Vermont Legislature SmartTranscripts:

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Good afternoon, everyone. This is a joint hearing with house commerce and economic development, house general and housing, and house ways and means. We're taking, this Friday, 01/09/2026 at 01:08 in the afternoon. We're here to take testimony on, the CHIP guidance from last year's session. We have with us Jess Hartleben from he's the executive director of the Economic Progress Council, and we also have commissioner Alex Farrell from Housing and Community Development at the Agency of Commerce and Community Development to start it off. So welcome. Thank you for joining us this afternoon. I think the purpose of this hearing is more to understand here, how the process went with, creating the guidelines that Pepsi, has proposing or has proposed and, to hear from our legislative council as well to make sure that legislative intent is is followed in, those guidelines and to hear from some of the users, that may be filing applications for CHIP. And this is not this is not adhering to rehash, what went through the legislature last year and what the conference committee came out and governor signed. This is moving forward, better understand how CHIP is will be working. So with that, chair, I don't know if you have anything you'd like to add. You've been most eloquent. Madam chair. Agreed. So with that, we will introduce our committees or

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: If you wish.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Well, it's a long process.

[Unknown legislator (House General & Housing committee member)]: No. I think we all know each other.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: I think so.

[Unknown chair (House General & Housing)]: Okay. Let's let's just get to

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: You got it.

[Rep. Wilson]: Okay. I know.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Well, we'll turn it over to to Jess and Alex.

[Herb Olson (Member)]: Welcome.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Thank you for joining us.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Thanks for having me. I'm actually really smiling because I have technology. We're totally honest. So just for the record, I am Jessica Hartleben. I am the executive director of Betsy. And I just want to thank you all for, first of all, getting together in one room so that I don't have to do this three separate times. And it's really great to be here and to be back here seven months later since the passage of the CHIP bill. I just want to personally thank each and every one of you again. I am so grateful for your efforts, for your dedication, and for your support to bring this much needed and very wanted opportunity to Vermont communities and municipalities in every corner of the state. We've heard from so many municipalities this summer, and I just did not want to miss the opportunity to personally thank each and every of you for that opportunity that you have given your constituents. I'm not sure if you've seen recently that in Fairhaven, the 24 acre site that many of us visited in July for the ceremonial signing of CHIP was officially donated to the owners, or by the owners, I should say, to the town of Fairhaven. The town of Fairhaven plans to use this land as a CHIP project site, and it's really inspiring to see towns like Fairhaven bring this much needed housing to their community and that Joe Gunter, who testified in front of many of these committees last session, is going to realize his vision of redeveloping the old racetrack that has sat vacant for many, many decades in that community. Just to give you some background, as for the launch of CHIP, CHIP is on track to launch later this month. Our staff has continued to develop and test the software platform since July, and we continue to test that software platform as I sit here and speak with you today. To give you some progress on what we've been up to since the passage of CHIP in July. This summer, the VEPSI Council created a CHIP subcommittee of five council members, which included the following: Chair John Russell, who serves from Rutland County Michael Keene, who serves from Bennington County Rachel Smith, who serves in Franklin County, Senator Wendy Harrison, and Representative Abbey Duke met weekly from July 2 till October 15 to draft and create guidelines, which were then reviewed and adopted by the full BEPC Council. During these subcommittee meetings, the BEPC CHIP subcommittee allowed for public comments and stakeholder input, which provided robust engagement throughout these summer and fall meetings that ultimately led to the CHIP guidelines being adopted by the full BEPSY Council at our annual retreat on October 22. Additionally, we were able to hire a full time staff member on November 3 who will be fully dedicated to managing the CHIP program. In response to the statutory requirement of providing a report on the consideration for amending the definition of a CHIP housing development site, and we submitted that report to the Committees of Jurisdiction on 12/15/2025, the VEPSI Council voted not to make any further changes at this time, deciding to keep the program as simple as possible for municipalities to administer. We realize that this is a brand new program, and we do not want to create any additional administrative burdens for municipalities that are just learning how to use and administer the TIF financing model. Yesterday, Betsy held its first of a three part series in coordination with the Council for Development Finance Agency to understand tax increment financing and the CHIP program. Of note, we had over two sixty participants registered for that webinar yesterday. There is certainly enthusiasm, curiosity, and demand for these webinars. 80% of the participants yesterday were from state or municipal government entities, quasi public agencies, or local nonprofits, with local developers, consultants, or others rounding out the attendance list. The next dates for these free CDFA trainings are January 1315. These free trainings are also going to are recorded and will be available for you to go and review at your ledger on our website. Additionally, the online pre application CHIP interest form went live on Tuesday evening and is available on our CHIP website. The purpose of the CHIP interest form is to help VECSI staff understand the municipal interest as it relates to the CHIP program and the timing of the CHIP projects so that our staff can better inform the council as to when we will be able to be reviewing these projects and the demand for the municipal interest. Any questions on the progress that the council has made over the course of the last seven months before I move on? So for the remainder of the presentation this afternoon, I'm going to be providing you a high level overview of the guidelines and the statutory requirements. I'm happy to come back and provide you additional information as we roll out the program. I would like to thank Representative Duke for being our legislative liaison throughout the summer months and Senator Harrison, because they really did help the council in making sure that we were keeping within the legislative intent and also making sure that we were staying and following the statutory criteria. So in order for infrastructure improvements to be eligible, the guidelines follow the statute. Infrastructure improvements to be eligible must, one, serve a public good and directly support the development of an eligible housing development. Secondly, the eligible infrastructure improvement must result in new or rehabilitated housing developments where at least 60% of the floor area of the projected housing development is dedicated to primary residences, or the projected housing development must meaningfully address the purpose of the program if it does not meet that 60% floor area requirement. Of note, if the projected housing development does not meet the criteria for an affordable housing development, the projects must meet the Buck forecast. While the CHIP program is paying off the increment debt, all of the housing units must be for primary occupancy. All applications for Chip program will be accepted on a rolling basis until 12/31/2035. This slide explains the process from start to finish relating to a municipality for a CHIP project. And again, this is a very high level overview. I'm not going to get into the nuances of this. This slide would be very dense if I were to do that. At the heart of every municipal application, we keep the legislative purpose of the program at the heart of this. And the legislative purpose of the CHIP program is to encourage the development of new primary residences for households of low and moderate income across both rural and urban areas of all Vermont counties that would not be created but for the infrastructure improvements funded by the program. So the municipality is always the applicant. And so on the far left here, you'll see that we have the municipality listed there. The municipality is going to create a housing development plan, a housing development site, and then housing infrastructure agreement. Those are all outlined in the statute and in the guidance. The municipality will then submit that and the supporting documentation into the portal that the VEPSI staff is now creating. That portal, as I said, will be hopefully up and running in about two to three weeks. Once that is submitted through the portal, Betsy staff will review those documents. And if those documents are deemed complete, BEPSI staff will schedule a site visit with the municipality. We will go out, we will see the proposed site, and then we will schedule with the municipality a time for the municipality to come to the council. The municipality will then come to the council, and the council will review the application and ask further questions about the application. Vepsey Council, with the support of the three nonvoting members that the legislature added to review and approve the CHIP applications. And for those of you that may or may not remember, Commissioner Farrell serves as one of those new members. Mora Collins, or her designee, from BHFA serves as a second member, and Gus Selig, or his designee, from BHCB serves as the third nonvoting member. Those three folks will review those applications with the local council. Once VECSI approves the CHIP site, the infrastructure project can begin. The municipality will then either bond or work with the developer or the sponsor to finance and then construct the infrastructure project. The infrastructure project can either occur at the same time as the new private development or the new private development may occur after the infrastructure project has occurred. VEFT doesn't get in the middle of that. Once that infrastructure has occurred or is occurring simultaneously, that new housing construction happens. That new housing construction increases that municipality's grand list values. Those new grand list values create new tax revenue. Those brand new tax revenues are then shared with the municipality and the state. Those new tax revenues are then used to pay for that infrastructure that caused that new housing to be created. And those new tax revenues will then pay off that infrastructure debt. Once that infrastructure debt is then repaid, all of the new tax revenue that was generated will then go back to the Education Fund. This slide now explains the amount of CHIP increment that can be retained by the municipality depending on the type of housing that is going to be created. As you'll see here, there are four types of housing. There's two types of affordable housing. There's moderate income housing and there's market rate housing, and these are all created statutorily. The area median income limit is different for each housing type, and the income limits vary geographically using the federal housing and urban development guidelines. There is no income limit on the market rate housing, Although I will note that there is no luxury housing to be created. There will be no second homes that will be allowed in an application, and there will be no vacation homes that will be allowed to be created in the application because the purpose of the program, as is outlined, and the legislative purpose is for primary residences. The percentage of housing units created for each housing type varies between affordable and moderate income. Affordable units is 15% and moderate is 25%. The income retention rates. All projects must retain 85% of the municipal tax increment. However, a municipality may retain up to 100% of their municipal tax. There are different education tax increment rates for market housing versus the affordable and moderate income housing. The market rate housing is capped at 75%, and the affordable and moderate income is capped at 85%. Lastly, there is a but for a test, and that's going to be required for the moderate income and the market rate CHIP projects only. That will mean that for those projects, a municipality would need to demonstrate that the proposed housing development either would not occur or would occur in a significantly different way if the municipality did not have the ability to utilize the CHIP financing. This next slide outlines the major municipal responsibilities for

