State Audit Finds Burlington's Waterfront District Finances 'Rife With Errors' | News | Seven Days | Vermont's Independent Voice

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State Audit Finds Burlington's Waterfront District Finances 'Rife With Errors'


Published January 23, 2023 at 11:54 p.m.
Updated February 14, 2023 at 2:13 p.m.

Cyclists on Burlington's bike path - CALEB KENNA
  • Caleb Kenna
  • Cyclists on Burlington's bike path
Burlington’s effort to upgrade its waterfront has been plagued by millions of dollars in financial mistakes that will require the city to pay the state nearly $200,000 in tax revenue.

That’s according to a scathing new audit of the financing tools used by the Queen City to revitalize its waterfront for more than a quarter of a century.

The Waterfront Tax Increment Financing District, formed by the city in 1996, allowed it to borrow nearly $16 million for infrastructure projects such as Waterfront Park, the skate park, bike path improvements and renovations of the former Moran Plant.

TIF districts, as they are known, allow cities and towns to pay the costs of projects with the increased property tax revenue from the resulting revitalization of the area.

But a report released on Monday by state Auditor Doug Hoffer found that between 2010 and 2021, poor record keeping, high staff turnover and the administrative complexities of the district led to many errors. Hoffer called on lawmakers to make the districts simpler to manage and more accountable to taxpayers.

“This was one of the most difficult audits my office has ever conducted,” Hoffer said in a press release. “Managing the complexities of this TIF district proved challenging even for the largest municipality in Vermont.”

Burlington Mayor Miro Weinberger, whose administration has tackled waterfront improvement projects, acknowledged “major errors” in the administration of the district. 

“The City regrets these errors and will take prompt action to resolve them completely,” he wrote in a statement.

TIF districts are allowed to retain a portion of the increased property taxes that would otherwise be paid to the state education fund. Hoffer calculated that the city shortchanged that fund by $197,510.

Weinberger disputed the characterization that city errors were responsible but said officials would get to the bottom of the problem.

“The City is committed to continuing the already ongoing process with the State Tax Department intended to ensure that payments to the Fund are accurate and complete,” he said.

Weinberger, who worked to get the city's finances in order after taking office a decade ago, said it was “unsurprising” that the city experienced financial errors during the period of the audit. “We had fundamental issues in our financial systems at that time, which in 2012, resulted in a downgrade to the edge of junk bond status and financial disaster,” he noted.

Since then, the city's bond status has been upgraded repeatedly and its “strong financial footing” means Burlington will be able to address the issues raised in the audit without reducing services or raising taxes, the mayor said.

In addition to underpaying the education fund, the audit found the city had improperly used the district to pay for $173,056 to rehabilitate the waterfront bike path.

The city’s management of TIF projects suffered from poor accounting, weak record keeping, bad communication and confusion over funding sources, the audit found. The city has since hired consultants to assist in its management of the projects.

The district was “rife with errors,” with 49 separate mistakes ranging from $457 to $250,000.

The report also found that the city used $178,098 in tax increment funds without the approval of the city council, including $30,000 from a separate TIF district downtown. A city official told Hoffer the funds would be repaid.

Katherine Schad, the city’s chief administrative officer, said she’s been working on these issues since joining the city in 2020. While the work was slowed by the pandemic, she now has two senior accountants, a consulting firm and a trustee to help manage the district.

“I am confident that with these resources now in place Burlington will no longer experience the accounting issues that have previously challenged the administration of our TIF districts,” she said.

In response to questions from city councilors on Monday, Weinberger said, all told, more than $1 million will have to be shifted from the city coffers to the TIF district.