Vermont Legislature SmartTranscripts:

[Speaker 0]: How you doing, Nancy? Good morning. This is the House Appropriations Committee. It's Friday, 03/13/2026. It's 09:05AM, and we're going to hear a couple of bills. And I do just want to acknowledge that six years ago today was Friday, March 13, and it was our last day in the House because of COVID twenty twenty. And we all knew that we had that week to put together bills and pass things out that we thought would help for monitors because we thought we might be gone for a couple of weeks. That's when telehealth happened and a few other things about notaries and, I mean, kinds of things. Every committee was asked to say, what can we do remotely? How can we work things while we are gone for a few weeks? Then we didn't come back until 2022. We were remote the next year. And some of you got elected that year. A Except for that one day. Yeah, whole other story. Anyway, I just want to acknowledge, because many of us were here on that Friday, March 13. And it was six years ago today. We're here for this afternoon. You have time.

[Rep. Eileen Dickinson (Member)]: Just want to I

[Speaker 0]: guess that was our joke. What?

[Rep. Eileen Dickinson (Member)]: That was the Thursday, yesterday. Yes. Year's call was the day we rewrote the entire bill.

[Speaker 0]: Oh, the unemployment insurance bill, yes.

[Ted (Joint Fiscal Office analyst)]: We did

[Rep. Eileen Dickinson (Member)]: it so that everybody could go on unemployment and not

[Speaker 0]: That's right.

[Rep. Eileen Dickinson (Member)]: Any kind of money. All the employers would not be penalized for three years. And we did that Thursday and Friday. When we came up for air and went out to the floor,

[Speaker 0]: May, or something? No. Oh, yes. It was June. And then our poor IT department had to help remotely help house members figure out their computers. We have

[Rep. Eileen Dickinson (Member)]: a lot

[Speaker 0]: of them didn't know. Mean, and then do Zoom, which, of course, we never heard of. And then they sent us all those little things to cover up our cameras. They mailed them to us.

[Rep. Eileen Dickinson (Member)]: And that was one of the So certain committees could go home Zoom at certain times.

[Speaker 0]: Right. Right. Because we didn't have the capacity. So anyway, we're taking a trip down memory lane. It was quite a time.

[Rep. Eileen Dickinson (Member)]: Thomas was one of the ones that did it because they had to figure out how to use that cam money.

[Speaker 0]: Yeah, it was something that we will never forget. But I just wanted to acknowledge, because this is the same day, Friday, March 13. So, happy Friday the thirteenth. Now we'll go to age seven seventy five. Cameron, you were in a different role then. A very different role. And then we had legislators get trained to

[Rep. Eileen Dickinson (Member)]: help you all out. How many unemployed? In a month?

[Cameron Wood (Office of Legislative Counsel)]: We went from, at the time, less than 5,000 to over 100,000 in a matter of two weeks.

[Speaker 0]: Are the days, and we're all still here on whatever capacity. Okay. So, Cameron, you tell us about seven seventy five. Tan is here to talk about the fiscal note. Sorry, Cameron and John. We must have two different parts. We have rep Tom Charlton here from the committee on general and housing to talk about it as well. So we'll start with you guys.

[Cameron Wood (Office of Legislative Counsel)]: Yes, ma'am. For the record, Cameron Wood, Office of Legislative Counsel. Scott Gray, Legislative Counsel. So we'll walk through the recommendation, the report from the General and Housing Committee. And I asked John to join me this morning because the first section of the bill is within his portfolio area and would be best to speak to it. So I'll share my screen. We'll walk through the general and housing report, and then we'll switch over, and I can run through the amendment that's proposed from the Ways and Means Committee. I'm going to share my screen, I'll let John kick it off.

[John (Legislative Counsel)]: I'm fortunate in that I have the first section of this business for me because I should probably Okay, so special assessment bonds. Just a little bit of background. I think you guys are familiar with special assessments in the first place. They're like a task, but they're levied on individual properties that benefit from a particular public improvement that benefits their area. So special assessments, there's existing statute that deals with special assessments, those districts. This does nothing to modify those. This is a section that creates a new financing tool predicated on those special assessments, and it's just a new form of revenue bond. So what you're seeing here is one of it's trying to confront a practical problem that occurs in this space, which is that for a general obligation bond, you need the consent of the voters of a whole majority of a municipality to issue general obligation bonds. But because special assessments are just assessments against the subject properties, issuing a general obligation bond in that context doesn't make as much sense. So this proposed to set up a new financing tool, section one, this is 24 VSA section three thousand two fifty seven. And the key thing here is this first clause of A, upon approval of the legislative body of the municipality, and subsection C, a municipality may issue revenue bonds for the purpose of financing a public improvement for the benefit of the limited area of the municipality to be served by the improvement. So this is saying you can approve, a municipality may issue these kinds of bonds without the vote of the municipality. It can be done upon the approval of the legislative body, and I'll come to why some concerns you may have are not necessarily present in this case. And then we have the standard call out revenue bond issued under the section is issued for an essential and governmental purpose, but in for tax purposes. So the typical reason folks get antsy about issuing a bond in the absence of a majority vote, is your concerns that the taxpayers are on the hook, and someone could compel a tax levy and then forced to cover those costs. And so it's key that this is just a revenue bond. It is a bond not backed by the faith and credit of that municipality, it's backed by just the revenues, just the assessments from the district. So that's what you see in B, revenue bond issued pursuant to this section shall be payable solely and exclusively from the special assessments levied on the properties to be served by the improvement and shall not constitute general indebtedness of the municipality, and in the key, additional call out, no holder of a bond issued on its section shall have the right to compel any exercise of the taxing power of the municipality to pay on the bond. So what does that mean? They only have recourse to the revenues that come in, That's it. This doesn't add anything. It doesn't change anything about the way special assessment works. It just says you could use this financing tool to back up a bond with those revenues. If we jump to subsection c, this is kind of a less core part of it. This is more about the marketability, but this is language that had been at the bond bank suggestion to protect the markets, and it's a condition for issuance of these revenue bonds. The meeting may issue a revenue bond pursuant to the section only if one of these conditions is met, that you receive a commitment letter for the issuance, so backed by one of these reputable institutions, the Vermont Bond Bank, a bank regulated by the FDIC, opposite the comptroller of the Federal Reserve, or a credit union regulated by the National Credit Union Administration. So if you get a commitment letter from one of these reputable institutions, that would be a condition that would you would meet this requirement for issuance of the revenue bond. Alternatively, you didn't get a commitment letter, you could get a minimum credit rating to satisfy the requirements of the section. And that's what we see in subdivision two on line 11. If you've got a nationally recognized statistical rating organization that has an active US public finance practice rates the issuance at a minimum credit rating of triple b or equivalent, which is potentially that is an investment grade bond.

[Speaker 0]: Yeah. It's very good, but it's not triple a or anything else. Is that sort of standard, the triple b for these kinds of things?

[John (Legislative Counsel)]: So the reason that this was selected is that this keeps you out of non investment grade or junk bond territory. So it's kind of It's the lowest. And technically it's higher than the lowest, the lowest would be BBB minus, I guess. Right. Right? So it's not the absolute lowest, but it's keeping you in investment grade territory is basically the

[Speaker 0]: Was there a worry that and let me

[Peter Trombley (Office of the State Treasurer)]: know if you're not the

[Speaker 0]: right person. But is there a worry that if we went higher, fewer towns or municipalities would qualify?

[John (Legislative Counsel)]: I think that's a fair assumption, you is wanna keep this tool available to folks. And again, this isn't a core part of the ability to authorize it. I mean, it is essential to the section itself. Just mean to say that this is included, I think, mainly as a protection for the markets themselves is the way that I think of it to ensure that they're not that the municipal markets aren't flooded with bad bonds, essentially. Right.

[Cameron Wood (Office of Legislative Counsel)]: So please clarify for me again, not again, please clarify for me, revenue bonds are riskier than full face credit. They are

[John (Legislative Counsel)]: So in this instance, the a bondholder doesn't have recourse to the tax and capacity of the municipality. Typically, if there's a shortfall, right, a bondholder could say, you gotta pay us, and then the municipality is obligated to do a tax levy to raise the funds to cover it. There is no authority for the municipality to compel a tax levy in this case. And I think maybe this is the answer to your question. So it is safer for the municipality, it is riskier for the investors, think maybe what you were.