[Herb Olson (Member)]: a CHIP project.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: The first is that a municipality needs to submit that CHIP interest form. The CHIP interest form, as I said before, really helps the VECs staff understand what the municipality is thinking in terms of their CHIP project. On our website, there is the link to that. And we are also using that form to gather data because we want to come back to the legislature to be able to tell you and not speculate what is going on in the communities. And it's really important for me to be able to provide you actual data and evidence about what is working and what is not working. And so that CHIP interest form is a way for us to actually start gathering that information. And then the other pieces I did explain earlier in my presentation about providing the notice of the housing development plan and the housing infrastructure agreement to the legal voters of the municipality, submitting the CHIP application to VEPSI, posting the site visit. In the statute, we do have a timeline. We have to provide an answer to the municipality within ninety days of doing the site visit. And then once the application has been approved, the municipality will need to then verify that the developer and the sponsor's activities comply with what's outlined in their infrastructure agreement. They'll need to ensure that the infrastructure improvements are actually constructed as agreed upon by the developer. They'll need to confirm the total cost of the infrastructure projects, validate the amounts of the education and municipal taxes that have been retained, and we work with the Department of Taxes Now on TIP projects. We intend to collaborate with the Department of Taxes for CHIP as well. Additionally, the municipalities will need to fulfill annual reporting requirements and financial audits. I'm not going to go through today all of the allowable improvements, but we did take into consideration through the testimony that we heard throughout the legislative session and through public comment and through looking at our TIP rule, the types of allowable improvements that will be available to ship projects. There are a number of infrastructure improvements that are allowed. There are a number of transportation improvements that are allowed, site preparation, and soft costs. There are also related costs that are allowed, and these are taken from the TIF rule. Lastly, the infrastructure agreement. This is really the meat of the ship project. This is the agreement. It's a legally binding agreement between the municipality and the sponsor and the developer that includes all of the terms that would be related to the infrastructure financing terms, the affordability components of the CHIP project, the number of housing units that will be created, the timelines for the infrastructure projects and the housing units, and all of the performance assurances. These are outlined not only in statute, but then there's also additional guidance for the municipalities as well. And I'm not going to go through the fine print here. You all have these slides and can ask follow-up questions. Happy to answer them. And again, we'll be coming back to you if we notice that we need to make any changes once the program gets launched. That is all I have. If you have any questions, I'm happy to answer questions. Also have Commissioner Farrell here with me. He can answer any housing related questions. Thank you so much.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Questions?

[Unknown chair (House General & Housing)]: There's a question here.

[Unknown legislator (House General & Housing committee member)]: You mentioned that no luxury housing would be allowed.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: How is luxury housing defined? So the council hasn't defined luxury housing. And I think that that is something that's going to need to be addressed by the council and that we would need to look at on an application by application basis based on the community's needs. There's one more related question, which is how are municipalities how are they on the hook to make sure that none of these are second problems? So there are compliance requirements in the statute that say that municipalities are required to look to see that biennially, that they're going to certify through homestead forms and or through landlord certifications that they're in compliance.

[Unknown legislator]: Many of our discussions in commerce and economic development and what I'm hearing from constituents is a concern that those municipalities that are already geared up for planning for some staff to process these applications, maybe a serious advantage. Is there any kind of a vetting of applications or is it strictly first come first serve or will there be a geographic distribution follow-up to allow the fair items and other smaller communities to supply?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Sure, so the council at this time has chosen not to prioritize applications. However, the chair has signaled that should there come a need to prioritize applications that the council would consider doing that in the future. But right now, the council is focused on launching the program and seeing what we get for applications. And then if we need to prioritize, we will. Representative Wozilek.

[Rep. Wilson]: Thank you. Just putting a finer point on Representative Burkhart's question. So verifying the primary residency of these units will be accomplished through the homestead or the landlord certificates. That's the mechanism that y'all are looking for to confirm.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: That's what's in the statute that's required. Yes. Okay.

[Unknown legislator]: Yes. So you've had over two sixty participants in your first webinar. I think just solely from a housing development standpoint, are you seeing municipalities attend? Do you have a census of that? And not that you need to share it, but are you seeing new developers? Are you seeing new municipalities who don't normally reach out for these types of programs? I think that's something that we look at. I know that Commissioner Farrell was in yesterday talking about how we've a number of new smaller developers. I'm just wondering what the interest that we know is there. Are you seeing the change or even more names, different names?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: So we don't typically hear from developers in other programs that we administer. So VEXY administers the Veggie program, which is a business incentive program, and the TIF program, which is largely a municipal based program that has typically been an economic development driver. I will just say anecdotally, we have heard from a few developers that are interested in utilizing the tool. So we'll just wait and see and continue to gather data and report back.

[Rep. Wilson]: Great. May I chat one?

[Unknown legislator (House General & Housing committee member)]: Of course.

[Alex Farrell (Commissioner, Department of Housing and Community Development)]: For the record, Commissioners. Oh, I'm sorry. Thank you. For the record, Alex Farrell, Commissioner of Department of Housing and Community Development. We do hear often from communities that are contemplating how they're going meet their housing targets. And so I'll say again anecdotally, I'll be interested to see the data as some of the pre applications come in. Anecdotally communities that their historic annual average production is on the low side. We are seeing those communities come in and say we recognize this opportunity. This might help us meet our housing target. We do want to talk about this. So the Betsy team has been incredibly good at cataloging who has reaching been out, who wants that information, adding them to newsletters, and making sure communication gets out to them. So again, at least anecdotally, we are hearing this encourage communities to step into a space where they hadn't previously.

[Herb Olson (Member)]: Can I have a follow-up?

[Unknown legislator]: In the guidelines, is there any outreach discussion on how we're getting this out to communities?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: So I will say, thank you for that question, that VLCT did get a $500,000 MBRC grant to provide technical assistance to municipalities. I'm not sure what that's going to look like, but I know that for the shift to work, you need to have a partnership with a funding developer in order to be able to submit an application. So I would anticipate that there's going to need to be a lot of education. We have been sharing out the webinars. I was encouraged to see in the other We did the poll before the kickoff of the webinar yesterday. And in the other section in the chat, there were a handful that made up that 8% of developers that were coming to that webinar. So the word is, I think, getting out there. This is a new program, and it's a novel concept in Vermont. So it's going to take a lot of education and a lot of communication. Following

[Unknown chair (House General & Housing)]: up on that, first of all, the $500,000 grant, was that to provide technical assistance solely for the CHIP program? Yes. Delighted to see it's been that productive so far. Have you received any inquiries, anecdotally or otherwise, from communities saying, gee, we'd like to, but we need help. How do we get help? Like, who can pay for a consultant or because small towns can't do this themselves if the entire town staff consists of a clerk, town clerk. So have you gotten any of that back? Like, where do we get help? Who can pay for it?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Yeah, I think anecdotally, we probably have gotten some of that feedback. And we refer them to the EHCD for some municipal planning grants. There are other types of state grants that are available. And I think that over the next few months, we'll be working with the LCT to roll out that type of technical assistance to provide those potentially consulting type services. I had a quick question about the

[Unknown legislator (House General & Housing committee member)]: thought that under related costs you have, like planning and consulting fees,

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: as part of the loan that you're So yes, thank you for that clarifying question. So they are allowed. However, costs are only think of it as like a reimbursement because you would not be able to get your money back until the increment is generated. That's a good thing years. Right, right. So it's not an upfront. You have to build the infrastructure. You have to do the consulting work. And then once the new tax revenues are generated, that's when they would be reimbursed for those. So there might be some upfront cost to the municipality.

