 parcels and is there a limit? Could I have a hundred acre parcel? I don't, I don't know if any of our village centers are designated downtowns have hundred acre parcels. It has to be within the confines of the village center. Yes. The location of criteria is for a designated downtown, a village center, one of the designation programs that we have or in an industrial park is defined in statute. Okay. What if we just, or this bill authorize, no, the last bill, the neighborhoods, okay, which can be contiguous to the village center. Could you expand the village center? And I think it's not just towns, it goes towns and villages. Could you expand to a contiguous part, you know, a contiguous parcel, make mansions, and would that property tax revenue, 70% of it, not go to the ed fund? So it's expand beyond the 10 parcels or include those in the 10 parcels? Yeah, you can expand your downtown. Why not? And you can have a neighborhood off your downtown. Could you make that neighborhood one of those 10 parcels? If it's in a designation program, it could be part of, but this is a one debt and currents program. So unlike the TIF district program where you're going to go to debt repeatedly over 10 years, as soon as you have your debt serviced, you're retired. So if you, in Westford's example, I think it's around $300,000, if they built a McMansion or two McMansions in the village center and they got $200,000 of increment in the first three years, then that would be paid off and the project would be done. They required to use that to pay it off or could they just lower water rates? I think it's this kind of fine tuning that's making, is anywhere else in the country done this that we can look to? There are places in the country that do project-based TIF, but not, I mean, Vermont is unique in our funding of education. So what we do with TIF is going to be unique. Yeah, it takes the money out of the Ed fund. Only if we say so. I know Senator, but that's what this bill does. It says so. So I'm just concerned because when you are dealing with smaller towns and I'm being hard, but I can assure you when this bill goes across the Zoom hall, they're going to be harder. That I'm concerned that this is happening quickly and I want to make sure that it is thought out and that the staffing is there and the expertise is there to make sure that these towns, they do not get themselves in over their heads. Like they build the water system and then, oh, the pipes collapsed or something goes wrong and they need to maintain it and the 50 people that are signed up on it say we can't afford to do that. And so we've wasted our, we've got a small water system that needs maintenance. A water system needs somebody to supervise it. Does the town have that ability? You know, does your office have the staffing with the training to supervise five a year of these as a pilot project or is the administration just giving away Ed fund? But how in your scenario, Madam Chair, how does the TIF district get impacted? Their obligation is to continue to pay the increment and know if the property value declines, they're still fixed at that rate. I'm not understanding the risk in that sense. I'm saying that it was Joan Goldstein who talked about the water system she was on with 100 people and they couldn't afford to pay to maintain their water system. And I said, so how did you afford to build it? And she said, we got a grant back in the 70s or 80s when the federal government was giving out clean water grants. I don't want to get a town into a situation where they build something and have a 20 year obligation to pay for it. If they are in fact bonding, which is what this is usually set up on and 10 years down the road, they need maintenance and the growth hasn't happened. So if the growth doesn't happen, their taxpayers have to pay it which they've already said they can't. And it's a very small amount of growth. It's not like downtown St. Albans where there will be and we do out the normal background growth gets figured out and that's taken out. So if this is a town where everybody's seeing development moving up north from the busy county, that gets taken out. I just don't want us, I'm concerned with the number 15 and five a year. I might try a couple. We never did 15 tips to start with. If I wanna make sure that we have the systems and the expertise in place to make sure that these towns don't get five years down the road and find out that I never rehab the store. There's no increase in the grand list. There's no money coming in or not enough money to cover the gap or they need a repair. And we're just looking at one septic system. We don't know what else. I mean, roads, we have other ways to fund roads. Is there any requirement that everything, you know, it's, I'm feeling rushed. And I, you know, because it sounds like a good idea. I just have this fiduciary thing. I would say, I would say, Madam chair, we looked at this pretty thoroughly. It's one of the highest priorities for the leagues of cities in town. I think the towns, regardless of whether they get a, assistance with this creative financing mechanism still has to have to take the project very seriously and can't just throw in a fly by night project that doesn't have mental enhancements to the grand list. And then you have the veggie program itself, reviewing these things to make sure they don't have egg on their face that they pass through something that I mean, I just don't think we could stand still. We can't just not take advantage of seeing our growth centers grow. And this is one of the