[Cameron Wood (Office of Legislative Counsel)]: Yes, I mean, that's exactly right. So, and can you just give me an example of how this works because this has colors of tip districts or tip you know, the idea that you can raise money in this different way than than out now. Can you explain to me the town of Waterbury wants to build affordable housing in a place, how this how this would work?

[John (Legislative Counsel)]: So I I have an unhappy answer and a happy answer. The unhappy answer is I don't know that I can give you what you want, but the happy answer I have is that I I think the question you're asking is actually about special assessments themselves and not about What's the revenue? The special assessments. So there is an existing process, and this section does nothing to disrupt the way that special assessments currently work. An assessment is a tax levied against properties receiving the benefit of particular public improvements. So in this case, you're talking about pursuing housing for instance. Under that chapter, a special assessment can be levied only if the town itself votes by majority or all of the subject properties themselves consent in writing to that. So that process would continue to exist. This approval by a legislative body for just the revenue bond doesn't disrupt anything or change the standards for pursuit of those public improvements that are backed by, the special assessments themselves. And as I understand it, you're not typically funding the entirety of these projects through a special assessment. It's just part of a capital step that you're using.

[Cameron Wood (Office of Legislative Counsel)]: Right. Anyway, the specifics of it are still I mean, and then talk a little bit about the difference between needing to get a public vote on it. Is that in relation to the taxing perspective? Or this seems this seems a little I take time of a deep sigh when I think that a municipal board can commit to this without a public vote that just Sure.

[John (Legislative Counsel)]: I just haven't experienced it. And I'm not saying it's wrong.

[Cameron Wood (Office of Legislative Counsel)]: I just haven't experienced what that means for the town and for

[John (Legislative Counsel)]: that selection. Exactly, so part of why both hackles get raised in a context like that is that for a typical general obligation bond, the issue is that if you just have the legislative board approve, later the bondholders could actually afford residents of the town to then cover any shortfall in the revenues. So that's why we require majority votes in those instances, is that it's actually gonna be the residents of municipality that are on the hook for it. In this case, because the only thing backing it are the revenues themselves, the only recourse that the bondholders would have those revenues. So whether they come in or don't, it's part of an agreement that already has to be set up for the separate process. That's the only thing the bondholders can go to, they cannot compel a tax levy to force the residents of the municipality to pay on it. So it raises different concerns, it's not the same. The residents are not at the same risk as they are for a general obligation bond, which is why I described it as less risky to the municipality, but more risky to the investors. And I'm sure other folks could speak to this as well.

[Rep. Eileen Dickinson (Member)]: Thank you.

[Rep. Wayne Laroche (Member)]: So this is for low cost housing obviously. And so as part of this analysis, do they actually look at what those revenues would be? Whether the revenues would be sufficient sufficient to?

[John (Legislative Counsel)]: So this is not exclusively, this is special assessments can be used for all sorts of purposes. This is truly just adding a new financing tool, whether it will or won't be used, I have no idea. I mean, it's creating a new authority, so that municipalities could more simply access long term financing on the basis of an already existing revenue raising tool that they have, which is special assessment. So it's truly just saying, can do revenue bonds, you can do special assessments. Why not do revenue bonds backed by special assessments?

[Speaker 0]: We've done I used to in banking do revenue bonds up and

[Ted (Joint Fiscal Office analyst)]: a lot.

[Rep. Wayne Laroche (Member)]: There's there's one downside again. Nothing can blow back on municipality.

[John (Legislative Counsel)]: So legally, municipality is on the hook, but the only recourse that the bondholders have is to the revenues. They can't compel a tax levy type. So I

[Rep. Wayne Laroche (Member)]: do share Tom's concerns because recently, I know our town purchased a house without going to the voters. That's causing a little

[John (Legislative Counsel)]: I think the best thing to speak to this because I understand it was so much material come through here, it's important to separate out the bond from the specialist assessment process itself. All of the procedures that are in place for special assessments have to be followed. So you're not even gonna have these revenues to have a special assessment bond unless you have pursued the process of imposing the special assessments, which requires either majority vote of the town or that all of the subject properties receiving the public improvement that are subject to that special assessment have consented in writing. So, all of that continues to stay on. This is truly just a new financing tool.

[Speaker 0]: Okay, and I know you're I'm getting a text that you're being called for ways and means, but is there so why don't we finish whatever your parts are?

[John (Legislative Counsel)]: That is the whole of my part.

[Speaker 0]: That's the whole of your part. Well, was good timing. Well done. Thank you so much for stopping John. If we have other questions, and we can check-in with John as soon as I'm offline.

[Peter Trombley (Office of the State Treasurer)]: Perfect. Thank you.

[Speaker 0]: Thank you. Alright. I'll let you know.

[Cameron Wood (Office of Legislative Counsel)]: I'm gonna take over here. We're gonna move into section two. This is gonna be on the the second half of page two here. The the next two sections really go hand in hand with each other. The section two, the first piece here is regarding the Vermont state treasurer and the Vermont state treasurer's ability to create a credit facility and invest currently up to 10% of the state's average cash on hand. What I will say here is on section two here at the bottom of page two, this new language that's underlined is simply reorganizing the section so it will fit better with the amendments that are further down. So what this requires is any of these investments that the state treasurer is making, they need to comply with the Uniform Crudest Investors Act. That's already a requirement in the statute, as you can see here on page three, lines five and six. I've simply moved them up so it applies to the amendment that I'm later on in this section. So currently, the state treasurer has the authority to create this credit facility of up to 10%. So they take 10% of the state's average cash balance, and they can invest those monies. There's really no limitation on what the state can invest the money in. So it could be in economic development initiatives. But I think recently, over the past few years, they've been investing a lot of that in housing. But there's no statutory limit on where those monies are into what sectors they have to be invested in. So this proposal would be to raise the credit facility to 12.5%, up from 10 to 12.5. And then separate from that, what you have here in the B and then the two is separate from the 12.5, the state treasurer can create a separate facility of up to 1% of the state's average cash balance. And we're going to limit that 1% to look at lines twelve and thirteen. The 1% can only be used to facilitate housing development through bulk purchasing of off-site constructed housing to aid in the purchase of off-site constructed housing units. And then the other key piece here to notice is at the end of that subdivision b, any portion of this 1% authority, any amount that the treasurer's office chooses to use here has to reduce an equal amount the credit facility established under the 12.5%. The reason this language is here is because you're increasing up to 12.5% from 10. You're authorizing this additional 1%, but the treasurer's office didn't want that to go to 13.5%. They wanted to keep the total at 12.5.

[Speaker 0]: So the up to 1% is part of the 12.5?

[Cameron Wood (Office of Legislative Counsel)]: Yes, ma'am. It's intended to be designed so they can do up to 1% for this off-site construction, but anything they do within that 1% credit facility equally reduces their overall authority into 12 and a half. Okay.

[Speaker 0]: Just to carve out the up to one's.

[Cameron Wood (Office of Legislative Counsel)]: So this is for manufactured housing. It is limited to off-site constructed housing units that equals manufactured housing. It could be manufactured. It could be modular. If you're thinking manufactured in the the mobile home context, it could be that, but it could also be off-site. Yes, sir. It could also be modular off-site.

[John (Legislative Counsel)]: Yes, sir.

[Cameron Wood (Office of Legislative Counsel)]: And so as of last November 15, do

[Chris Root (Joint Fiscal Office)]: you have an idea of what

[Cameron Wood (Office of Legislative Counsel)]: the fund was? So do we have an idea of what this is creating, what 12.5% is is creating? I would defer that question to the treasurer's office as far as how much they have the authority to create currently and what they think this would create additional

[Speaker 0]: The joint business might have that also. Yeah. So we'll wait to hear from Ken on that. Thank you.