[Unknown legislator (House General & Housing committee member)]: I just had another question, but related to the So we've kind of set up the parameters of requiring that it be a primary residence, like the affordability of goal as well. What type of how do you foresee I can see how you're going to verify this. What do you do for remedy or what kind of penalty How do we prevent the whole project from, being nervous about getting involved? Yeah,

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: so thank you for that question. And we currently have compliance measures that are already in place for the TIP program. And we have also addressed that in our guidelines. So if, for example, a project in the TIP world comes out of compliance or there's a misuse of TIP funds, the municipality comes back to the council for what they call a substantial change request. And the council works with that municipality to bring them back into compliance. There has never been a case in my understanding of looking at any of the eight tips that are currently in Vermont where the Vepsey Council has stripped the increment entirely from a municipality. Are there instances where a municipality may have to repay the Ed Fund for increment that they used that they shouldn't have? Yes. So that is something that happens on a case by case basis. I think that that is something that we would just need to continue to monitor and that every municipality, just like every bank, is going to have to weigh their risks and their projects on an individual basis.

[Unknown legislator]: So, thank you so much. Really appreciate you being here. Appreciate the heavy lift of starting a new program, developing all of the infrastructure necessary to make it comprehensive and easy to follow. So I just want to thank you for that. That's really you need to be recognized for all of the work that you've been doing since we left session. I know you said yesterday was the day that the pre applications opened, right? People could start

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Tuesday at 05:00.

[Unknown legislator]: Okay. So

[Unknown legislator (House General & Housing committee member)]: this week. So

[Unknown legislator]: when do you anticipate having information for us on how it's going, on what's happening, on how long it takes? What percentage of free applications turn into applications? And what percentage of those get approved? Are we looking at twelve months? Probably are we looking at six months?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Yeah, think. So I think when we were creating the reporting reports.

[Herb Olson (Member)]: We're waiting.

[Unknown chair (House General & Housing)]: We're hanging on your answers. I

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: think when we were in the legislative session and we were coming up with our reporting requirements, I think the first report back to the legislature is, I want to say it's in December maybe of 'twenty six or maybe even January '7. But I was in Senate Economic on Wednesday, and I think Senator Clifton was going to be inviting me back maybe in March, just to give an update. So maybe you can have a Senate and a House hearing in this room, and I could just come and give you all

[Unknown legislator]: a big update at that time. We'll get on some meetings. Do

[Unknown legislator]: you think that you'll have enough information by March?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: I don't know. Okay. I don't know.

[Unknown chair (House General & Housing)]: We can check-in with you and then see. Yeah. I

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: wanna follow-up a little bit on a few things you've said about sort of the process for especially for communities that have lower capacity. Mhmm. If, say, someone comes with

[Unknown legislator (House General & Housing committee member)]: an application that might be on the gray zone of whether

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: it has luxury housing or not luxury housing, if you're in sort

[Unknown legislator (House General & Housing committee member)]: of a we'll know it when we see it scenario,

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: and then they didn't think they saw it and you see it, Does their application get rejected? How does that work?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Yeah. So what we do now with TIP is there's a lot of back and forth. And Commissioner Duxin is here, and he happened to be involved with the Rutland Tip District, and he can speak to that. Betsy's staff work with municipalities, and we go back and forth. And one of the, I would say, benefits of having somebody like Alex and Laura and Gus is that they're the experts in housing. So they have that data that can tell us what a luxury house would look like in Bennington County versus what luxury homes would look like in Windham County or wherever. So you'll be able to give us that data. We can go back and say, look, this is what the data says about the housing markets. And we also know that housing markets are going to change over time. This is a ten year program. You can't have it be static and say, what your house was valued at ten years ago is not where your house is going be valued at ten years from now.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: Well, might be, but right in the middle, it's certainly not. Yes.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Exactly. So that's what I would say is we will work with an applicant to make sure that their application can move forward without just saying, No, you're done. And then in the guidelines, to also say, if municipality is like, No, we wanna go forward. And then they go forward and the council says, No, in the guidelines it says, we will provide you a written denial, and this is what you need to do to come back to the council.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: And the sort of changing market is why you wouldn't put it in rules?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Correct. Okay, thank you.

[Rep. Charlie Kimball]: Hi, Jessica. I'm not sure if it's a guidelines question or a process question. In terms of calculating the tax increment retention, where does that start? How do you verify it? Is it from the applicant? Is it from BEPC?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: It comes from the Department of Tax.

[Rep. Charlie Kimball]: So walk us through the idea. Not through the actual math, but in terms of the flow, if a project developer comes to you for the development agreement, says this is what we think the tax increment is, that then goes to tax and that comes to you? How does it work?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Yeah, so the municipality is always the applicant. So the developer is not going to be coming to us and saying, this is what it's going to be. So the municipality would come to us. And we're working on this in the spreadsheets right now in the software. The There's no easy answer, Charlie. But I'm happy to give you that answer offline and give you the spreadsheets that walk you through that increment calculation because it's over that

[Rep. Charlie Kimball]: The lifetime.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: The lifetime of the project. And then I can tell you that it is verified by Jeff Carr before it comes to the council.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Okay.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Can you send that to Sorsha and send that to Chittenden? Of course. Yeah.

[Herb Olson (Member)]: Yeah. Roxanne Wilkinson.

[Unknown legislator (House General & Housing committee member)]: Can you help me understand when they initiate the proposal, project out the tax rates that they expect? Is that correct? I'm sorry. In calculating the increment, there's an expectation that we've obtained based on objective tax rates. What happens if we have a significant change in the funding formula or significant mergers or if there's some change in demand on the Ed Fund that radically changes what those tax rates are? How is that true number adjusted?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: I don't know the answer to that question off the top of my head. Again, I think that is something that would need to be I'd have to talk to Jeff Carr about that. He's the one that really does all of those calculations, and he's the one that does all of that truing up. We rely on our executive branch economist and the Department of Tax for the administration of that portion of the program.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: Maybe we can have a separate session with Jeff and the tax department and you and

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: That would

[Unknown legislator (House General & Housing committee member)]: be some of these.

[Unknown legislator]: Unless Yeah. Anyone from another

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: committee wants to come for that.

[Unknown chair (House General & Housing)]: Well, just a very basic question. When let's say there's a when tax increment is established, bonds are issued, the bonds are paid off by the tax increment, does the moral obligation of the state stand behind that?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Yes.

[Rep. Wilson]: Mean, think Stand behind the bond?

[Unknown chair (House General & Housing)]: Behind the bond payments. Yes. Which means I think that's partly the answer to your question.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: No. I don't think it's not. It's

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: I don't know if it does.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: It's really it's really I mean, we do this in TIFF. Okay. It's not it's not a controversial it's just that I don't have the information here in front of me. It's something that we use in TIFF. It's a modeling tool. And I just was not prepared to have the answers to those questions today. But I'm certainly happy to come back and provide you that modeling. And it's going to be in the portal in about two to three weeks.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: That sounds great. I think the moral obligation might sit with the municipality, but we can look into that. Yeah.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Okay. I think it's time that we move on. Jess, thank you very much. I will say that, congratulations, and, you were true to your word. You told us, the conference committee legislature that you would have this done by January, and you've done it. So congratulations to you, the Pepsi board, and and congratulations also to the members, Abbey and to senator Harrison, and everybody that sat on that special subcommittee, to write these guidelines. So it's much appreciated. Thank you.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: They are a volunteer council, and they dedicated many hours of their time. The Pepsi Council is a volunteer, so they need to be recognized as well for their dedication and their commitment to the state of Vermont for their efforts. So thank you.

[Herb Olson (Member)]: Thank you.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Commissioner, did you have more to add?

[Unknown (brief interjection)]: Unless there's anything in the

[Alex Farrell (Commissioner, Department of Housing and Community Development)]: chairs, but I just would

[John Craig (Office of Legislative Counsel)]: like from me, I'd definitely

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Thank you. Thank you.

[John Craig (Office of Legislative Counsel)]: Thank you. John?

[Herb Olson (Member)]: Hello everyone. Hi, Hi, John.