more promising tools that I've seen that we're doing. You could come up with all the, you know, what ifs and all the, it's so good, then why isn't the administration financing it rather than asking the Ed fund to finance it. I don't, I, I don't agree with the statement that's been made several times that we're taking this out of the Ed fund. I think that this program is going to put money into the Ed fund. You're assuming that there's no development. There's no development. There's no development. Once the development, the fact is this development doesn't happen unless you do something to make it happen. So you're never even going to get that 30% into the Ed fund unless these projects are built. So walk me through. Step by step. How these towns. How these projects are developed. How, where the expertise comes from. What's. Good question, Madam chair. How, who's having the, the. Tough love discussion with the. So I think a lot of that discussion is happening before, you know, we might be in the know that someone is considering this, but if we're using the example of Westford, they have already found somebody else. Okay. So we're using the example of middle sex who. Has a developer who owns the camp meat area. And wants to. I have a feeling I know who that developer is. So. This is kind of interesting. Okay. So we have a developer who has ideas on how to make that a village center, a community center. But needs the public infrastructure in order for that development to move forward. And to get the commercial tenants that they would need. And without that public piece, they're not going to move forward with their piece. Now the town is going to look at what funds are available for the community. And what are the other grants funds are available? What is their bonding capacity? But recognize that their small village center does not have the bonding capacity to take on. All of the debt on their own. And to get this. Huge town with some fairly wealthy. Neighborhoods and residents. They are not without. Capacity. So. I mean, I mean, I mean, I mean, downtown may be downtown, right? Which is where, I mean, that's you. It's about investing in our village centers and downtown's and. Getting support for helping those projects move forward. So that this. The downtown of middle sex or the village center of middle sex. And that's where other development in that village center. Could happen because now there's. Do you know where, are you familiar with the downtown center of middle sex? I am. It's while it has a church, it has a town hall. It has the old camp mead. Right. At some houses. But there's a river and a major power dam that backs up. There is a bridge over the dam. The main road was shut off. Because the bridge wasn't safe. A new bridge was built. But there's a cliff. There's an interstate and there's a river. There isn't a lot of room. To build in downtown there. I mean, family. Little sex is a, is a hot real estate market. But there isn't room. To do a whole lot of moving in to downtown. Unless somebody's talking about eighth of an acre zoning. And putting up. And how does this comply with the town plan? The town have to agree. I mean, the town planner has been part of the conversation. So I assume they're. I don't know. I don't know. Is there any kind of a town vote required? There would be a town vote required. Okay. So walk me through the steps now. So if they're a quick question. Yeah. I'm just wondering, is the middle sex example, that's just, you're just, it's a scenario, right? I mean, it could be any small town Vermont. Yeah. I think we're talking about right now. You don't want us to get hung up on, you know, details of what the downtown might look like. We're just talking small town Vermont. Right. Right. So if, if they're saying, you know, we can't get commercial. Development to happen in our village center. Because we need to allow people. Pedestrian ask access through. Sidewalks. We need to have some type of parking available. So we need to have some kind of, you know, a place where people want to go. And I've heard anecdotally from, from some towns that have said, you know, there are people who have told us if there was some place for us to be in our village center. Now that we know that we can work remotely, we would love to have a space here rather than commuting into a larger office space. But they, they can accommodate that. So it's really looking at, you know, can they access. They can access CDBG funds. What are the town funds that are available? And, and what is the gap that then keeps them from moving forward with this project? Okay. So start with who. Walk helps the town. That has no financial advisors. And I can assure you there's more than one banker and financial advisor that lives in middle sex. You get further a field. You're going to have less of a chance to get down into Orange County. You're going to have less of a chance. That you have town. People. With expertise. So when we set this up. I want to make sure that every town has. Equal access. To enough. Financial. Expertise. To not. To have a realistic program. And now we're talking about streetscaping. Well, I think is that where we want to spend. Ed fund money. Isn't that. Wouldn't we be better off? Isn't that what we do the downtown tax credits for? The downtown tax credits go to the developer. This program is for the municipality. So this is, this is the public piece of. Public private partnerships that bring development into our communities. So part of what Pepsi does is looks at the viability. And if somebody. Comes