[Cameron Wood (Office of Legislative Counsel)]: Okay. So the the three here on lines fifteen, sixteen, and 17 are saying that any financial loss due to this credit facility is gonna be covered by this Vermont Housing Special Fund. What is the Vermont Housing Special Fund? So we're gonna scroll past page four. There's a few just technical statutory cleanup language there on sub c. We're gonna get to this new subdivision E on the top of page five. And before you do that, the section D, line 14, previous page, this is the general and housing bill. Should they be part of the recipients of the reports? So the D is it's a report on just the credit facility in subsection C, which is separate from the 10% credit facility that exists. Under sub c, the treasurer has the authority to create another credit facility of two and a half percent. And this is only for financing climate infrastructure and resilience projects. They're on lines ten and eleven. So technically, that report that's required in D is only related to those climate infrastructure and resilience projects. Yes, sir. So when you get to page five, so what was this Vermont Housing Special Fund that is mentioned above? This subsection E would authorize the treasurer's office to keep the interest on all of the loans that they issue through the credit facilities that are created under this section. So the current 10%, the current two and a half percent I just mentioned for those climate resilience projects. If you bump it up to 12 and a half, you add this new 1% facility, all of that package together, all of the loans that they're issuing out, the interest that they receive on those loans back, you would be authorizing that interest and to put that interest into this new Vermont Housing Special Funds. Currently, that interest goes into the general fund. This Vermont Housing Special Fund here, most of the language in this section is just the standard language creating the special fund itself. The fund consists of monies that you may appropriate, monies transferred from other outside parties, and interest paid on the loans authorized in section 10. That's the key piece, then capturing that Don't get too attached. The proposal from the Ways and Means Committee is to take it out. And then in C1, what are they going to do with the special fund money? It says here that it is intended to be used, looks at line 17 through 21, to promote the increased availability purchasing of off-site constructed housing. And the capital may be provided on terms acceptable to the treasurer, including in the form of grants, interest free loans, and an investment in equity stakes of housing. So the interest would be solely focused on housing, but given a little more flexibility than that 1% credit facility that was done above. Page six, the treasurer can use the funds to pay administrative costs. And then the interest from the fund stays in the fund moving forward year over year. So that's that piece. The next section, section four, is for the Agency of Commerce and Community Development in collaboration with BGS to develop a pilot demonstration project study exploring the possibility of reducing housing development costs through modular construction. This is a pilot project that ACCD would work with certain municipalities who are willing to do this project. If you look on start looking on page seven, it's intended to try to utilize bulk purchasing of off-site constructed housing to then find a developer in a municipality willing participate to determine whether or not it's feasible to do bulk purchasing of these modular constructed homes to put them in if that's going to help reduce costs, etcetera. And so this is a pilot project that they would have to administer working with municipalities. That's the sub D there on lines 12 occurring in one or more municipalities willing to participate. Municipal planning grants can be available for municipalities wanting to participate. And then the sub f is a report back in 2028, written report with recommendations for legislative action based on the success of the pilot and whether or not the legislature should enact a statewide building code or codes for off-site construction. Page eight, the next section are some changes to the the VHIP program, which I know you all are are familiar with. The change here in the subdivision two, as we discussed actually last year, and rep Stevens, I think you brought this up when we were talking about the changes to be if the the money is not paid upfront. And so this section would authorize the departments through the partnership organizations and how they distribute money to be able to provide those funds upfront at the onset of a project as opposed to at different stages after the project begins. Section six is related to the Vermont Economic Development Authority. And what this amendment will do on page nine or we on 10? It's gonna be on 10. It amends the definition of facility or project. So this would authorize the Vermont Economic Development Authority here on page 10, this new subdivision U. After VITA consults with VHFA, and if they've been requested by a financing lender to jointly finance with the financing lender, VIDA can help fund multi unit on lines 10, multi unit housing developments of five or more units. However, the authority cannot finance projects that are utilizing funds from the Vermont Housing Finance Agency. So if VHFA is providing money, VITA cannot provide money. But deferring to VHFA, VITA can fund housing if they've been requested to do so by financing. Page seven, we get into municipal plans. So this would amend the municipal plan housing elements, the housing element of a municipal plan, I should say. So there on lines 19, the municipality shall include within the housing element an identification and analysis of existing and projected housing needs for the projected population of the jurisdiction, including housing needs for individuals with disability, and provide regulations that allow for the rehabilitation improvement and development of the number of housing units needed as identified in the land use plan or future land use map. So expanding upon what they must provide information on how they're going to meet their housing targets. If the municipality this is in the sub two if the municipality cannot meet those housing targets that are identified in the statewide housing needs assessment, The municipality must provide the DHCD an analysis of what are the regulations and physical that are preventing the municipality from developing sufficient housing to meet those targets. And then the remainder of this section is including a lot of detail about what the municipality would have to provide to THCD about what are the constraints, regulatory fiscal constraints that are preventing you from being able to meet your housing targets. So they would have to go through and quantify your projected housing need types by including the location, age, and condition, and occupancy required. A lot of those details, the AIDS Committee is recommending to strike some of them because they're pretty detailed, and there was testimony that they would be pretty onerous on the municipality. So some of this language in the A and B here, this detail is proposed to be struck. But essentially, the section here is saying municipality in your housing element, tell us how you're going to meet your housing targets. If you're not going to meet your housing targets in statewide housing needs assessment, you need to provide information to DHCD about what the regulatory physical constraints are preventing you from doing so. And then we get to page 12. And there are two new positions that are being created within the Department of Housing Community Development. And then you have the effective date of 07/01/2026. So then I will quickly switch over and take a look at the ways and means recommended amendment to that report. There are four instances of amendments. And the first, second, and third instance of amendment go together. So what Ways and Means is proposing to do is strike the interest from the credit facilities, strike the ability of the treasurer's office to keep that interest so the interest would continue to go into the general fund at that point.

[Speaker 0]: Which is about 3,100,000 of general fund that we'd be giving up if it stayed there. I think that's the number. We'll get the

[Cameron Wood (Office of Legislative Counsel)]: right number from Chittenden. And then it strikes special fund that goes with it. If you remember, they were keeping the interest. They were putting the interest in the special fund. So if you're taking away their ability to keep the interest, it strikes the special fund as well. And then the fourth instance of amendment here is a rewrite to that municipal plan that we were just talking about. And it makes two primary changes. The language in the report that came out of the House General Committee said that the housing element of the municipal plan should identify the regulations that the municipality is going to implement in order to meet their housing targets. And there was some concern about whether that was appropriate to put in a housing element or not. And so that was removed. And then as I mentioned, there was you can see here on page two, the sub A and B removed a lot of the really granular detail that was required to be provided if the municipality couldn't meet the housing targets. You remember it said like the location and the age of the housing, etcetera. They removed a lot of that extra layer of detail from the requirement if they submit information to Department of Housing. That is the amendment.

[Speaker 0]: And if you want to stay there, we'll get Ted up. I

[Cameron Wood (Office of Legislative Counsel)]: have a few minutes. Yes, ma'am.

[Rep. Eileen Dickinson (Member)]: You have to go?

[Cameron Wood (Office of Legislative Counsel)]: If I can leave within the next five or so, I have to go to Senate Economic Development for the remainder.

[Speaker 0]: We'll try to be efficient.

[Rep. Eileen Dickinson (Member)]: Take your time. Okay.

[Ted (Joint Fiscal Office analyst)]: I'm running at joint fiscal office. I am hopping into Zoom. It's gonna speak.

[Rep. Eileen Dickinson (Member)]: So I think I spent a lot of time thinking about how

[Ted (Joint Fiscal Office analyst)]: to explain the money mechanics because it requires holding a few separate things in your head to understand why there's foregone interest revenue.

[Rep. Eileen Dickinson (Member)]: You have a question in the form. Yeah, before, kind of, when we

[Speaker 0]: talk about the two positions in Section eight, was there testimony from ACCD asking that they needed these positions or? And you know, we've got somebody from the committee, so maybe we can have him talk about that. Rep Charlton can do that. Okay. Thanks. That.

[Ted (Joint Fiscal Office analyst)]: What does it mean? Sweet. Starting with the safe harbor cash balance, The treasurer invests that cash through short term instruments, right, that generate interest. And as far as I understand, the return on those investments is about three and a half percent. The 10% for Vermont program allows the treasurer to instead of take a portion of the average cash balance and make loans to various projects. So economic development, recently it's been a lot of housing projects. The return on those investments are lower than what the treasurer can earn through short term investments on cash. As far as I understand, the interest rate on those investments, what they're receiving back from loans that they've given out on average is about one and a half percent. The range is a half a percent to two and a half percent depending on the loan terms or amortization period on those investments. So that's the piece when you're thinking about expanding or contracting the 10% for Vermont program It reduces some interest. It reduces the amount that the treasurer is investing in on cash, in short term investments at three and a

[Rep. Eileen Dickinson (Member)]: half percent.