[John Craig (Office of Legislative Counsel)]: John Craig, Office of Right of Print of Counsel. I guess I'm happy to approach this in different ways. I think your request had been to try to think about the CHIP guidance in relation to the legislative intent behind what we see in Act 69, kind of been in the same pocket. You guys throughout this testimony listening in and getting a sense for what's going on here, I think I could start with identifying some places that I think of as, they're not problematic areas, but throughout the process of developing the guidelines, I kind of had more questions to as to where the direction fit within the legislative. And I would reiterate what the executive director said, there was back and forth during that process, it was a nice communicative approach to working through the guidance. So I'm happy to start with the kind of areas that I most thought about while thinking of these pieces, and then maybe another way we could do this afterwards depending on the approach that you'd like to take. Things that you've identified in the guidance that you're interested to know more about, I may have thoughts as to how they relate to the particular language or if there are things you would like me to look into. I could come back and talk about other pieces, but happy to start with kind of the high level things that stood out to me. And just to state again, these aren't things where there are issues, they're just things that stood out to me as kind of warranting more investigating. So with that said, the first piece I would note is, and if it's helpful, I can pull up you see I'm on Betsy's page looking at the guidance. Could share, just a second. I'm gonna start with the definition of housing development site, just because I think it's something worth flagging for potential legislative consideration. So just a second, I'll begin. And just before I hop in, so everyone recalls the housing development site is analogous to what you would see as a tip district under standard statewide tax increment financing. It's the area in which your OTP is set and in which you generate the increment and by statute in Act 69, it is the parcel or parcels on which the housing development that's being financed here. Sorry, the infrastructural improvements for the housing development are being financed. It's where that housing development is situated. And one of the key things from last year that you may recall was the tightness of the site. It was just the parcels on which that housing development was going. So let me just share something to kind of foreground for thinking heading into session. And this is a technical piece which is why Betsy raised this. See if I can get Do you see that at all?

[Rep. Wilson]: Yeah.

[John Craig (Office of Legislative Counsel)]: Look at that. Okay, so just to read aloud here what you see in the guidance. Housing development site, the whole parcel or parcels where the housing development will occur. If the development is to occur over multiple parcels, parcels must be contiguous. Only parcels where the housing development is to occur can be included in the housing development site. That's what we were just discussing, the parcels which is situated. And then there's this phrase, the unless contiguous parcels are under common ownership and share a school's property account number in which case they must also be included. I just wanted to flag this line. The reason and I'm sure that you can ask Betsy as well, but the reason that this was proposed to be included this unless contiguous parcels is I understand that it relates to the actual administration of the parcels themselves that these wouldn't be separated because they do share a span. So I'm just calling out that the definition that you see here could conceivably be technically larger than just the parcel or parcels on which that housing development is situated because it might include contiguous parcels that share a span. And you may recall that there was a second law provision in Act 69 but also was triggering our report on the definition of housing development site in anticipation of this exact concern. That's just the first piece that I wanted to know. It's really a technical provision relating to what the scope is for that housing development site. And please jump in.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: You don't by any chance know the process for changing a span, do you?

[John Craig (Office of Legislative Counsel)]: I do not know that.

[Unknown legislator (House General & Housing committee member)]: I was just thinking

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: Mark probably didn't, I'm gonna ask him

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: after. Okay. The

[John Craig (Office of Legislative Counsel)]: next piece I think would just be naturally a place where I might expect folks to have questions. You may recall back and forth on the definition of improvements from last session and this debate around public purpose versus public good. At the time, was thinking that improvements that would need to be for a public purpose would be publicly owned. And so there was this shift to using the language of public good. And that's what you see here. So I think folks might have questions about what constitutes a public good if it's not publicly owned. And you can see in the BEPSY guidelines, these are what have been set out here. So your improvements can be publicly loaned, publicly owned and publicly accessible, privately owned and publicly accessible, or, and this is kind of the most meaningful category where I would expect questions, privately owned and privately accessible so long as municipality can demonstrate a community benefit from the chip supported infrastructure project. So this is the way that the guidelines are building out what that concept of public good is. And you can see that there's a requirement for articulation with evidence, how they are mutually beneficial for the municipality and developer.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: Couldn't you define any property that increased the grand list as?

[Herb Olson (Member)]: Broadly Yeah, or the

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: mutually beneficial for the municipality?

[John Craig (Office of Legislative Counsel)]: People could make arguments, but yes.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Okay, okay.

[John Craig (Office of Legislative Counsel)]: But this is a term that just stood out to me and I was kind of interested in following the process just because it is a bit more mutable, it's a bit more, feels like you can use this as a tool throughout the process, but here are the set of guidelines and you can see the requirement for demonstration evidence.

[Unknown legislator]: I

[John Craig (Office of Legislative Counsel)]: think throughout the process, the 60% floor area is the place that I was most closely following along to see what would happen. I think that the executive director's testimony was extremely clear on Betsy's approach to this, that regardless of this floor area threshold, all housing units would need to be primary residences for the duration of the indebtedness. So I think the executive director addressed that piece, but that's just an area that I was following along because if you saw earlier instances of the guidance, you may recall that there was some thought that you could have 60% be dedicated to primary residence and potentially have other housing units that aren't contributing toward the threshold that is not primary residence essentially. That's not in this version, the published guidance is clear. If it's a housing unit for the duration of the indebtedness, it has to be a primary residence. And you've already heard earlier that that would be demonstrated by annually by the homestead declaration for that landlord certificate.

[Unknown legislator (House General & Housing committee member)]: I have another

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: question. So I came upon some guidance from a realty group, and I think the tax department simultaneously came upon similar guidance from a Realty Group, and they've submitted a request for us to make some changes to our property transfer tax statute because folks have found a workaround that essentially you buy a property, issue a long term lease, and then take back that long term lease fairly quickly. And so I'm curious if you could imagine a similar workaround in this scenario and how a municipality

[John Craig (Office of Legislative Counsel)]: Right, I would have to think more, but the way that you've presented it, I don't see why you couldn't equally attempt something in the same context, but I

[Rep. Wilson]: would need to think more about it.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Okay, okay.

[Rep. Charlie Kimball]: I recall that not only is it the 60%, but if the development

[Unknown (brief interjection)]: largely fulfills the purpose of the chapter,

[Rep. Charlie Kimball]: which is to create more low and affordable income housing, or low and moderate income housing, then it still passes that test.

[John Craig (Office of Legislative Counsel)]: That's right.

[Rep. Charlie Kimball]: So there's a flexibility for PEPC in

[Herb Olson (Member)]: that sense.

[John Craig (Office of Legislative Counsel)]: The project criteria contemplate two avenues. One is that you meet the 60% floor area threshold described here, and the other is that you meaningfully address the purposes of the chapter which the executive director went through. That's actually the point that I was gonna hit next is part of what I'm getting at here is identifying the terms that are kind of most malleable and so I'm gonna hopefully not cause whiplash, but I'm trying to find Yes, here we go. So looking at the process for application, you'll see that the housing development plan that includes, so I can pull the proposed housing development including the anticipated floor area dedicated to housing. It's less than 60% a narrative about how that projected housing development meaningfully addresses the purposes of the CHIP program. I think this is an area to pay attention to. What does it mean to meaningfully address? But you can see that the additional provision that's been added here, supplementing what exists in Act 69 is to require a narrative component to that to get at that piece. But you're right, there's two avenues, You don't necessarily have to meet the 60% threshold.

[Unknown (brief interjection)]: Sorry, just a second.