to us with an application saying, gee, we sure hope that if we build this. Someone might be interested. They're not. They're not going to be approved. The viability check is, do you have actual. You know, developers that you're speaking with that have shown interest that have signed an agreement that. Okay. So is there a signed agreement or contract before. Public money gets invested. We don't require a signed agreement. We know that in some districts, they have developed our agreements that are signed. But, but that's not a requirement, but part of the viability is looking at how viable. Projects are to move forward. And what commitments are. And who, who makes these decisions? So the information has to be sent in a, in an application to Pepsi and it's reviewed by. Our policy analyst and it's reviewed by the, the Pepsi council members. Under what criteria. What criteria. What criteria is it reviewed? The viability is, is the, does the market support the. The. What's being proposed is this, is this reasonable to. To see that what they're showing would reasonably happen in the market that they're talking about. And is the, the increment that they're expecting, does that make sense? For what the development that's being proposed is. And is that increment that is expected. Enough to repay the debt that they're looking at. That's, but that's what bankers usually have for a criteria for loans. I'm not a banker. Okay. That's my point. Do you, do you have. What are you analyzing? If you're doing bank work and you're not a banker. We have an analyst who does. Who looks at it. I mean, we try and make sure that there are more eyes than just the executive director. Or the program director, but an analyst who reviews everything that comes in. As well as our council members who have. A great deal of expertise in, in these areas. Bankers, higher advisors to give them similar advice. And once the bankers have made a decision to go ahead and do it, the bankers are on the hook. If it goes wrong. If it goes wrong. If it goes wrong. I would expect that if this goes wrong, I am on the hook. Do you post bond and can you. Can we go to you and get the money from you? I'm not sure if this is fair. It isn't fair. It's not fair. Okay. I want to be respectful of the witness. Okay. I've got Senator Pearson next. So. I'm. I'm. I'm trying to understand this because when we. Talked about the TIF program a few months ago. And we tried to get. Varying experts in to help me in particular as a new member. Of finance understand tips. And I was in a mood of. Being protective of the Ed fund. And we discussed the three year extension and that whole thing. I voted for that because. The overwhelming testimony was that the Ed fund is not. Quote unquote at risk. We're not rating the Ed fund. We're not costing the Ed fund anything. And so. I'm really baffled. Megan, is there a dynamic that you could describe to us. Or folks from economic development. Where the impact. Or the vulnerability. On the Ed fund is any different. In these very small. TIF. Proposals here that are now just. Block based in small downtowns versus. TIF district based. Is there any real. Significant difference in terms of exposure that the Ed fund feels. Or sees in your estimation. I could give a lay response to that. Okay. I think there's less. Because I mean, when I, when I. Met with. Sign X on the downtown Burlington TIF. My first question says. You want $20 million. To build a 200. Million dollar project at 225 million dollar project. How do I know that you wouldn't have built this. Anyway. And he says, well, it's really, we're on tight margins. And this is the difference. And we're putting in a proposal. For a TIF and Pepsi has to review it. And you have some faith in that, but it's all about the butt. For test. I don't know whether he was telling the truth or not, but the Ed fund doesn't suffer. If you assume. That the project wouldn't have been built at all. If you didn't do this. And that's over 30 years in the example of Westford. This project's been on the table and they've never been able to find the financing and the gap financing. To build it. So I don't think you're going to see downtown Westford. Anytime soon have a project on its green. Unless we help them here. So that benefits the Ed fund because now they're going to have. Their grand list go up. Where it never would have gone up at all. They won't get a hundred percent of it initially. But it's going up. So. Having it go up from a place of nothing is an improvement as far as I can. I think on a small scale. It's probably safer if that's your fear. That the Ed fund could lose money. I think my fear is more that the towns are going. To get very enthusiastic. That. And get in over their heads. I would feel much more comfortable. If we did this. At five. And see how the five go. I don't know why we need to do 15 and five years. Why not do five. See how they go. See if in fact. We have. The capacity. The difference is that. Larger towns. Have finance departments. And directors. And planning directors. All of whom have. Training. Small towns. Have select boards. And a town clerk. All of whom are elected. And have no guarantee of any training. So they themselves at risk. The question is. Is the Ed fund somehow at risk. The Ed fund. If, if it. Grows. All right. And if it grows. More. You know, I don't know that the Ed fund is any more at risk. I think my, my concern is really the two. And Graham has got words of wisdom. You're still with us, Graham. Yeah, I'm still very much here. All I can say is that, I