[Ted (Joint Fiscal Office analyst)]: And I have no idea. I'm not gonna put this full screen why I'm having trouble in this moment. It's all fixed. So that's the general framing. So by increasing the current 10% for Vermont program to 12.5%, that makes approximately $30,000,000 available through the cap that they can lend out. This is basing an estimate on the average cash balance ranging somewhere in the neighborhood of $1,200,000,000 to $1,500,000,000 That's through the end of fiscal year twenty seven. And so by taking that $30,000,000 out of a pool that can be invested in cash, you would be foregoing up to $600,000 in annual interest income. Now I said the number 600,000. It will take time for it would take time for the treasurer to make once they have that money that they know they can expand the cap, they have to they can make that money available. Folks apply for that money. They decide who they're award awarding to. It takes money to get money out the door or time to get money out the door, and it takes time for folks who receive rewards to start drawing down loans through those credit facilities. So this $600,000 is a maximum theoretical impact. I think practically it would take a few years for the program to fully boot up. It's the treasurer is, I will say, as far as I understand, fairly conservative. They're not trying to really operate at the full maximum amount of the cap. And as they're making money available, folks are paying money back in. So it goes you know, it's kind of a revolving process. And so I think it's very unlikely that you would see lose that full $600,000 in any given fiscal year. And it's certainly the the key piece is that in conversation with the treasurer, they wouldn't be able to make loans through the expanded facility in fiscal '27. So it's not current year budget question. It's just less money to that you're receiving an interest income in future fiscal years.

[Speaker 0]: And over because that's the that's the peak maximum revenue, not worst case scenario.

[Ted (Joint Fiscal Office analyst)]: Yes. And looking into the future, the average cash balance is expected to decrease as more federal funds are spent. It won't go down to pre pandemic levels, but over time we'll see.

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: Okay. So

[Ted (Joint Fiscal Office analyst)]: that's in terms of the foregone interest piece. There are two positions in the bill. The bill does not include funding for those positions, but folks from the committee may be able to speak better about those positions than I can. And then I do wanna note that the bill in the pilot program for off-site housing refers to municipal planning grants. I assume that that's referring to municipal planning grants that are from property transfer tax revenue and deposited in the municipal and regional planning fund. It could increase competition for those funds. So wanted to note that as well.

[Speaker 0]: So there's no funding in here for the positions?

[Ted (Joint Fiscal Office analyst)]: Okay, it's them, but there's no

[Speaker 0]: I'm seeing your last sentence there. You see that not to amend it if

[Rep. Eileen Dickinson (Member)]: we needed to go through this.

[Speaker 0]: The funding is not necessary. Okay. So the at this point, the only cost potential cost is future foregone revenue, but not in f y twenty seven. Not in f y twenty seven.

[Rep. Eileen Dickinson (Member)]: Thank you. The $30,000,000 that you say is available, is that

[Ted (Joint Fiscal Office analyst)]: the 10% that we currently have, or is that what's projected for the 12/2005? That is projected from moving from 10% to 12.5%. LIAAC, the Local Investment Advisory Committee, has authorized 120,000,000 for the 10% for Vermont program. And so the $30,000,000 would be 10%. Yeah, the normal 10% and the $30,000,000 would be an addition.

[Rep. Eileen Dickinson (Member)]: How much goes for the 2.5 of the climate and resiliency piece?

[Ted (Joint Fiscal Office analyst)]: The climate and resiliency piece is 2.5%, but it's separate from So in total, through this bill, you would have the 10% moving to 12.5%, and then the climate 2.5% would be in addition. So the total amount of this It's

[Rep. Eileen Dickinson (Member)]: 12.5.

[Speaker 0]: 15. 15. Well, you have

[Rep. Eileen Dickinson (Member)]: the other two. Yeah. It comes to 15.

[Speaker 0]: So it was It's partly 12.5 divided into 2.5 for the climate and 10% for housing.

[Rep. Eileen Dickinson (Member)]: Another 2.5

[Speaker 0]: Add to the housing thing. The other one doesn't get changed at all. That's just staying the way it is.

[Rep. Eileen Dickinson (Member)]: Well, how much has the treasurer or other entities gone and already tapped into this cash fund that we found this cash balance? Would have it. They

[Ted (Joint Fiscal Office analyst)]: have a report and I'm sorry, I should have had that information with me, but I can provide it to the committee.

[Speaker 0]: We have somebody from the treasurer's office here.

[Rep. Eileen Dickinson (Member)]: Peter, do want to

[Peter Trombley (Office of the State Treasurer)]: introduce yourself

[Speaker 0]: and tell us anything you want to say about this?

[Peter Trombley (Office of the State Treasurer)]: Yeah, Peter Trombley, office of the state treasurer. So to date, we've authorized 120,000,000 in loans, but only about 67,000,000 have actually been drawn on. So the remainder of authorized loans are still being held as cash investments in earning a cash interest rate. Some qualifiers, if

[Cameron Wood (Office of Legislative Counsel)]: I might add to the fiscal note, One

[Peter Trombley (Office of the State Treasurer)]: thing that we've been seeing over the last few years is the interest rate. We are on short term cash basis going down. It's difficult to predict the future of interest rates, but I think it's safe to say it will be lower in fiscal year twenty eight when we see this change if the bill were to pass than they are now. So the difference between what we earn in LIAC loans, what we earn in cash investments would likely be smaller than 600

[Speaker 0]: So the foreground revenue could be less than will be less because the difference between what we could invest and what we're lending out at, that's going to be smaller. Because right now, if earning 3.5% and we're lending it out at 1.5%, you know, there's a 2% margin there of potential loss. But if we drop it down, if interest rates go down to two and

[Peter Trombley (Office of the State Treasurer)]: a half percent, then there's only 1% of The interest final if I may qualifier is that what we don't have hard numbers for are the revenues generated to the state through the creation of the housing in these slides it's enabling or the jobs. This program has created or saved 1,700 units of housing and over 140 permanent jobs, which generates through income tax, payroll tax, sales tax, rentless value, revenues Well,

[Speaker 0]: and people exiting homelessness, which is also a

[Ted (Joint Fiscal Office analyst)]: cost that we're now not funding for

[Rep. Eileen Dickinson (Member)]: People purchasing their own individual Well, renting. Yeah. Rentals, may be.

[Peter Trombley (Office of the State Treasurer)]: There's indirect revenues generated through the program that we haven't been able to quantify yet, we'd like to.

[Speaker 0]: Cameron I know go ahead and then I'll let Cameron go as soon as as they go soon.

[Rep. Martha Feltus (Vice Chair)]: I don't I have a question on the finance.

[Speaker 0]: Okay you're welcome to go thank you Cameron for coming. You may be excused.

[Rep. Martha Feltus (Vice Chair)]: Go ahead. Okay, my question. I'm concerned about the cash balance. Right now, I think our cash balances are probably pretty hefty because we've received a lot of money in from ARPA grants and all this kind of stuff, and yet we are expanding them and we need to expand them by a certain amount of time. So I'm concerned that if we are loaning out, and I understand the concept that we got this cash balance, we might as well loan some out and let it work. But I am concerned about moving it from 10 to 12 in terms of that cash balance. I presume it's gonna be getting smaller over time. And I don't like having my

[Rep. Eileen Dickinson (Member)]: little piggy

[Rep. Martha Feltus (Vice Chair)]: bank squeezed when we might be needing that for some thing. Mean I know it's not a reserve fund but I'm just concerned about the cash balance being reduced and then therefore our loaning more of it out and obviously waiting for that money to come back in.

[Speaker 0]: It's still only going to be 10%, just be a reduced amount. Yes, it would be a smaller amount. It would be a smaller amount.

[Rep. Martha Feltus (Vice Chair)]: Right, but if we go to 12%, we're loaning out as opposed to 10%.

[Speaker 0]: That's right. So Peter, do you have a sense of what the cash balance is right now? I see the revenue forecast is in the fiscal

[Rep. Eileen Dickinson (Member)]: note.

[Peter Trombley (Office of the State Treasurer)]: Yeah, right now we average about $1,500,000,000 for the year, but you're quite right at Ripple and then we want to be conservative. So we look at two things. One, where do we think cash balances we determine over the coming years? And two, what does our cash look like if we take out reserves and restricted funds? Both of those analyses point us towards 1,200,000,000.0.

[Cameron Wood (Office of Legislative Counsel)]: So for the purposes

[Peter Trombley (Office of the State Treasurer)]: of this program, we assume the state only has 1,200,000,000.0 in cash and well in 10% of that as opposed to the actual 1.5 that we have. So we're trying to base our portfolio where we think we'll land in the long term. If this bill were to pass as is, the state would maintain 85 liquidity which we feel very comfortable with defeating our day to day needs

[Cameron Wood (Office of Legislative Counsel)]: and if there were to be any sort

[Peter Trombley (Office of the State Treasurer)]: of vendor requirements to liquidate assets rapidly, we don't feel that this expansion would create a future.

