In response, Burlington Mayor Miro Weinberger pushed back on one of the audit’s key findings, calling it “bogus.”
Tax increment financing, used throughout the state, allows municipalities to borrow money to pay for public infrastructure projects and pay back debt using increased property tax revenues that result from the projects.
Burlington has two tax increment financing, or TIF, districts. In a separate review one year ago, Hoffer found the city had made errors to the tune of millions of dollars in its waterfront district. The audit released Tuesday examined the downtown district, which was created in 2011 and has included projects such as the St. Paul Street reconstruction and the forthcoming Main Street project.
“The Downtown TIF audit shows once again that even Vermont’s largest municipality struggles with the complexity of the TIF program,” Hoffer said in a press release that accompanied the full report on Tuesday.
One of Hoffer’s key findings was that the city drew over $4 million more from bond proceeds than was approved by the Vermont Economic Progress Council, which oversees parts of the state’s tax increment financing system.
Municipal bonds offer cities and towns a chance to raise money from investors, who usually get their money back with interest. Tuesday’s audit report explains that Burlington issued bonds with a premium, where investors have to pay additional money to the principal amount. Municipalities are allowed to do so in normal instances of debt financing, but under the TIF system they require state approval, according to Hoffer, who said that Burlington did not have such approval.
“These approvals were built into the process for a reason — to ensure projects are not too risky, and to limit the liability of taxpayers statewide who are asked to subsidize TIFs through the Education Fund,” Hoffer said in the press release.
In a press release issued in response to Tuesday morning’s report, Weinberger rejected the key finding on bond premiums.
“The headline finding of this audit is bogus and reflects Auditor Doug Hoffer’s longstanding campaign against the State’s TIF program,” Weinberger said.
Weinberger, in his release, said that the city has also used bond premiums in its waterfront TIF district and that Hoffer did not raise any alarms during last year’s audit of that program.
Tuesday’s report also included an opinion from an attorney working for the city on bond issues, who said municipalities have the authority to charge a premium on such bonds.
In November, Hoffer sued Attorney General Charity Clark and her office, claiming her office failed to provide a legal opinion regarding bond usage in this audit. He argued that the attorney general should be compelled to provide an opinion when the state auditor asks for one. Clark’s office disagreed.
Hoffer also concluded in the most recent audit that the city had incurred greater interest costs than it had disclosed. The city estimated $4 million in interest costs when the actual amount was around $12 million, according to the report.
Burlington Chief Administrative Officer Katherine Schad said in a response published in the report that the estimates of interest costs are subject to change when the actual terms are finalized and that the city shouldn’t have to return to the state to gain approval on final terms of the financing, arguing it could slow down the financing of projects.
Other issues raised in the report included accounting errors and incorrect valuations, which Weinberger’s office acknowledged in Tuesday’s press release.
“The City will take action to correct some ledger errors uncovered in the audit which will have no impact on the City’s operations, nor will they trigger a need to increase tax rates,” the release said.
This article was first published by the VT Digger. Read the original article.
