The graying of Vermont may be good for the makers of Viagra, but it's been crushing taxpayers in Central Vermont's urban core. Declining student enrollments in Montpelier, Berlin, Barre City and Barre Town have left taxpayers struggling to pick up the tab for surplus school infrastructure.

The region's experience is similar to that of many Vermont communities.

Over the past decade, Central Vermont's public school enrollment has declined by more than 1,300 students. That's a loss of $9 million in state education funding in FY '08 alone and about $50 million altogether. The four core municipalities have lost half the total of the region, a combined $25 million.

The good news is that all four have access to public sewer capacity and the potential to added houses with school-aged residents. Important steps are being taken in all four communities.

Barre City recently changed its zoning bylaws to allow smaller lots and greater density. Barre Town is in the process of doing the same. Berlin is refining a town center design that would incorporate housing projects adjacent to the Berlin Mall.

Montpelier has begun taking the most aggressive approach to housing development and stands to reap the greatest reward in the shortest timeframe. However, it will need the support of city residents and state agencies to be successful turning concepts into cash.

Past Successes

Montpelier has initiated several projects in recent years that have provided momentum.

In 2004, Montpelier commissioned A Study and Analysis of the Fiscal Impacts of Growth in the City of Montpelier. The study demonstrated that growth would have a positive financial impact on the city and developed a model for allocating costs related to future development.

New accessory apartment language in city zoning regulations makes it easier and more attractive to add units to existing houses. A municipal grant offers some homeowners the opportunity for free design assistance.

Voters have funded an annual contribution to the city's affordable housing fund to help facilitate low-income housing projects.

The city was also an active advocate and participant in the Barre Street housing project that created 60 apartments and condominiums on the site of a former granite shed.

These set the stage for the more comprehensive programs now in the works.

Growth Center Designation

Montpelier has submitted a preliminary application for growth center designation of four square miles of Montpelier, almost 40 percent of the city.

That designation would establish the parameters for Vermont Neighborhoods and Tax Increment Financing (TIF) districts that could dramatically accelerate housing development.

Vermont Neighborhoods legislation allows municipalities to designate areas within a growth center where permit fees, capital gains taxes, and permit appeals would be reduced thereby making development more attractive.

Tax increment financing can do the most to encourage development. In such a tax district, the city could choose to bear the cost of roads, sidewalks, sewer and water extensions, power lines and other infrastructure. When these initial infrastructure costs must be borne by the developer, they represent a huge obstacle to development and a major portion of the per unit price.

When the municipality fronts these costs, the developer's burden is greatly reduced and unit prices can be much lower. In a TIF, the city's investment can be recouped from the new taxes generated by the increase value of the lots created and the units constructed.

In preparation for a growth center designation request, the Central Vermont Regional Planning Commission projected that if housing was made available, there could be demand for 1,200 units in the coming 20 years.

Job Creation

According to a report issued by the Vermont Housing Finance Agency in 2006, construction of 25 housing units creates or retains about 60 jobs in construction and related sectors. Using this standard, constructing 60 homes annually would have an economic impact similar to attracting a new business with more than 140 employees.

Just as importantly, a housing spurt would provide additional customers for Montpelier's existing retail businesses. In recent years, the number of jobs and residents - customers - in the city barely holding their own, the opportunities for retail and service growth have been limited. According to the growth center projection, the city's population could increase by as many as 2,000 residents, representing an increase of 10 to 20 percent in Montpelier's most loyal patrons.

Greater sales potential should translate into additional employment in retail and personal services.

Long term, perhaps the greatest employment potential will emerge from the growing work-from-home sector. This sector includes among others, writers, graphic artists, designers and professionals who constitute an important percentage of Montpelier's residential community. Increasing their numbers within the confines of the city opens opportunities for interaction and information-sharing that can snowball into new industries.