[Rep. Eileen Dickinson (Member)]: Not.

[Rep. Wayne Laroche (Member)]: So the average is, as it's noted in the fiscal note here, three fifteen, that's the average here, what's the range of fluctuation current year? I know things kind of go up and down, big money goes out, we're earning more back here. It's just a basic sense of that.

[Peter Trombley (Office of the State Treasurer)]: I don't have those numbers up top, can get you those numbers. It does fluctuate substantially throughout the year, which is why we look at our average throughout the year when we're sort of setting these rates.

[Cameron Wood (Office of Legislative Counsel)]: So again, Peter. So quick so if I'm a housing developer and I wanted to develop run a bunch of these houses, I'm gonna come to you for a loan out of this out of the Vermont money. What's the interest rate? How does that work? Yeah. Because I guess the goal of this is to be able to achieve to to access money at a lower rate than market rate because if cash is expensive and the building is expensive, is that the theory going on here?

[Peter Trombley (Office of the State Treasurer)]: That is the theory. We're trying to correct for areas where the housing market is simply more expensive to build and you can effectively charge in rents to be able to make a private cash flow. So we do loan at rates below what you would see in a typical commercial loan. Those range from 1% to 2.5% and we base that off

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: of the longer term or

[Peter Trombley (Office of the State Treasurer)]: the amortization schedule for the loan. So if you're taking out a loan with twenty five year amortization of 35%, we're taking out a loan with only five year amortization, we'll charge you 12%. Another thing to note is that to protect the state against risk, we loan through intermediaries. The largest use is the HFA, sometimes it's banks credit unions. They add a small marker to the loan and in return they guarantee us repayment of their balance sheets to protect

[Cameron Wood (Office of Legislative Counsel)]: the state against the risk. That one to 2.5% is on the financial intermediary. Etcetera. And then so what's available to a builder or developer is going to be higher than that, which again, at current rates is still much lower by at least

[Rep. Wayne Laroche (Member)]: a couple percentage points than what's on

[Cameron Wood (Office of Legislative Counsel)]: the commercial market now. That's correct.

[Speaker 0]: So think Peter, you're maybe too late, come up to the table. I should have asked you a lot of questions ago. I thought there would be one, but clearly we have a lot of interest in this. Now that he's up here, do you have a question for Peter? Now that we brought him to the table.

[Rep. Eileen Dickinson (Member)]: Okay, now this is design. This is modular homes. Modular Bulk of it. The idea is that, from what I understand, bulk sounds like we get it cheaper than if you were doing one house at a time or one apartment at a time or one anything at a time. So, you're looking at bulk and you're looking at, let's say you're going to put in a development of 50 homes in a municipality. And you've got your infrastructure, everything's there, you're all set to go. What happens for the purchaser, or has this been factored in at all? What happens to the purchaser? Is there any kind of problem or difficulty for them under this scheme of things of financing everything to go and get a mortgage or to be able to are they limited to what they can borrow or what there's very prescriptive language for the municipality. I'm just wondering if someone wanted to buy a single family home and move out of an apartment, what kind of restrictions or any would be on that?

[Peter Trombley (Office of the State Treasurer)]: I don't think I have the expertise to say how lending institutions look at providing mortgages for something like an off-site constructed home. I think for some, my understanding is that for a lot of modular homes, they essentially function as the same kind of asset as any other stick built on-site home. But I think that that can be different when we're talking about manufactured housing. The idea behind this 1% is it really came out of an idea for a pilot program that DHCD had. They've been doing a lot of really great work looking at whether we could facilitate, as you say, a bulk order, which would allow us to essentially purchase a large number of off-site homes over the course of a year or multiple years at a discounted rate of purchasing it all at once. And then there would be some sort of kind of coordinating entity, I think likely DHCP, that would coordinate individual developers to say, Well, I want 10 of that order. I want 25 of that order. And then they can get placed around the state and sold either to if the developer is going to own them to rent or if they're going to be eventually owned by an individual family. The idea being that our 1% credit facility could allow some cash flow to make the intermediary payments in the time between which the house needs to be purchased from the manufacturer, the factory, and when it's then sold to the developer or final consumer.

[Rep. Eileen Dickinson (Member)]: So what would happen with the credit facility, this thing? We did it and the pilot's done or we had a downturn or whatever comes. Is this something that's is this going to be like a bank or what is exactly a credit facility?

[Peter Trombley (Office of the State Treasurer)]: So I think the way the credit facility will most likely work and some of these details would have to be worked out with DHCb in the construction of the pilot going forward. I think the way it would most likely work is we would be making very short term loans that is purchasing the homes as they come out of the factory and then turning around and selling them to the developer or the consumer. In that window of time, maybe a few months, they need a loan in order to make the purchase and make the sale. If the pilot were to not be able to move forward or not work out, that 1% capacity could just be used towards our traditional loan program or kept as cash investments. That's part of the 12.5%. It's part of the 12.5. We did not want to go up to 15.5.

[Rep. Eileen Dickinson (Member)]: And if you lose some of your cash balance, I mean, it decreases between ARPA money going out and some kind of a downturn or recession, whatever it might be, revenue getting softer, Does that mean you can decide to go back to 10%?

[Peter Trombley (Office of the State Treasurer)]: We would have still the authority to go up to 12.5. It would be the legislature's decision if they wanted to restrict that authority back down to 10. What we would do in a scenario like that, and we typically see average cash balances trending slowly, there's short term volatility, but the average trends slowly. What we would do if we ended up in a scenario where it was trending down, and we felt like we were at risk of going over our monetary cap, we would freeze lending, allow for repayments to replenish the credit facility to bring the total amount outstanding below 12.5, and then reevaluate from there. So we would simply pause lending and allow repayments to lower our total portfolio.

[Speaker 0]: That's why you have the advisory council too. Mean, LIAC is the is sort of the check. It's like the the the loan committee is what they're doing. And my question would be and then I see you, Wayne. I'll get you next. Is What have you have you experienced losses at all?

[Peter Trombley (Office of the State Treasurer)]: We have to date experienced no losses in our credit facility, and that's That's a We haven't had loan fail from an intermediary to a developer, but what really protects us from loss is the fact that even if that developer goes under or if that loan fails, the intermediary guarantees us repayment. They absorb that risk, not this thing.

[Speaker 0]: So we are it's pretty minimal risk for us. That's what I wanted to get clear.

[Rep. Wayne Laroche (Member)]: We've been running a ton of money for housing through VHCb. I'm just curious why this mechanism all of a sudden is being proposed rather than something going through VHCb, or things that's going on here or We'd have

[Speaker 0]: to give them the money to do it.

[Rep. Wayne Laroche (Member)]: Right. But we are giving them the money to do it this way only is

[Cameron Wood (Office of Legislative Counsel)]: No. Just I would just say that the money that especially when now we're we're really limited to the proper transfer tax. That was the question I was gonna have Peter is related a little bit. Money we give to the HCPs through the property transfer tax primarily, then we can make additional monies that are handled differently. So Peter, the question that I had was, or clarification is that when we do have money given to BHCB and that money is being used for housing, not all of it is housing, could be as well affordability covenant that's put on that money because it's been raised through tax dollars and whether it's our tax dollars or the federal tax dollars. Whereas this is a loan and it's not restricted to nonprofit housing agencies, anyone in the commercial world in particular, I mean, the difference being nonprofit and commercial, they can apply for these loans through VHFA to build kind of housing. So that even though they're getting the money at a lower rate, is there a perpetual, there any kind of affordability covenant on that money, on that building? Or is it just this is what we're trying to do to spark that piece of the economy or that piece of the segment? It's different money being handled differently. I mean, that accurate?

[Peter Trombley (Office of the State Treasurer)]: Yeah, if I may address representative Laroche's question and then yours in order. This is an extension of the treasurer's office's historic function around managing the state's cash on hand. The reason we facilitate these investments, the legislature has allowed us to facilitate these investments is through representative Dickinson's comments, we're watching the state's cash balances, we're watching the health of the portfolio, and we're dialing it up and down as we need to based on where the state's cash is functioning. So the legislature over a decade ago decided to give the treasurer's office the authority to take some of the state's cash on hand and put it into more long term investments as opposed to short term investments. It was not specific to housing until the treasurer Pcheck came into office and the LIAC committee drafted a new investment policy because we have a policy that binds our investments and I can share that if you'd like to see it. And that investment policy contemplated housing as what we felt at the time was the state's most critical need. To representative Stevens' question, the majority of the housing units we have supported have been either capital A affordable or affordable in sort of the workforce housing range anywhere from 60 to 120% of area median income. There have been some market rate units in our portfolio, sometimes market rate projects more often projects that are mixed affordable and market rate. The reasoning behind that, there is a very critical need in affordable housing, but we also often hear about missing middle, an area of housing where the market, the private market, can't build housing for the cost that they can then rent it out affordably even to a in a market rate unit. There's a market failure there that we're trying to

[Rep. Eileen Dickinson (Member)]: Or sell.