mean, our office is written a fiscal note on this bill. And. We've costed the mini this as it's currently written. To. I mean, we use the same methodology that we use across all taxes. So the way we're treating mini tip program is how we treat all tax expenditures. We had it costed out. Anywhere between 500,000 a million dollars. Cost to the Ed fund. In the future. Probably not very much in the beginning years. But I think that. Not putting aside about four question here in terms of the costs, the Ed fund. The legislature could easily appropriate. X number of dollars to small towns. And that would, if we wrote a fiscal note on that, we would say it would be fiscal impact on the state would be X number of dollars, regardless of what the project would happen or would have happened anyway. And you might get, you know, corresponding grand list growth. I'll set that. This is scored sort of in the, the similar way. It doesn't really matter to up from a fiscal impact standpoint, whether the legislature is. Is spending money or like in the way like a downtown tax credit or appropriating new funds to, to adopt economic development project. So that's really, really important in the future. I just want to specifically offset any of the. Any potential new growth here. So the fiscal note that we've written on this as a fiscal impact on the education fund. So we're depending upon the size of the projects and how. Between half a million and a million dollars. In the out years. Okay. And that's pretty year. Okay. Senator Brock. that there is only an impact on the education fund relative to the tax increment itself. In other words, if there is no growth, there is no impact on the education fund, is there? Yeah, nothing happens and there's no impact on the education fund. That's the whole point. There is no impact on the education fund from simply doing this. The impact is if there is some growth and the growth is not as robust as perhaps it's intended. But again, the argument of creating these many tips is, and I think it's much more clear than it is with the larger tip, is this stuff isn't going to happen. Lightning isn't going to strike in Westford and make those buildings habitable for occupation and income growth without this. Now, that's point one. The second point, though, that I think would make everybody more comfortable is if we had a mechanism to provide, since these, I think, probably are a higher risk than some other things that we do in this area, is if we were able to figure out a way to have a reserve of some kind established, that reserve may come indeed from other activity that Veggie does with others to set something aside as a reserve in order to deal with situations that perhaps fail. And again, I just throw that out from the top of my head. I'm not necessarily from Veggie, but a reserve of some kind. So in the event that a municipal, a small municipal project, like one of these we talked about, fails so that we have some backing behind it so that it doesn't create that catastrophe locally. Senator, I think what you're saying on the first point is right. I mean, if nothing happens and there's no impact on the education one, that's just, I think, how our office scores these bills. I like the analogy of whether this would, imagine it's more an appropriation, right? Imagine we were appropriating $500,000 to small towns to build infrastructure, right? Imagine that the money wasn't spent necessarily every single year. We would still count that as a impact on the general fund and appropriation on the general fund. I understand that nothing would get built maybe in that situation when it's a carry for our carry for a reversion in money. But I think if we get into whether we have something would have been built or not, it just presents a difficult situation for our office to accurately score these bills. And I think if you apply the same logic, if you use the same logic for TIF here on other things, then lots of stuff costs no money. The downtown tax credits, how the heck will we score those? How the heck will we score things like the 529 tax credits? I mean, for instance, well, we might be getting a very large return. If we didn't give the credit thing, these kids might not go to college. There are costs. I understand the point. I think our office, and I think the reason why we score it this way is because it's written into statute when we present the impact on the education to the emergency board every year, we use the methodology. This is a methodology that our office and the department of taxes agreed upon. So I understand what you're doing and why you're doing it. And I understand the methodology and the basis behind the methodology, but my point is to me, the methodology is misleading because what it does is it leaves the layman with the impression that by passing this, we've done some sort of a raid on the education fund by taking money away from it. And the point is not true. It's misleading. I would add just using, I agree with what Senator Brock is saying and I just wanna take your analogy one step further using any town, Westford or whatever. If you're saying that if no development happened, that there would be no impact on the education fund. But if a million dollar building was put there and the education fund got $300,000 or 30% of the tax on that, the education fund would have 30% more money in its fund than if nothing was built. So we don't want anything built there because it's gonna cost the education fund. I think it is misleading in this case. And I quite frankly think it's