[John Craig (Office of Legislative Counsel)]: The other pieces I think worth noting in the guidance are just areas that stand out to me beyond what you might recognize from Act 69, just because they do go further, are requirements for the Housing Infrastructure Act. And actually gonna flip

[Unknown (brief interjection)]: those

[John Craig (Office of Legislative Counsel)]: conditions. Yes. Okay, so if you see on the screen here, a set of bullets for the housing infrastructure agreement, just note that there's some additional provisions included here which build out the concepts from the program. So under statute, what you'll see if you just look at Act 69 is the first five of these bullets. Identification of sponsor, developer and housing development, make sure you obligate those tax decrements exclusively for the purposes to which they're intended to be dedicated. You can see the primary residency requirement, which is built into the health infrastructure agreement. And then you can see this performance assurances piece. I did just want to note so that you'll know places to look, Include expected outcomes, including the percentage of care area dedicated to housing, number of units, number of affordable housing units, and expected development value. A detailed description of the infrastructure improvements, the types of costs and amounts of cost improvement that may be finest with that. Provision that expressly defines, this one's particularly, and a provision that expressly defines the obligations of the municipality and sponsor and or developer in the event that that tax increment generated by the housing development project falls short of the financing. This is particularly significant because as you'll recall, under statute municipality would be required to make whole but Ed fund regardless of what's happening in the property value. So this is saying the housing infrastructure agreement needs to establish some kind of obligation for what's done here. This doesn't specify, it doesn't identify a party that would cover that whole essentially, but it says you need to build this out in your housing infrastructure agreement so there's not ambiguity as to what's gonna happen in the shortfall. Additionally, you can see that the municipalities shall provide notice of these terms to the legal voters, which is under statute. I think the other interesting piece to note in the guidance is the amendments process, which is just in part where you're gonna hear me identifying here is things that we talk less about in committee. In committee we talked about some statute, she didn't especially need guidance to build these things out, but I wanted to hit some of the pieces that will be novel if you are familiar with the act and you're just looking

[Rep. Wilson]: at the

[John Craig (Office of Legislative Counsel)]: guidance now. Let me pause for just a second, but Betsy has identified in the guidance some of the approach for amendments. Yes, so it's section nine of the guidance, And you can see that this sets out a process and identifies some of the pieces that would require Pepsi approval. So any significant changes require Pepsi review and approval before proceeding. You'd apply for a substantial change request, submit a narrative explaining that desired change, And those documents would be approved by the legislative body at a hearing. And then this is non exhaustive, setting out some of the things that you can imagine triggering this amendment process to your plans. So increase in the CHIP funded portion, actually changing the scope of the infrastructure project itself, increase in the approved debt ceiling, as you know, the debt ceilings and the retention percentages and the like can vary. About the retention percentages are up to a maximum figure. So just noting this is an area you can look if you're trying to identify the sorts of things that might trigger an abandon. With that, I'm gonna pause. I think it might be helpful just to see if folks have specific pieces they either would like to hear my thoughts on or have me look more into or however you guys might best have.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Questions?

[Unknown legislator]: Yes, Ashley. Triggering an amendment, something changes, is that on Vepsy to reach out to the municipality? Or is that on the municipality to reach out to Vepsy and say, Hey, X, Y, and Z has changed.

[John Craig (Office of Legislative Counsel)]: Yep. So should have not stopped screen sharing. Sorry. It's on No, no, no. It's on Monday. It's my fault. As you can see, it's on the municipality. Any significant change requires Vepsy's review and approval before proceeding. The So municipality has an incentive to write, they're not going be able to move forward with the proposal until they do that, that's it for that approval.

[Herb Olson (Member)]: Thank you. Herb? Thanks very much. Always good to hear Leslie to go through and and describe the details there. It gives you a lot more insight to what's going on. Can I go back to the comment the comments on the common benefit issue? I think that's sort of what it was. I think there was some guidance and I was having a little trouble.

[John Craig (Office of Legislative Counsel)]: The common good.

[Herb Olson (Member)]: Common good? Okay. Yes, common good. And I'm trying to recall exactly what the question was that you had about that. And I wasn't sure whether it was question about the actual content of the guidance or just that it wasn't crystal clear detail kind of thing. There's a couple of ways, at least a couple of ways

[Rep. Wilson]: you can draft that sort of stuff.

[Herb Olson (Member)]: You can create a general standard for an agency to apply to an agency or for the agency by itself, or you can try to do some specific stuff. I'm trying to understand what

[Rep. Wilson]: the question is you have about that.

[John Craig (Office of Legislative Counsel)]: Yeah, so just to clarify from earlier, this was not something where I was identifying any particular issue. I was trying to remind the committee that last year there was a debate around the use of public service versus public good. A lot of that debate came down to whether something was required to be publicly owned. You may recall there's some discussion as to whether or not the infrastructural improvements need to be public improvements, what does that mean? And where the statute landed is on this use of the term public good, as a guest public purpose, which is thinking that infrastructural improvements could be privately owned, but they needed to serve a public good. And I was just identifying, this is the place to look if you wanna look within the guidelines to see this. And you can see the process that's set up here. Something privately owned and only privately accessible may be eligible. So long as the municipality can demonstrate a community benefit, they would articulate with evidence how the community needs or desires to plan improvements mutually beneficial municipality and the developer. And that's when representative Kornheiser pointed out the malleability, the breadth of that term. Because there's all sorts of arguments you can make as to how an infrastructure improvement might be mutually beneficial for the municipality and developer that are quite broad. That you increase the property values, could that be argued to be mutually beneficial though it's privately owned and otherwise not offering that? Yeah, yeah. And it's all coming back to the, it has a lot

[Herb Olson (Member)]: to do with the different nature of the camps, think. It's not a small girl camp, you can be looking at that particular aspect about, okay, it's a product development, but what's the good thing? So, yeah, I'll take a look at it a little more closely. First brush, looks pretty good. Nice.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Jonathan?

[Rep. Jonathan Cooper (Member)]: Thanks so much. John, this question is really about that notion of, substantial change, the thresholds that sort of articulated there in that portion we were just looking at. One thing that jumped out to me is one of the bullet points in the non exhaustive list was changes in the sources of funding for the chip funded portion of

[Herb Olson (Member)]: a

[Rep. Jonathan Cooper (Member)]: project. My thought was how sensitive, where is that threshold? I mean, I guess it's not is it crystal clear, or is that also something maybe you were stressing the describing this just before we pause your questions? But that seems like something that might undergo some tweaking start to finish. And I'm wondering where how you're feeling about where all the reliance is for when it becomes substantive.

[John Craig (Office of Legislative Counsel)]: So I think that would be a question for Betsy. I can't help you so much with that, but just note that any amendments to your financing plan, you're gonna have to go through those changes to the financing. You have to run that by Betsy, but I think can't speak to that.

[Herb Olson (Member)]: Jonathan, could you go back to that statement you had about maybe more than one parcel and

[John Craig (Office of Legislative Counsel)]: a spade number issue? Yes, just a second. And just to remind everyone this was an issue that was forecasted at the end of last year, specific task as to whether or not to come back on this piece.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: And we do have sort of an ongoing conversation happening with the GIS office and property valuation about exactly these things, even unrelated to TIF and CHIP and all that. And I think there might even be something in the miscellaneous tax language about it.

[John Craig (Office of Legislative Counsel)]: So the specific question here is, in statute, the definition of housing development site is the tightest possible site definition. It's just the parcel or if there are multiple parcels involved on which construction is occurring for the housing development, it's just those parcels where the housing development site is located. The specific issue here is that if someone had a neighboring contiguous parcel on which construction was not occurring, but that it shared a span, the assertion was that for administrative purposes you wouldn't be able to separate out that parcel. And so the definition of housing development site would need to be broadened to include that contiguous parcel that does share the span. That's the question is sort of, is it administratively required that you include that additional parcel just for purposes of having your assessed values for the health and development side of the way.

[Herb Olson (Member)]: So if I got it clear you're saying there might be a particular parcel with a different owner owned so it would be a different part span?

[John Craig (Office of Legislative Counsel)]: Maybe another way to say this it's if the same owner has multiple parcels adjoining each other, is it possible to have multiple parcels adjoining each other with different span numbers or if you do have adjoining parcels, do they automatically share a span in which case sort of see the technical necessity is that they would become part of that housing development.

[Herb Olson (Member)]: Like you said, let me make a clarification, but if it's a contiguous piece of property owned by the same owner, it's letting the span.

[John Craig (Office of Legislative Counsel)]: So that's the assertive justification for this particular technical provision is saying that if you just follow directly the statute which says only the parcel on which construction occurs and not this contiguous when held by the same owner, that because they share a span. So that's where the problem comes from and the problem that it's trying to solve.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: And I guess I'd add the reason that I'm curious about it is one of the sort of debated edges of TIFF law is how sort of edge properties can be added or not added. And so if if two parcels that were not owned by the same person became owned by the same person, and then someone could add, could modify the span to include that now contiguous parcel? And would that then necessitate a substantial change request or not because it was not previously within the span, but now it's within the span? And if we hadn't spent all of these years at the edge of TIF policy every year, for some reason, I never would have wondered how a person changes his span.