[Peter Trombley (Office of the State Treasurer)]: Or sell. Absolutely. So we have tried to be flexible in this portfolio in providing some resources towards market rate housing. We think a healthy housing market needs everything from affordable to market rate, and quite often there aren't. I mean, the legislature generally makes the wise decision to focus its public resources on affordable, which sometimes leaves a gap in resources for critical market rate housing. So we do have some of that in our portfolio.

[Cameron Wood (Office of Legislative Counsel)]: So those houses that are built through nonprofit housing agencies that receive monies from as you somebody said stack the stack earlier, that project still will have will has to retain their perpetual affordability. But, again, I was asked I just wanna be clear that this is available for any developer who otherwise qualifies, is which is the I think it's that's the spark we're trying to give, You call it a market correction or what have you, but just that idea of lowering the cost of money, which is the first expensive piece in development.

[Peter Trombley (Office of the State Treasurer)]: Yeah, you're absolutely right. We try not to create a great many restrictions on our program. Every restriction you apply to funding adds time for the projects to accommodate perhaps legal fees, design fees, etcetera. We try not to do that. We try to make our money as smooth as possible. We're often lending, we're very rarely the only source of public subsidy in a project. So there's often other forms of public subsidy that to your point come with affordability covenants. Oftentimes we lend through BHFA and they're very avid and making sure that they're looking out for the affordability of the units that they're then lending towards. So sometimes it depends on the character of the intermediary, whether they're bringing their own resources to bear. In the case of VHFA, those resources tend to come with affordability requirements. Sometimes we're loaning through a local bank or credit union, and their resources are commercial and and at market rate and don't come with those kinds of restrictions.

[Rep. Wayne Laroche (Member)]: So is the treasurer's office merely going to be the banker or is there any policy decisions that that go with? We're

[Peter Trombley (Office of the State Treasurer)]: merely the lender. There's an investment policy that is crafted with the local investment advisory committee that is made up of BETA, BHFA, the Bond Bank, Efficiency Vermont, VSAC and the Treasurer. So there are investment policy choices that are made through that committee in terms of what kind of investments we're willing to make, but we're simply lending to an intermediary that's lending to a project. So all the policies within the realm of investment?

[Rep. Wayne Laroche (Member)]: Yes. Not in terms of what projects get done or how those projects get done.

[Peter Trombley (Office of the State Treasurer)]: No, we are simply providing another source of capital.

[Rep. Eileen Dickinson (Member)]: Yeah, was going to say that my understanding is that what the HCB does is and other housing authorities, nonprofits, what they do is they use, can correct me if I'm wrong, but they use the federal low income tax credits that banks, insurance companies, private equity, very, very, very wealthy individuals use to pay down their taxes. They buy a million dollars worth of tax credit. So that's the thing that's leveraged into the stuff that VHCV does to create the non profit for the affordability. Tax credits are a big part. They're the owners or co owners or whatever, how it works. And this would not be looking at that piece of the stack that they're so. But the other question I did have

[Speaker 0]: I'll think of it. Okay. Other questions for folks? Representative Charles, do you want to introduce yourself and tell us a little bit more from maybe trade seats with, Peter here. Thanks for being here, Peter. Alright.

[Ted (Joint Fiscal Office analyst)]: Thank you.

[Rep. Eileen Dickinson (Member)]: Don't go away.

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: For the record, representative Tom Troutman, that was general in housing. This is the first time I've appeared before the legendary communications committee.

[Speaker 0]: I wanna respond. Welcome.

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: Seven seventy five initially was conceived as a simpler alternative to chip for smaller communities with less capacity, smaller developments in the hands of smaller developers, it's probably not limited to that. Most of our rural communities don't have the capacity without a lot of help to work with CHIP, although it's a fantastic program. This bill has been a very collaborative effort between treasurer's office, Vermont excuse me, DHCD, the governor's office.

[Peter Trombley (Office of the State Treasurer)]: The

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: credit facility on a part of the treasurer's office, and you may need to refine how I describe this in layman's terms, It's an essential piece that can be used for infrastructure, it can be used for roads, can be used for the housing, can be used for a number of different things that are essential to bring housing into existence. It dovetails with the off-site manufactured housing accelerator pilot program. Probably the title is longer than that. The way what we're trying to address here is that there are three there are essentially three different three or four different kinds of housing that are that are being built. One is what we formally call mobile homes. And there are programs for mobile home infill projects or programs. Mobile homes depreciate over time unless they get some extraordinary maintenance. But they are a very cost effective entry level get somebody under a roof alternative. There is a beefier version of the same thing called cross mod that's build the higher code and looks more like a conventional home. These were created so that they could be, the mortgages could be traded, could be sold on a secondary market, which you cannot do with what we know as mobile home and manufactured homes. The off-site manufactured housing is the volumetric or panelized sort of stuff that are Huntington Homes. It's very, it's almost identical to stick built. They just build the sections off-site. There are a number of benefits to that, which I can explain later because it's a nerdy builder hammer and nail suck. This cost savings in the volumetric homes is in building the same model in bulk. Currently, lot of customized homes are done this way and they are as expensive as stick built. But if they are told and the manufacturers have told us we are building if we tool up to build the same home 30 times, there is a that's where the cost savings is. Because we are not retooling every time we build a unit. We're not redoing the blueprints every time we do a unit. The combination here to make all of this accessible to small communities, small developers comes in making the money a little more accessible for the initial building phase. For the off-site pilot, the credit backing of the state is essential in that we're looking to offer say a block of 30 homes, whatever the magic number will vary depending on the model and the manufacturer, but whatever that magic number is, we'll say it's 30, they might need two in Pulte and five in Callis and three in Vernon or who knows where the smaller development, smaller communities. We're looking to aggregate those orders into a single bulk purchase to back the order with the credit of the treasurer's office so that the manufacturer is confident to go ahead and build 30 of these things. On delivery, they are bought by the developer. So essentially, they are not at any point owned by the state. The state is providing the backing for at a lower interest for these things to be produced and delivered. That makes it less expensive for the developer, and it makes it less expensive using DACD's eight zero two homes catalog where the engineering has been done, the architecture has been done, the designs have all been done. Each of these is a little reduction, little reduction, little reduction in the eventual cost of producing these homes. The nonprofit housing agencies often will come in at the purchaser, the end purchaser, which is not necessarily the state, and in this program, not intended to be the state, other programs that are financed might be. But the idea here is that DHCD might say, yes, we're going to do and it might be part of the developers funding STAG that they know DHC is going to do a limited equity arrangement for permanent affordability or VHFA is going to provide first time home buyer loans for this project. I think that's a nutshell. I don't want use a lot of your time, but certainly Yeah.

[Speaker 0]: Will, Will, we need wrap up. Go ahead.

[Rep. Wayne Laroche (Member)]: So, say we're going to build a boat lot of 30.

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: The money that we're looking for is the money to construct those homes in total upfront is what we're doing here. With the credit facility the treasurer's office? I imagine there would be a a down but there would be an upfront. So the intent is to pay for the whole buildings upfront. We're not buying the buildings. We're backing the loan.

[Rep. Wayne Laroche (Member)]: Backing what loan? The loan

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: Well, it essentially be a construction loan for the off-site portion of

[Speaker 0]: the Anytime you buy

[Rep. Wayne Laroche (Member)]: I understand. So I'm just trying to get it all straight.

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: So I'm buying a house. You're buying a house. I get a loan.

