VT S0296

Developers using tax increment financing (TIF) must guarantee their project will generate sufficient tax increment to cover the municipality's debt service payments for the duration of the TIF district or housing development site.

The guarantee must be secured to the municipality's satisfaction through instruments such as letters of credit, performance bonds, special assessment liens, mortgages, or personal/corporate guarantees.

Developers must provide at least one additional protection: casualty insurance or prohibition on contesting assessed value; license/ownership of engineering or architectural plans enabling the municipality to proceed if the developer fails; or an equity position such as profit-sharing.

If a developer lacks assets, the parent company owning project assets must provide the same guarantee.

Housing infrastructure agreements must comply with these new development agreement requirements; the act takes effect on passage.