misleading in a lot of cases where people come in with economic development plans and they can show pretty clearly that the payoff is gonna be there, but the only thing that comes out of, I'm not faulting you, but what comes out in the fiscal note is what goes out. They don't wanna say what comes in and that's what's happening here. And so I just, that's why I'm a proponent of TIFFS because I think TIFFS are a creative way to stimulate the economy and they don't actually cost the education fund money. They actually bring money into the education fund. Okay. My concern is the exact opposite of that. If nothing happens, the town of Westford who has said they cannot afford to pay for this filtration plant or sewer plant has to pay for the sewer plant, which they've said they can't afford to do. So what happens if nothing gets built on those three parcels or nothing gets built on two of those three parcels? But that's just, that's a scenario that in part, correct me if I'm wrong, we're trusting local communities to make those decisions. Exactly. They don't make those decisions though. Developers do. Remember we had... They don't make the decisions either. Windsor, that they had to get an extension because the economy went south right after they got their TIFFS. I remember that was three months ago in another world. We... I think that's actually an example of how they did not move forward with projects when it was not an economically viable time for them to do so. Right. If they had moved forward with the projects and then didn't get any of the increment coming in that they needed because they move forward with them regardless of what was happening in the economy, then that's a different conversation. I think the project... The project, because you're coming for one project, you have three years from approval to incur the debt. You're not... It's not the same as the district program where you're sort of saying, here's 10 years worth of projects that we're looking at doing, 10 years of worth of development that we think is gonna pair with it. And then going for it. Madam Chair. I worry that the thought is that our municipalities are going to, on their own, try and go for things without having some certainty of what's coming down the line or that they would get state approval for these projects that they've been working on and pulling together and pulling partners together for years. And typically if it's wastewater, then they're working with DEC and the staff at DEC on what that project is and what their users are gonna look like. They're working with their RPC. They're working with the RDC on the developer side. They're working with Vermont Leagues and Cities of Towns on the finance side. I think there are a lot of partners who are out there to help. And that's part of, if this passes, that's part of what we'll be doing is really getting out to talk to those partners and make sure that the policies are written to guide this program well. Why this? We just did gap fundings for the CUD through VEDA. Why TIFFs and not gap funding, which is a lot more straightforward. We could get a loan from VEDA, we put money in VEDA for that gap between the time you needed to start paying and the time you got people signed up and paying into you. I just, I wanna know why. And I think a lot of these projects that they have, it's already a multifaceted approach. They already have a lot of players. If you look at the Putt number lock project, I think there's 21, Senator Campion may be able to speak to that, but 21 different funders and pieces in there and they're all necessary to get that project off the ground. And to get all those pieces to play. And I think that that is the case we're looking at here where people have looked at all of the resources that are out there and have access to the resources that are out there, but they're still finding that there's a piece missing. And if the point of this is to create new development or redevelopment, it's not a maintenance. It's not to repaid your loan. No, but my question is we've dealt with water and sewer and public infrastructure projects for years and TIFFs came out. I don't have a problem with TIFFs and I'm not gonna fight the Ed fund thing. My concern is bringing this down and so many of them without doing being sure that we have the system to help those towns in, you know, once things, you know, you don't run, you don't... If things don't come on, I mean, none of us anticipated the last two months. We were tooling along, you know, we had almost zero unemployment. We had, you know, the money was coming in and now we're here. I just wanna make sure that we, if we are promoting this, that we have the structure in place to make sure that the towns have the support they need to have these be well-developed projects. And that's all I'm trying to figure out. I've got Senator Ballant and then I'm going to do Senator McDonald's. Okay. Madam Chair, I just, I wanna bring us back to what you were saying earlier, that your main concern is with the towns. Obviously you come to this committee having been a mayor, you understand town politics in a different way than some of us who've never served in that capacity. And so I'm wondering, is there some language that we can include that would help you to feel better? Because it sounds like what you're saying that we're kind of, we're putting them at risk. And maybe I misinterpret it, but... No, I mean, my town had a very good planning department, a very good finance department and a very good city manager who was trained. I am more concerned