[John Craig (Office of Legislative Counsel)]: You could imagine just the economic effect from the increment generated would be doubly large in a sense because not only are we adding additional properties such as taxation, they weren't included in the OTB against which the income has been paired. For those who may be scared to ask questions, if you have particular things that you want me to look at, you can shout them out or you can email me and I can take them.

[Unknown legislator (House General & Housing committee member)]: Or just speak to them at a regular volume.

[John Craig (Office of Legislative Counsel)]: That'd be great too.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: Thanks.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Great, thank you very much.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Eddie, did you have a question?

[Herb Olson (Member)]: No. I was agreeing with your point.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Oh, Charlie thought you

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: did. Okay.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Thanks, Herb.

[Rep. Wilson]: Representative Kimball.

[Unknown legislator (House General & Housing committee member)]: And then Then representative Hancock got involved. It was

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: everyone's really looking out for you.

[Rep. Wilson]: I'm so appreciative. Happy be

[John Craig (Office of Legislative Counsel)]: Happy to be here with all three

[Josh Hanford (Vermont League of Cities and Towns)]: committees. As you know, Vermont Legacies and Towns represents all the cities, towns, and most of the villages in the state of Vermont. They're our members. We refer to them as our members. Again, thank you all for the incredible work you did last year on CHIP. It was a lot of work. We've had great interest from our members. Many saying this is a game changer that they've been waiting for. We've had numerous requests from members for training and resources and templates and guidance and consultants and project managers and the list goes on and on and on. We've provided at least three sort of educational awareness type trainings for our members early on, which did nothing more than generate more hunger for more guidance and more direct technical assistance. And since then we've applied for a Northern Border Regional Grant Program, which you've heard about earlier testimony. We were just announced that we received that in mid December. We don't have a grant agreement yet. We don't have signed agreement but plans are underway. We're in the process of trying to get that grant agreement and to come up with our match award that's required for that. But our hope is we will begin offering assistance in mid February. And we're calling that Vermont's chip in Vermont, chip invest in Vermont.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: We're all very pleased with your marketing.

[Josh Hanford (Vermont League of Cities and Towns)]: Okay, well good, good to see some laughing. The type of assistance that they'll be provided with that is a base level, you heard it, we need to continue education, but then we need some sort of foundational trainings of what Chip is, what's required. We plan to create some tools and resources, a resource library that has template documents, template agreements, a chip increment calculator, you can run numbers. Obviously there's a lot of need for the infrastructure development agreement and not having every community start from scratch around that and incurring significant attorney fees right at the gate. So we're going to work on that. We're going to include the RPCs and RDCs in some of these trainings and use them where we can. One area that our work isn't going to address that probably is a need out there somewhere is support for the actual the home builders and the small developers like those aren't our members but the municipality can't submit an application unless they're bringing these projects and working but their needs are different than the municipal needs So that might be something to think about from that sort of workforce and the actual building of the home side that you may hear other folks bring to you. We're going to develop like a municipal cohort that are submitting projects and work with them throughout the application process and guidance and so they can learn from each other peer to peer and we can have a group that we're bringing along at the same time and training and helping them get that application submitted.

[Herb Olson (Member)]: We're

[Josh Hanford (Vermont League of Cities and Towns)]: also aware that we need to help them with their sort of community support and their public engagement, getting the votes, securing bond counsel. There's a lot of work that's going to go into this and working with municipalities to make sure that they're successful. And it sort of doesn't stop there. They get awarded, we need to help them with the risk management side of things, any RFPs and ROIs, contract agreements, auditing, all of that compliance continues. You want to make sure that folks complete their reporting and their auditing and TIF account management and sort of following along the lines of what we did with ARPA funds. BLCT had some resources to help municipalities comply with the ARPA, utilize it, meet the compliance deadlines. From what we've heard from our national league of cities, Vermont was rated the best in full ARPA utilization and compliance across. So we hope to sort of have that same level of support for our members that go after this new resource. So the grant agreement isn't signed, there's still a lot of work to do here. We have to submit our final plan, they have to agree. So I don't want to get into too detail exactly how this is going to play out in timelines because it's not set in stone yet. But those are the general ideas and our team at BLCT, not Samantha and I that you see here, but the municipal operations support team has a finance, municipal finance specialist, a sort of a municipal business back office specialist, people that know municipal work are going to be the team that delivers this. And it's planned to be a three year grant. So I'll stop there and see if there's any questions on this sort of grant.

[Unknown legislator]: Is your grant going to be just for your membership?

[Josh Hanford (Vermont League of Cities and Towns)]: Yes, because the applicants are all municipalities.

[Unknown legislator]: And all municipalities?

[Josh Hanford (Vermont League of Cities and Towns)]: All municipalities.

[Herb Olson (Member)]: You mentioned that the grant

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: was matching, so this would be a million total?

[John Craig (Office of Legislative Counsel)]: No, it's 20% batch. 20% batch,

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: okay. You were mentioning about a meeting that we're probably going

[John Craig (Office of Legislative Counsel)]: to think, need to think about our working with the developers. Have you had any conversations with the Homes For All folks? Absolutely. We've had meetings with Homes For All folks,

[Josh Hanford (Vermont League of Cities and Towns)]: some of the RDCs and RPCs, VEPSI staff, there's a lot of people that know we all need to coordinate and work well for this to be successful.

[Herb Olson (Member)]: Ash, can

[Rep. Charlie Kimball]: you tell us about your chip implement calculator?

[Josh Hanford (Vermont League of Cities and Towns)]: I can't give you details, but I know the hope is very simple one that folks will be able to crunch some numbers early on and see if this thing will work for their project. There's a lot of ideas and projects out there. And what we've told our members is CHIP is available to every community. It might not be the right fit for every housing project for a lot of reasons. We've got to see if the public infrastructure that they need is supported by the new tax increment, whether that works out, the numbers, the units, all of that. There's got to be a simple way for folks to get some early indicators of whether this is the right path to go down.

[Rep. Charlie Kimball]: I think it's great that you're coming up with some standardized tool to use so that municipalities could use that, and look forward to looking at the details.

[Josh Hanford (Vermont League of Cities and Towns)]: Absolutely.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: The interest that you've seen so far from municipalities, can you give us an idea of the size of the municipalities that are contacting you? Absolutely. I think, you know, one of our big things about Chittenden was we need to get into the rural communities.

[Josh Hanford (Vermont League of Cities and Towns)]: Absolutely. It's all sizes. We have board members on the BSC board, which is a subset. They're very dedicated, and they're all different sizes, and they have project ideas from their communities. We talk about it regularly. It's every size community. What we understand about the cohort idea and helping folks, some of the more sophisticated communities that have already done big TIFF, they might not need that handholding, but for some of the smaller ones that maybe have never even gone out to farm, they're gonna need a group of people, peers to work with and work through this. And that's the idea there.

[Unknown legislator (House General & Housing committee member)]: And so to follow-up, are

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: you imagining that quite small towns and villages might be able to do this in partnership with you and the rest of their cohort without hiring a consultant? That's a good question.

[Josh Hanford (Vermont League of Cities and Towns)]: I don't know. There may be projects that maybe could do it without a consultant, but it depends on the sophistication of who the developer is coming with them as well. That's a big mystery right now. There's a lot of interest from a lot of municipalities. We don't hear directly from the developers as much, but we've had a few inquiries and it's got to be the right match with what the community can handle and their capacity and

[John Craig (Office of Legislative Counsel)]: what the developer can bring to the table.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Represent Wilson.

[Rep. Wilson]: Thank you. What is your prioritization going to look like? Is it gonna be first come, first serve? You know, Barrie City, we have a very large municipal staff, but we may lack the expertise for one specific portion of this, whereas another town may need more respectful handhold through the process. Just curious as

[Josh Hanford (Vermont League of Cities and Towns)]: to Yeah. No. Great. Great question. I think that's yet to be determined.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: If

[Josh Hanford (Vermont League of Cities and Towns)]: we first launch this and the number that want to join this intensive process is manageable. It'll be anyone that wants to come in. If it's overwhelming response, we'll have to find a way to do that. And I think that the conditions of the Northern Border Regional grant will probably guide us on how to select the communities there.

[Unknown legislator (House General & Housing committee member)]: I think, I mean, what I would imagine happening is you could take on community, more communities that need less handholding and fewer communities that way that need a lot more, But the communities that will get your help hopefully will get successful projects underway, and that's really our goal. Absolutely. That kind of balances out.