[Rep. Wayne Laroche (Member)]: Right. House has to be built. The money that I'm getting for the loan doesn't go to the builder upfront to build a home like it normally would. Yep. We're gonna put the money in upfront to build the home and then it's gonna be back paid for the loan that that I get from the bank. That's my money to pay off

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: paperwork. If the purchaser, not the builder. So, in the Yeah. The the I think and let me try to explain tell the tale as was told me. Okay? So find that the that the treasurer is a vest, that's made available to the intermediary lenders. Those intermediary lenders are also responsible for vetting the the developer at the other end and so on and so forth. Once this with the state's backing, because it a a manufacturer is going to know, hey, you know, you go to them and say we want 30 homes in the same thing and they're going all over the state. They want to know before they spend a penny that this is secure. So what the state is providing is the security to the manufacturer already having vetted the developers that are purchasing two, three, five units. So a lot of 30 years old

[Rep. Wayne Laroche (Member)]: and the finance companies, whatever they're to manage the loans to the individuals buying it. If something happens that they don't sell enough homes, they still don't get the money, then the money that we're putting up is going to back that?

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: The intermediaries back it.

[Speaker 0]: And so who's the intermediary? Let's

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: Credit unions.

[Speaker 0]: Right, financial institutions. If you're buying it, you wanna buy a modular home. You won't notice any of this.

[Rep. Wayne Laroche (Member)]: This is all

[Speaker 0]: You'll just go to the bank, and you'll buy it from the developer who's developing the property. You will have no idea what they did to get the money to build the property.

[Rep. Wayne Laroche (Member)]: So where does the backing come in? Because, of course, the credit union, they're usually they're the ones on the hook for

[Speaker 0]: That's what are you talking about? Your personal loan to buy the house or the developer's loan to buy the house? Because the developer developers always have to borrow money to build it, because they don't have enough cash, right? So they go to a bank to do it. So the credit union or, you know, the National Bank of Middlebury or whoever the developer is, M and T Bank, the bank, will make the loan to the developer, which they normally do. I understand. But they're getting some of the financing. But, yeah, why don't you come back? Not done yet.

[Rep. Wayne Laroche (Member)]: Because the pillar refriders and essentially the developers reselling it is getting building something.

[Speaker 0]: But he'd be doing that and everybody in the room has to get a loan.

[Rep. Eileen Dickinson (Member)]: Everybody on the line has to borrow the money before they decide.

[Speaker 0]: Which is what they would be doing anyway. The

[Rep. Eileen Dickinson (Member)]: beginning person who borrows the money that's backstory and they have to probably go and get other money, stack it, and then they sell it to a developer who then will

[Speaker 0]: It will help the developer, the home manufacturer, so Huntington Homes or whoever. They'll be more willing to make They can do it more efficiently and at less cost if they're doing 30 homes. Even if they go all over the state, it's not 30 individual loans and everything they have to keep track of. It's aggregated into one loan to one developer who then they deal with it across the state.

[Rep. Eileen Dickinson (Member)]: And what

[Rep. Wayne Laroche (Member)]: I'm getting down to is, obviously, you're doing this because is a perception there's a risk some place. Yeah. Who has

[Speaker 0]: the risk is what you're asking. We're we're we're gonna be on

[Rep. Wayne Laroche (Member)]: the hook to cover the risk. I'm just looking for a pinch point at what point in time we're on the hook to cover the risk.

[Speaker 0]: Okay.

[Peter Trombley (Office of the State Treasurer)]: I wanna first, Peter Trombley, officer state treasurer. I wanna first caveat this with the the fine details of the program will need to be worked out in implementation with the Department of Housing and Community Development and other stakeholders. There are a number of stakeholders listed in the Texan bill. Can't recall them all, but Travis, my friend, wrote some of the problem he can. Our view of this is that our money will be what is made available if necessary for the short term lending needed to purchase a home and then turn around and sell it by the intermediary. Who might that intermediary be? I think that is yet to be worked out. As to when the state is accepting the risk, however we construct this program, our office would be looking to find whatever way possible to receive a guarantee of repayment anytime we make a loan. That has been our standard practice throughout this program. I would say I think one of the reasonings behind having the interest retention language in the original draft of the bill is that if we had that interest retained, we could use it to hover losses, and therefore our office would be willing to take a slightly greater degree of risk than I think we will be willing to take without the interest retention in order to protect the state's cash balances.

[Cameron Wood (Office of Legislative Counsel)]: So the fine details of

[Peter Trombley (Office of the State Treasurer)]: the program would have to be worked out, the idea is that it would, from our perspective, function quite similar to our current loan program, where we're loaning money to an intermediary. That intermediary is assuming the risk, and in return, they get to add a spread to the loan.

[Rep. Wayne Laroche (Member)]: Okay, I understand.

[Speaker 0]: All right.

[Rep. Eileen Dickinson (Member)]: I remember what I wanted to ask. In section of the average, Seven, this is the prescriptive descriptions of what communities they have to give you all kinds of information. They have to go and do all kinds of things. Determine what their housing, it's very prescriptive. This is the kind of stuff that adds to the cost of a house or a building of any kind. Section seven? Yes. This is on

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: the municipality, not the builder.

[Rep. Eileen Dickinson (Member)]: Yes. But don't you say look at the

[Speaker 0]: house means one. Amendment. Yeah.

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: The amendment simplifies that

[Rep. Eileen Dickinson (Member)]: list. Yeah. Because that's part of the law. It's and I think

[Ted (Joint Fiscal Office analyst)]: Mhmm.

[Speaker 0]: I don't know

[Rep. Eileen Dickinson (Member)]: if you said it, Peter, or somebody said it. Maybe it was the day of both. But the more stuff you add to it, you know, it's like the everything bagel sounds great. We want all this stuff. We're going to do this. We're going to do that. We're going to have that. This is good. We'll have that. And it adds to the cost. I mean, the whole point of this, from what I gather, is to keep the cost down. Everybody's going to have savings, whether it's the Huntington homes and then it's the developer and then it's And the state is gotten in. I don't think that there's going to be any lack of interest in buying anything or being involved in any of these things because we have no housing, especially market rate missing middle type housing. This is something that should address that everywhere. So the question is, is that if we keep making restrictive, you got to do this, municipalities may find this, especially smaller ones, find this difficult. Large ones, they can do tips and other things. They have the manpower for this, but smaller towns don't.

[Speaker 0]: Are you working with regional planning and they get planning grants, right? Yes. And there was regional planning. There's actually all of the regional planning folks are now doing their So assessment all across the

[Rep. Eileen Dickinson (Member)]: we have that information, many of it. The question is, will a three man select board we went through this with COVID, how is somebody going to take advantage of these wonderful grants that they could get? And we had to go on. We did something with pirate navigators or something. But the point of it is we want to have these towns agree to this and participate in it. That's my goal here. Tell me about how that got discussed.

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: So first of all, is not a requisite for the off-site construction. No. So they already we've already essentially assigned our housing targets to every community in the state. And they're already trying to figure out how on earth they're supposed to meet the numbers that they've been given. This provides them essentially a gracious off ramp. If they're looking and saying, you know, we've been told we need to build 1,200 units in our all of our buildable lands in a floodplain. This provides them the means to say, we don't think we can meet this target because, you know, or we're, you know, we're 20 miles from anywhere. Well, who's going to buy 1,200 homes? You know, they give you any number of reasons. This gives them the chance to kind of articulate the obstacles they may have to meeting those goals that have already been assigned and they're already trying So to work it gives municipality the ability to say, here's why we're not convinced that we can make this goal. That that and they've already been assigned the task of coming up with a plan for how they're going to meet the goal, there are a lot of them are encountering, you know, really significant obstacles that we need to know about. So this simply gives them a chance to return that information.

[Speaker 0]: We've gone way over time here and I have one more question though because it doesn't count raise the money. And that's that you put in two positions. You must have heard from DHC. We didn't put in any money.

[Peter Trombley (Office of the State Treasurer)]: Okay. No, we did not.

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: Oh, I think it was pending availability and that was how we were asked to

[Speaker 0]: okay

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: to put that in and it's it's

[Speaker 0]: And did DHCD say they needed two positions to

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: DHCD did indicate they needed two positions, particularly in the grant specialist kind of category just to to manage the volume of grant funding, municipal grant funding, all kinds of grants that they

[Speaker 0]: They already do that now.

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: Oh, they do it now. Yes. It's More people if they're

[Speaker 0]: doing it.

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: It's quite a popular program, apparently.

[Rep. Martha Feltus (Vice Chair)]: But these two positions are not related to the credit facility idea,

[Chris Root (Joint Fiscal Office)]: are they? Not to the

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: credit facility. To degree municipal grants have been made available to the small towns that are trying to just step through the process. So that could fall in the DACV.

[Speaker 0]: I would think regional planning would be doing that, not DACV. DACV

[Rep. Eileen Dickinson (Member)]: doesn't

[Speaker 0]: do that. The municipal RPCs do that. Yeah, I think that's just right.