about the times who if they have any manager is part-time and shared with several other towns who have no finance, they have the town clerk and a three-person select board. I wanna make sure that the state has adequate resources and the poorer the town, the fewer the resources and the more they need this kind of financing. I wanna make sure that we're there. I think if we weren't talking 15 projects as a trial, I've never seen a trial of 15. I usually we do a trial of three or four, maybe five, just to make sure, because, Megan, you've got what? Two people in your office that you mentioned that would do this. That's not a lot given that you've also got a whole bunch of tiffs out there. Right. And I also wanna see this go. This is the easy sledding. This is, Bill is gonna have a much harder time in appropriations and it's gonna have a much harder time in ways and means. I wanna make sure that we've got it at a place where it can go and that we don't bite off. Or then the towns can chew. Well, I appreciate that. So that I wanted to get more of a sense of where you're coming from. I know that I speak for the team from Economic Development Committee. I think I also speak for Senator Campion as well is that we really do see the need for this in our smaller towns. But I want you to feel better about this. So I'd like to try to get to yes and I understand what you're saying. It doesn't make any sense to pass it out without us turning this stuff over if we're just gonna get slammed in approach and ways and means. I appreciate that. I just, I hope that we can get to yes because I think a lot of smaller towns need this. And the folks who came into our committee, they didn't seem like they were taking this matter on in a cavalier manner. I think they knew exactly what it was that they were asking their town to take on. Of course, we all sometimes get in over our heads but it was not about something that they hadn't thought about for years and years about how to make it work. So just wanted to offer that. Thank you for the clarification. I appreciate it. Senator McDonald. Madam Chair, I want to apologize to Ms. Sullivan for treating her unfairly. And part of the reason that she was being treated unfairly is because of the position and the job that she holds working for people to approve loans. And it is unfair of us to say to her, well, if you make a bad judgment in Pepsi, are you gonna pay the money back? And the answer is no. That's an unfair question. Banks have arrangements that when banks make poor judgments on approving loans, there's a consequence. And they are on the hook. And they have to have as I think Senator Brack mentioned, banks have to have reserves. They can't go loan money out as they see fit. They have reserves, they have to have that. And one of the premises that we're operating on is, if everything goes as the planned, the Ed fund will gain money, will have more revenues from property taxes. If that's the case, if the economic case is the state Ed fund, they'll have more money. If we do this, then the Appropriations Committee should provide the GAP funding. The GAP funding that allows these projects to be built and it results in a increased amount of money in the Ed fund, then the GAP funding cost the state of Vermont. That simple math, bankers, any banker that you ask would say, yeah, if the loan's gonna pay for itself and the state's gonna be better off with more money in the Ed fund by appropriating this money up front, like a bank, do it. But we're not doing that. And the small towns are, have traditionally, when they've gotten grants, it's been from the Appropriations Committee and they are competitive grants. You put out the criteria. This is the money, the various towns compete and there are people who win. There is no competition here. It is a, someone is, again, perhaps unfair to Ms. Sullivan again, but Ms. Sullivan isn't signing the checks so that the towns can buy a car and if the town fails, Ms. Sullivan would be on the hook if she signed that check. But they're the ones that are saying go ahead and do this, but they're not on the hook for anything other than their reputation. If we put the money up front to these loan the money from the Appropriations Committee and knew it was gonna go into the Ed fund, the state would be ahead of the game and we're not doing that. So this is using the Ed fund as a bank. It is. And if the towns go south, that's, yeah, this is not the way to do things. And I represent more small towns as a percentage of my population than anyone in the Senate. So. One, I appreciate that Senator McDonald and I know it may seem like semantics, but it's, you know, Vepsi, the Vepsi Council who does the approval is approving a community to use this tool. It is the voters who have to approve the loan. The community still has to go to its voters and say with the backing of the full faith and credit of the community that they are going to take out a loan that would be repaid with TIF if the increment is available. So it's, it is not, I am not approving the loan. The Vepsi Council would approve a project and the voters of a community would have to approve a loan. Thank you for that clarification. I don't know if it would make you feel any better. Our grants program manager is a former student of yours. So I hope that helps you feel better about the due diligence that's. I think you just made me feel nervous. Stephanie Barrett is a former student of mine, so. Oh, okay. That's good. I could list them, but I won't. The presumption in this is if we're only for this small