[Josh Hanford (Vermont League of Cities and Towns)]: And the tools and the library, that'll be available to everyone. There won't be any limits on that, but this intense group that's gonna have, there'll be only so many that we can offer that to, and that we'll have to see the interest in how we prioritize, which I don't wanna answer for Katie and Bonnie and Marguerite that'll be working on this, but I'm sure they're thinking about it.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Josh, real quick, and then we're gonna move on.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Okay. I'm just trying to

[Unknown legislator (House General & Housing committee member)]: get a clearer picture of who you're providing technical assistance to. I was really struck by something that chair Mahali said earlier. Some of these towns are so small that the only municipal employee may be a clerk. And I always imagine technical assistance being provided to someone whose capacity you're building so that they can then take the ball and run with that a little bit. But who are you providing assistance to if there's no one really working for the city? Sure.

[Josh Hanford (Vermont League of Cities and Towns)]: Some of the smaller towns, not teeny, I don't know if that's an official, but they have administrators. They have administrators, could be them, certainly the select board. They're going to have to make all these decisions. They're going to have to know what the voters are going to ask for. They could have a we have to assist the listeners and assessors about the original taxable value of the property. There's a lot of municipal officials, whether they're employees, volunteers, elected, appointed, that are going to be involved in this, and they exist in every size community. There are a number

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: of towns in my county that have housing committees and only a part time staff person.

[Unknown chair (House General & Housing)]: Gail, did you have your hand up?

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Yes. You mentioned that you

[Herb Olson (Member)]: don't really hear from developers, but have you heard of any developer in the town didn't want to participate?

[Josh Hanford (Vermont League of Cities and Towns)]: No, I have heard directly from a few developers because they sort of know me from my old job and first thing I do is refer them to the Vepsy website and refer them to the folks in town to start making that connection. But I have not heard of any developers come back and say no one in town is interested. In fact, just the opposite.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Josh, thank you very much.

[Josh Hanford (Vermont League of Cities and Towns)]: Okay, can I move on?

[John Craig (Office of Legislative Counsel)]: Yep, a couple more?

[Josh Hanford (Vermont League of Cities and Towns)]: Yes. So just wanted to comment that the, Pepsi, board and staff did excellent work. It's a tremendous effort. They met all the deadlines. They kept key partners informed. They engaged, with interested parties. We're really, really thankful to Jessica's leadership in that process. We've been supportive of the guidance issued and decisions they've reached. Impressive work. There's one issue that I think you've heard a

[Herb Olson (Member)]: little

[Josh Hanford (Vermont League of Cities and Towns)]: bit and it's come to our attention. We don't represent the developers. We don't represent the banks or the financial institutions. We represent the municipalities and some of the city and town managers have brought this as they did last year during legislation around the primary residence requirement. Not that they disagree. Everyone fully supports that that's the goal of this, but more of just how it's going to work out, how it's going to play out. And they're concerned about what the recourse is for the municipality if it doesn't work out. So this is likely not a problem for multifamily development. The nature of those deals are structured, the financing, the rental agreements, the accountability for the tenants to your primary residence are already baked into those deals. This is about homeownership. I think folks know. And so we don't speak, like I said, for the builders or developers, you'll have to ask, but it's just what we're hearing. With that all said, because those folks need to get mortgages that are buying home ownership if they're middle or lower income. So they're going to need to have a bank and someone to understand the conditions and what that may do to the future marketability. Regardless of this concern

[Unknown legislator]: Are are you saying you're not aware of how to provide them technical assistance to support them through that?

[Josh Hanford (Vermont League of Cities and Towns)]: What what I'm saying is that the just like the city and town manager submitted last year, they're not sure if their select boards are going to be risk averse with this. They're typically pretty conservative. And if there are possibly any violations or enforcement issues, they don't know how they would rectify that. Like as far as what the recourse is, is this the sewer line now not available to that home? But more so, and this is where it's not my place, you'll need to talk to mortgage bankers or whatever, but the folks that are going to buy those homes, any mortgages and how that will affect the conditions of those mortgages for folks that are particularly first time homebuyers and etc, if they're a potential market to sell and resell is diminished. But regardless of that, we're continuing to believe that this is one of the most significant investments in housing and infrastructure, we're on history. We're looking forward to working with our municipalities on chip projects and seeing new homes and neighborhoods built. So thanks for jumping into this so early and sort of rehashing the work you did. It was pretty impressive, and I think things are on the right track.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Thank you. Thank you. So

[Bob Flint (Executive Director, Springfield Regional Development Corporation)]: I'm Bob Flint, Springfield Regional Development Corporation. It's like theater

[Herb Olson (Member)]: of the round, by the way.

[Bob Flint (Executive Director, Springfield Regional Development Corporation)]: We're the RDC that serves Southern Windsor County, and I'm here representing the RDCs of Vermont. Repeating what Josh has said and others have mentioned, we really want to thank Jessica and Ellie and the council for making this work. I personally was at the October meeting when they approved the guidelines. I had a sense of how much time the council and subcommittees and so forth met, somehow, someway, they met the deadlines, the program's on schedule, so, sorry for that. I'm gonna talk about the experiences we've had at SRBC, as well as sharing some observations from my colleague, Dave Seniger, who is the director of NVDA up in the Northeast Kingdom. So we represent a mix of towns and probably those that don't have a lot of great, vibrant development. So it's been heartening to see that there's a lot of curiosity and conceptual interest in this CHIP program from communities and our regions. As I said, at least for my region, we don't have experienced developers hanging out in my office and doing deals, because there's not a natural return on investment the same way there might be in other parts of the state. So that ROI is challenging, and we need to figure out whether it's chip or whatever tools, does the math work? Or in my term, I use a lot of sausage making, you don't wanna know how it's made, you just want the end result. Chip has the potential to be a key ingredient to make the math work. But as was said by Josh, particularly with municipalities, all of us, economic developers, developers, private sector developers, municipalities need to understand how this program works, and appreciating that while I'm a bureaucrat, I understand all the things that have been talked about today, but your average municipality probably doesn't. And certainly private sector developers outside of maybe the North probably don't. So it's a language that's different, and it's vernacular and it's different that we need collectively to educate them on to figure out if it's applicable to their project. So it's our job to work with VLCT and other stakeholders to handhold towns and developers, and seeing how CHIP can be a piece of that puzzle. So in our region, is conceptual interest in CHIP for projects Chester, Windsor, and Springfield. In the case of Springfield, the one that is closest to an application is from our local housing authority for an 18 to 19 unit condominium complex, which would be a complex combination of duplex freestanding units, ideally tied to use for residents that could work in our local school district. The site is adjacent to our high school and to our CTV facility. In Windsor, Windsor Improvement Corporation, which is their local development corporation that we manage, is looking to construct a mixed use building adjacent to the recently completed Central And Main project that Ever North and Windsor Rhythm Housing Trust did. This project would have eight housing units and two storefronts. As Representative Charlton knows, the town of Chester has formed a housing commission that's exploring options for several projects, including one potential large one on land adjacent to or near Green Mountain Union High School. Up in The kingdom, my friend Dave reports several of his towns have expressed interest in the CHIP program, all attended the webinar yesterday and will watch the other ones. He said that MBDA, his organization will likely support St. Johnsbury with a potential application as they move forward with the purchase of an eight acre brownfield site, which is in a designated neighborhood area for our housing project, but conceptually would have 24 to 40 units. As Josh mentioned, the primary residence requirement, neither Dave or I have heard about that specifically, but I know it's come up with some of my colleagues around the state. I'm sure there'll be additional conversations as things go along. So to wrap up, or at least for our region, I think Dave's, education and cultivation are what we're focusing on for CHIP. There's not going be an application coming next month. We're hopefully going to be in a position where we could do an application sometime in 2026. But it's about making sure all the partners understand what this program is and how it potentially could be of help. We, the RDCs, are very interested in having in house technical assistance to take the TA that VLCT and others are providing and take it to a more granular level to help package and handhold projects through the process, much as we do with commercial development now, and being in a position to help our municipalities with that, we're trying to work on how do we fund that, how do we build that capacity statewide through the RDC now. With that, I'm happy to take any questions.

[Herb Olson (Member)]: Time for my room.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: Thank you so much.

[Rural Weinberg (Executive Chair, West Cove Homes)]: All right, thank you so much.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Good afternoon. A little

[Rural Weinberg (Executive Chair, West Cove Homes)]: worried about that last comment. Saving time

[Unknown (brief interjection)]: for me.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: Don't have have much fun to worry about.