Municipal Revenues: Taxpayer Relief

Residents tend to offer relatively few criticisms of life in the city, but property taxes are one of the exceptions. Like most Vermont core communities, Montpelier provides services and infrastructure utilized by non-residents. These non-residents include employees of Montpelier firms, shoppers, visitors and rural residents, among others. Financing of municipal infrastructure is an ongoing challenge for most historic communities. Rarely can the infrastructure (and its cost) be easily scaled to just meet the demand. Water treatment, roadways, sewage treatment and schools are capital investments that must be built to meet future demand. Unless operating near capacity, the relative and per-user costs can be high.

Stagnant, aging population has left Montpelier with excess sewer, water and school capacity - capacity that additional housing can convert to cash and taxpayer relief.

Adding 1,200 housing units would increase family consumption of sewer and water services by about one-third, distributing capital and operating costs over a much larger consumer base. Another 300 students in the school system could increase school revenues by $2 million annually.

Some estimates project total revenue increases of $50 million or more over the next 20 years if 60 housing units were created annually during the period. While operating costs would rise, only modest capital costs would be incurred. Net revenues would be substantial and could be used to reduce taxes and/or improve services.

Conclusion

As the need for housing becomes increasingly acute, and the benefits of additional housing become more vivid, Montpelier seems poised to adopt and pursue aggressive new housing goals.

The city, its residents and the entire Central Vermont region will prosper when it does.

Since 1965, the Central Vermont Community Action Council (CVCAC) has gained a reputation for leadership in education on poverty issues, advocacy on behalf of low-income families, and developing strategies to reduce poverty. They achieve those objectives by providing training and technical assistance, as well as encouragement and support, so that people can begin to overcome personal and institutional barriers to their economic security and well-being.

In 1995, CVCAC recognized the need for an alternate source of flexible business financing for its clients who were seeking to improve their economic well-being through self-employment opportunities. Together with a group of 23 municipalities in central Vermont, they created the Central Vermont Revolving Loan Fund. Thirteen years later, the Loan Fund is now called Community Capital of Vermont, is a separate nonprofit institution that meets the alternative financing needs of microbusinesses in the entire State of Vermont.

Community Capital has become the "go-to" place for entrepreneurs who require business start-up and expansion financing but are unable to secure bank financing. Community Capital is able to increase economic opportunities for Vermonters by providing them with the flexible capital and business management assistance they need to achieve their entrepreneurial dreams. They serve as a stepping stones; they seed business start-ups and help fuel business growth, enabling business owners to build the sales, credit, and experience needed to secure traditional financing in the future.

Community Capital is also the new home for the Vermont Job Start Loan Fund, a thirty-year old revolving microloan program established and funded by the State. One hundred percent of Job Start loans are invested in businesses whose owners lack the personal assets and income to secure a conventional bank loan.

Since its inception, Community Capital has lent over $2.6 million dollars to 113 Vermont businesses. Eighty percent of these businesses are owned by low- to moderate-income individuals, 60 percent are owned by women, and 65 percent are startups. Since starting their Management Assistance Program in 2001, over half of all Community Capital borrowers have accessed more than 1,140 hours of specialized consulting and $5,200 in Business Advancement Grants.

These businesses in turn have added or retained, on average, 2.3 full-time equivalent jobs and contributed important revenues to the economy economies. As a result, these businesses help increase regional commerce and our local tax base, which is a benefit for everyone.

Community Capital operates in partnership with the Central Vermont Community Action Council. Community Action Agencies (CAAs) are non-profit private and public organizations originally established under the Economic Opportunity Act of 1964 to fight America's War on Poverty. Today, there are nearly 1,000 Community Action Agencies across the United States, and CAAs can be found in 98 percent of our cities and counties. There are five that operate in the State of Vermont. CAAs are a primary source of support for the more than 40 million Americans who are living in poverty in both rural and urban areas. Across the nation, partnerships between CAAs and microloan funds like Community Capital help thousands of people achieve economic self-sufficiency each year. For more information, please visit www.communitycapitalvt.org and www.cvcac.org.

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