amount of money that the would be fronted from the Ed fund, the projects wouldn't happen and the Ed fund should be delighted to do this because they'll earn more money. And if it's that's true, then the, you can fund it out of the appropriations committee because the math will still be the same. They'll pick up the gap and fund to get more money and every once ahead. And I resisted the temptation that's solved it from talking about semantics. But when we're talking about business and loans and things like that, we should try hard not to use the word partner because that is a slang term that people use unwittingly. Bankers don't use that under a partner is someone who has taken on the same debt that their partner and is equally responsible for paying it back. And it's, I'm not going to stop the world from using that term colloquially, but that's what one is. And so thank you. I'm going to assume that one of the criteria on the application is that, and I'm hoping it's an agreed upon project will owe enough property tax to cover the debt and that that is well analyzed because I really can't see how rehabbing and existing building is going to add enough value to the grand list to pay the gap financing on a filtration plant. It is well analyzed. What the projected developments are and what the increment is are both pieces that are analyzed during the application. Is any contribution expected? I mean, I'm coming out of act 250, but you want to put up a housing project in Montpelier, you pay your water fee and your hookup fee and you pay a school impact fee and you pay a recreation impact fee and you pay a parking impact fee. And if you go through act 250, you're going to pay part of that additional cost. You're going, especially if you're building something commercial that you're going to sell and make a profit on, is that part of any of these or is the town just saying, well, if you build, you'll pay your property taxes, we'll keep your section or the school section and we'll pay off the sewer plant for you. While, I mean, if you're expecting to make a profit on your development, traditionally you've had to upfront, if you're a commercial development and you go through act 250, you upfront the cost of the impact you're going to have on the town's infrastructure. Is that in any of these plans or are we, is this just a way to kind of, are these so small that that's irrelevant? I mean, are we putting in the infrastructure? I know there was one locally that couldn't build a senior community because it didn't have septic capacity. Well, if that's a for profit and a really nice senior living facility and that town gets one of these grants, is that other than paying the property taxes they would have paid anyway, is that for profit facility not going to be required to also pay an impact fee? So there's a delineation of what is an allowable TIF cost and what is not allowable and those wouldn't change. What's an allowable related cost? What's an allowable improvement cost isn't going to change from this program and the district program. So, you know- So we've just translated all of those TIFs. Right, we're talking about the same type of improvements, the same type of related costs that are allowable but we're talking about one project. So defining that project as one of those improvement projects instead of 10 or 12 different projects that may span a lot of those different types of improvements. So if I put up a hotel in a TIF district and the city runs the water and sewer line with their bond out to my hotel but the town has an impact fee in place for the capacity I'm taking up in their water filtration plant or their septic system. Am I still expected to pay that impact fee? Yeah, I mean, the developers costs aren't going away. The developers are still paying their fees, the developers are still paying their property tax and you think that's how Vermont's TIF program is different than some TIF programs where it is where the developers are the ones who are getting the break, not the benefit isn't going to the municipality. So the municipality might build the water line, they might build out the utilities but the hotel is going to be the ones who are doing the hookups and paying the additional town fees. Okay, all right, it's after five. Oh, we're just getting started. Good Senator, you can stay here and talk to yourself. I'll keep everybody with me Senator McDonald. I applaud everyone's patience, I had realized it was after five. It's actually been good today Senator, I just don't keep seeing your hand, it's good. Okay, thank you. Thank you for putting up with me but I do come out of town governments and I've been in an awful lot of town offices and I know that there's a wide variety of expertise and ability available to towns. And I think I get, it sets me off wrong when somebody comes in and says, this is a great development project and it's not going to cost anything. I was about to say there's no such thing as a free lunch. That makes me, I just, that is not my experience. If it doesn't cost anything, then why don't we just give them the money? There is a cost somewhere. If they're getting state revolving loan fund, if they're getting Northern Board of Regional Commission funds, I mean, they're looking at every opportunity they can. You know, I can tell you these communities are... Can you share with us, and it may be in the bill, but the kind of regulations or is that going to go through rule? The thing that says, you know, you have to look at all these other, this is your last resort kind of thing. We ask for that as part of an application as to what are the other funding sources that you've identified. And then certainly in the TIF district program, that's something we ask for our annual report. And we say, these are the funding sources that you identified in your application. What have you, you know, what... Okay. What monies have you gotten and have you gotten any additional monies? It's, you know, it's something that we, that we push communities to really look at every opportunity out there for funding. Limited to 5,000, 5 million, a project? I think it was 1.5. 