[Rep. Thomas Stevens (Chair, House Committee on General & Housing)]: I think testimony from from Alex would probably give you

[Speaker 0]: a bit People want people. Okay. Alright. I think we have our questions answered for now. We're not going to vote on this right this moment. We will vote on it before next Friday or by next Friday because we have everything done there. Thank you both for your time, for coming down.

[Peter Trombley (Office of the State Treasurer)]: Thank you, the

[Rep. Eileen Dickinson (Member)]: Queen. I guess it's going be yours. No, I think it's the treasurer's office. Oh, the treasurer's office.

[Speaker 0]: It's yours. It's housing and the treasurer, but it'll be your bill. All right. Thank you very much. We're not going to break the next because I know the next one's really short.

[Cameron Wood (Office of Legislative Counsel)]: Okay,

[Rep. Eileen Dickinson (Member)]: so

[Speaker 0]: we got coming up Chris Root. I'm joining us today. Don't need to pledge counsel for this. This is not

[Rep. Eileen Dickinson (Member)]: Do you want me to share

[Speaker 0]: my screen, madam chair? Sure, why don't you share your screen? 519, just came into our possession about forty five minutes ago. We actually can

[Rep. Eileen Dickinson (Member)]: vote on it. You could click that you said we might vote on this.

[Speaker 0]: Okay. This is a really I think this is gonna be a pretty uncomplicated one, I'd like to just get it out of here if people are willing to do that after you give. And if not, we won't do that, but I think it's important.

[Chris Root (Joint Fiscal Office)]: Good morning, everyone. I'm Chris Root from the Joint Fiscal Office. It'll probably take me longer to pull up the fiscal note than it will take to talk about the fiscal note. The bill before you is a fairly simple one, and so is the fiscal note. But I wanted to before I started explaining what this is, I wanted to tell you that the title of the bill no longer describes what the bill actually does. So I just wanna flag that. So don't pay attention to the title. Pay attention to what I'm gonna say, and pay attention to what's in the strike all So you all will remember when act one fourteen was created was enacted in 2022. A part of that bill included the creation of a new group in the state employee retirement system called Group G. And Group G was crafted to provide for a twenty year retirement plan for corrections workers to allow them to retire at age 55 if they had at least twenty years of service. The incremental cost of the group g benefit is borne by the employee in group g who pays a higher contribution rate of 4.68% more than they would have paid if they stayed in group f. So group g was intentionally designed to be cost neutral to the employer, and the employees in that group bear the higher cost of that enhanced benefit than group g. After you passed that and opened it up for the corrections officers, another bill passed recently that allowed for deputy sheriffs to transfer from group f into group g. There were some sheriff's offices that participated in the state employee retirement system, and they pay the cost of their participation. The state doesn't pay that cost to the state budget. They pay their way. But there were some concerns around inequities by having a few deputy sheriff's offices in group f, whereas state employee or state troopers and a lot of other municipal law enforcement were in groups that had a better multiplier and the ability to retire with twenty years. So you then passed a bill that allowed that roughly 100 or so deputy sheriffs to move into group g and then have a more comparable benefit that, the municipal law enforcement in VMRS group d and the state troopers in VCR group c have. This bill sort of picks up on that theme and deals with sort of one last vestige of law enforcement that, for historic reasons, was in group f. And that has to do with there are three municipalities that participate in group f, Randolph, Bethel, and Danville. Randolph is the only one that currently has law enforcement officers, and I believe there's three of them. And what this bill would do is allow those officers to transition to group g very similarly to how you allowed the deputy sheriffs to transition to group g a few years ago and the corrections officers to do that in after, act one fourteen. So this would only apply to municipal law enforcement that are employed by towns that are already in the state system in group f and just allows those law enforcement officers to transfer into group g. So the towns already they pay the cost of participating in these service. The state doesn't. And these law enforcement officers would be paying for the higher cost of transitioning into group g. So this is cost neutral to the state, and, you know, it it it's really the the cost of the participation is borne by this handful of people who are in these town law enforcement. So we looked at this. The treasurer's office has looked at this. We think the impact of this would be well within the realm of de minimis to the the state employee retirement system, and it would have no cost to the state budget. I did just wanna flag, though, that I probably wouldn't say the same thing if there were other proposals that drastically expand the membership of group g beyond what it currently is. There are some other bills in the building that propose really significantly expanding group g's membership. Whenever you start really adding on and especially adding new employee demographics in that might look very different than the people who are already in Group G, that's the point where I think you want the actuaries to go back and rerun the numbers and see if 4.68% is still the right contribution rate. But this is three people that are very demographically similar to the people who are already in Group G. So, I feel fairly confident that this is gonna have a de minimis impact, and it's not gonna have any impact to the ADEC that you all have to fund every year to the state budget. So there's a lot of verbiage in here that just explains the ins and outs of the different retirement groups, but I already sort of went through this verbally, and I'm happy to answer any questions you may have that I didn't cover at this point.

[Rep. Eileen Dickinson (Member)]: Anybody have any questions?

[Speaker 0]: I guess I do because of your cautionary comment. Does is the concern that if all police officers are most police officers in this group already?

[Chris Root (Joint Fiscal Office)]: There's actually very there are very few police officers in group g. Most of them are actually in the municipal system in group d there. Okay. But since we already have a lot of deputy sheriffs in this group and we're dealing with, like, three FTEs Yeah. My favorite concern is there's a proposal, for example, elsewhere in the building to add all classified employees of the Department of Children and Families into group g. That would more than double the size of group g and very significantly change the demographics of who's in group g.

[Speaker 0]: And not the point. Okay.

[Chris Root (Joint Fiscal Office)]: So when you're dealing with a few people that are sort of similar to the people who are already there, I feel a

[Rep. Wayne Laroche (Member)]: lot more comfortable.

[Speaker 0]: Yeah. Yeah. Okay. Great. Everybody clear on what this is? Are people comfortable voting? Dave, are you comfortable voting? You're on mute, Dave, but Yes, I am comfortable. Okay, thank you. Looks like everybody is. Is there a motion to, approve H519 as amended? Okay, it's a strike all, so I assume it's as amended.

[John (Legislative Counsel)]: Yeah.

[Speaker 0]: Okay. Second? Wayne. And I'm not seeing future further discussion at

[Rep. Eileen Dickinson (Member)]: this point. So if the clerk is ready. Representative Boone? Yes.

[Rep. Trevor Squirrell (Clerk) — time-bound override]: Representative Dickinson?

[Rep. Eileen Dickinson (Member)]: Yes. Representative Feltus? Yes.

[Rep. Trevor Squirrell (Clerk) — time-bound override]: Kascenska? Yes. Representative Laroche? Yes. Representative Mrowicki? Yes. Representative Nigro? Yes. Representative Squirrell, yes. Representative Stevens? Yes. Representative Yacovone? Yes. And representative Chittenden? Yes. Eleventh, no, sir.

[Speaker 0]: Great. Thank you. And this is pension. So, Lynn, I think this must be yours also. It's your day. Everybody's getting a day, and today is Lynn's day. Okay. Thank you. I have a question on this $7.75, just to go back to that for a minute. We don't have to answer it right now. But I'm thinking that we might like this bill if I requested an amendment for moving the two positions. I'm not comfortable myself with those two positions. The rest of the bill, I'm fine with moving along, but I would Okay, like to move so I will ask for an amendment and then

[Rep. Martha Feltus (Vice Chair)]: there may be another couple of things that after I think about

[Speaker 0]: it that I might want to amend as well. Okay, yeah. Right. So we'll request who is that Cameron? Yes. Okay. I'll talk to Cameron and then maybe we can have a conversation. Yeah. Committee, I have a couple of things. No, one thing for now, I'm going to check on the other. We are getting a new fridge. This fridge died, you may have noticed. Please clean it out before we all get fumigated. So, good stuff in there. Would you check before you leave today and just throw everything out? Because if it's been there for two weeks, it's been unrefrigerated. So, take a look. The other thing I just want to say is I think we may have more security starting daily, and it may start next Monday. And we would be the test case because we're here. It's like ease in with one committee on a Monday. I'll confirm that with the Sergeant at Arms, but maybe starting to every day. That's security. All right. I think that's all we have

[Rep. Eileen Dickinson (Member)]: for the morning. Is that right, Autumn? Am I

[Speaker 0]: saying the right thing? Okay, you have time to work on your spreadsheets. And we will have a bill at 01:00, and then we may have more chat about seven seventy five to see how long we are with that.