1.5, getting five, because it was five a year. Right. But that's one point, all right. Yeah, okay. Okay. Okay, committee, well, I haven't had a chance to check my emails. Thank you, Megan. I'm just going back to schedules. I haven't scheduled anything from tomorrow, except we can either watch live stream. I haven't gotten to read my emails to see if representative Briglin has gotten back to us. But next Friday. So after, after the consultants turn in their report, Catherine is going to set up a meeting for us with the consultants. So we can go over their report, what they've done. It might be good to listen in tomorrow if we don't get a formal invitation out or former, yeah, to be there. Because I know that the house committee has been looking at a lot of those changes in the broadband, the licensing, and all the little things who you have to jump through to get a hole in a wire up. So it might be good to just kind of hear some of these things they're doing before we get a bill dumped in our lap with two days to turn it around. So thank you, it's been a long day. Thank you everybody. And we'll get this one back on. Are you ready to end live stream? I think we're ready. I was gonna say, I think I would probably be gonna write up a proposal to limit that to five for at least the first year, just to make sure that we're ready or sunset it after one year and then come back so that we do get a chance to take a look and see how it's going. I think, I understand it is limited to five a year, is that right? Five a year, but it's a five year, 15. I would rather have us, it's like 248A, I would like us to have to come back and see how those five are going, who those five are, just do a reassessment. So when do you plan to sunset it? I would say, I mean, I'd like to have a way so that next year we come in and we say, okay, how did it go in the first year? And make sure that we are kind, this is a new program, no one's done this in the first year. If we put it up right now, let's pass this bill right now. What would the effective be? Let's do five projects in two years and review it in two years. Madam Chair, we in the Senate Economic Development Committee were on the same page as we, and we brought this thing down from where it was proposed. And I recall, I think we can still on the line, I think we try to do a three year sunset and there was concern that because of the timing of how the money went out, you wouldn't know at that point, but she could speak to that. But we try to. Okay, but I want to have less than 15 and I want to have the legislature take a look at how this is going before we get 10 years down the road and we have a problem. So that's kind of what I would like. I will be amazed if this bill makes it through. And I think the more it is put up as a true pilot project, the better chance it's going to have to make it through both bodies and out of here this year. So we have Megan here. I don't know if you want to hear from her, but I remember us raising the same questions and the administration saying that. Michael, don't talk to me about the administration. But you want to hear why we said it at the level we said it? Yeah, I want to, not what the administration said. You face the good idea. Why did you do it? I'm trying to say to you that we were told that if you cut it off at three years, there wouldn't be enough information or experience because of the timing of how the money gets out and how the projects. Okay, then do five projects and come back in five years and tell us how it's going. And if it's going better than expected, come back next year and ask to have that five expanded. But to keep doing five a year with no check back and to have, if we don't assess the first five, then we don't know if there's anything that should be altered in the second or third five. I think our committee would be fine with an assessment every year that this goes to the extent there are things to assess in those years. It is 15 over five years, so that's three essentially. We could limit it to three a year. The most they could do would be a total of 15. We gave them a little bit more flexibility, we said a total of 15, but it didn't have to be limited to three a year. We could certainly talk about those things. We're not trying to make this more than a pilot, but really aren't. Yeah, it works. And I'm trying to get one that feels like a pilot with the appropriate safeguards so that it has a better chance of making it through. Because, as I said, I'm the only pro TIF person out there right now outside the Economic Development Committee. So it's gonna have hard sledding. Senator McDonald. I am a pro TIF person. We, I was on the committee that passed the first TIF. What we have now is the same problem with definitions that we have with broadband. They're not the same TIFs. Okay. I think that's our cue, Madam Chair. I think that's a good, that's a cue. We can go off live stream, we can all go. I'm gonna go talk to the guy about banning tear gas.