[Rural Weinberg (Executive Chair, West Cove Homes)]: Rural Weinberg, the executive chair Wet's Cove Homes. We got a chance to work with all of you over the one degree or another over the course of last year's session with the development of this program. We commend you on taking action on it. It was an issue that has hung out there, I resolved for a long time. How can smaller communities be given access to this powerful tool? You could find a way through. I really wanted to echo the comments that have been, I think, shared pretty much by all the other speakers that the process that took place over the course of the summer, I think, was a model process for legislative implementation. There was committee that led the process met regularly through the summer, very transparent and iterative engagement process. There was ample opportunity for many parties to give input and be heard. There was urgency that drove the process and they got it done. They got it

[Rep. Wilson]: done on

[Rural Weinberg (Executive Chair, West Cove Homes)]: time. Is remarkable and commendable that the program is opening later this month. I also wanted to just echo what has been said about the interest. That was news to me to hear that two sixty people were on the training call yesterday, but I'm not surprised from the conversations that we have had since the legislature adjourned. We had a summer engagement series that involved seven different meetings around the state. CHIP was a major topic of conversation in every one of them with scores of people coming to these meetings. There's a Vermont Development Conference in the fall, which is an annual event that has real estate professionals, developers, attorneys, engineers, various professionals and municipalities. By far the best attended session was one breakout session about CHIP. I think there was more than 200 people in the room before that. Every time I've got on the radio or should have been in a public setting, there have been questions about this. I think the reason, so I think it is very positive indication that there is such broad interest. I believe it is going to be well distributed around the state, not just the larger communities. I think the reason for that is that with this legislation, have tapped into something old and important about what municipal governments are. There's some joke about the federal government that really the federal government is just like a big health insurance company with an army. And in a lot of ways, municipal governments are property managers with a police department. The big, the bulk of what municipalities are responsible for is the creation and management and expansion of public infrastructure. And though for The ability of Vermont municipalities to do that work, the kind of agreement that you have worked out here now with CHIP, where you can have a municipality using future revenues created by public investment to encourage new private investment. That's the kind of thing municipalities did historically quite a bit of, and has been harder to do with a statewide property tax for good reason. It's only a firm supporter of what the statewide property tax does and what the equity that it drives in this state. It has changed that relationship of what municipalities can do working with builders to grow their land list. Think what you've done with CHIP is restore some of that. And I think it's going be very quite exciting what the results that are, and we'll soon see more. I think it might be by March that you'll have some greater indication than we do today about what kind of communities are coming forward. Certainly, my message has been that there are lots of tools available, even for the smallest communities, not only the type of tools you've heard about from the league, which is very exciting, but also, RTCs are looking into what they can do to support municipalities in their districts. Even the philanthropic community is watching this and looking for a way that they can add value and help these smaller communities, engage us the fact that you made a legislative decision to ensure that related costs, the costs incurred by municipalities could be paid for by the future taxes or the key element to legislative decision that often comes up and people are relieved when they hear that that's a possibility. We're very hopeful and very optimistic and think to work on this so far, including this hearing. If every new piece of legislation got this kind of follow-up attention from the legislators who passed it would be a great thing. I think it's encouraging for the future of this program that you're giving it this kind of early attention. I don't think there's a need or probably an ability to get into detail on this. There is one implementation concern that we have that I just want to put squarely before you so it's not a surprise if it has to come back to you in some way. It's my hope that it does. But I've heard all the questions here that I've been here for the whole year. I've seen the interest and the commitment, the belief that this tool should be a tool for primary residences. And I think we're all aware of the challenge that secondary homes are in the state right now for, there's some competition between second homeowners and primary residences. And constituents bear the brunt of that. And I totally understand the interest and support the interest. This is a tool for primary residence development. There is a concern with the way the guidelines were finalized. There was a late change in the guidelines that makes it crystal clear that even though it's okay for 40% of a chip project to be commercial, to be used for a use other than primary residence, That's quite expansive. That could include convenience stores. It could include a whole range of commercial developments. It cannot include second homes, short term rentals. And so that strict hard line on that has raised some questions about what will happen with, not with rental projects, as Josh mentioned. I think rental projects will be fine, but for sale projects where the control and ownership after the initial sale leaves the developer's hands, leaves the municipality's hands. What happens down the road when one of the primary resident owners who was bought this, when they die, they leave the home to their children who do not live in the state, and there's some extended delay before the estate changes ownership. Other life circumstances changes like that, that could the real estate market has to be able to deal with, and housing programs have found a way to deal with. I'm pretty sure there should be a way for housing programs to be able to manage this, and that has been the answer from Betsy so far, that the compliance enforcement provisions, as you questioned and heard answers to, are going be worked out in these infrastructure agreements between municipalities and builders. And there's going be an attempt to sort those kinds of questions out in those agreements. Let's hope that works. There will certainly be an attempt to do that. If doesn't work, I would think anyone who is a supporter of this program to be concerned about a situation where this could only be used for rental projects. Generally, I think Vermont policymakers have wanted to promote and support for sale development, for sale. A lot of others believe in homeownership and the virtue of homeownership. And I think the intent of this was for this to be a tool that could support new for sale homes as well as rental units. It is possible that to meet

[John Craig (Office of Legislative Counsel)]: that intent, there might need to

[Rural Weinberg (Executive Chair, West Cove Homes)]: be more legislative engagement of one sort or another.

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: Can can I'd like to offer something. So you and I think the other witnesses who have testified about this perceived possible problem are all very experienced with the legislative process. And I imagine or aware that when you try to make a perceived small tweak to a program, it's a valuable opportunity for everyone else to relitigate the entire thing. This passed, I think, by the skin of its teeth, and everyone knows that. I

[Herb Olson (Member)]: wonder if

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: maybe we just wanna let it sit

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: for a bit while we-

[Rural Weinberg (Executive Chair, West Cove Homes)]: I hear you, and I understand that and agree with fully. And I'll only raise it here because it could become an existential thing. If you want this to used for for sale, it may not be possible to do it through rulemaking and guide mining. And I just don't want that to be a surprise in some sense. After all of this positive knock about the process and the work so far, but agree completely.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: And if one person brought

[Rep. Emilie Kornheiser (Chair, House Ways and Means)]: it up, I would have thought, oh, a warning, and now everyone's brought it up. So I'm just putting that on the table. Thank you.

[Rural Weinberg (Executive Chair, West Cove Homes)]: Just wanted Yeah. To be transparent and straightforward about it. Appreciate it.

[Rep. Wilson]: Yep. Good.

[Unknown legislator]: So you're you develop properties

[Rural Weinberg (Executive Chair, West Cove Homes)]: before? I did in an old life. I have not been a developer myself for, you know

[Unknown legislator]: Primary residences with homeowners associations and covenants. And I mean, this is not hard. I don't understand. And maybe this isn't the right place for this, but it is not hard for a developer, starting from the beginning, to put covenants in place to make something primary residence. That seems to be difficult for people to understand, and I'm not sure why. So I'm not sure why this has turned into something that it

[Rural Weinberg (Executive Chair, West Cove Homes)]: I appreciate the question, and I don't think anyone's suggesting that it is legally impossible to put some kind of restriction or covenant in place. The challenge, and we have been convening groups of attorneys and bankers and builders to look at this, would that kind of provision that is being contemplated here that would be necessary for that would be an unusual provision to have in a for sale deed. And there are financing questions about what that would do to the marketability of that home and those deeds, those mortgages, which as you know, the way our lending industry works, almost all for sale mortgages are traded, just, there's not just the original transaction, there's secondary markets. And I think there are some, I will say that bankers and lawyers that we have talked to do not think this is a trivial issue. But I hope you were right, and there is a way through this that is straightforward to be continued.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: I think that we have a working document now with the guidelines that we have. And but it it's it's not a final document. I think it's a living document that's going to continue to merge as things are going to get added, things will get deleted as we move along this process. But I think we need to really start get this process going and find out where the where the the point the the the tough points are in it. And then we work to make it work. So if it comes up that this is a big issue, then we'll have to figure out a way around it. But I think Jim Mattson. Jim?

[Herb Olson (Member)]: I had some preliminary conversations this morning in the cafeteria around this subject, but I

[John Craig (Office of Legislative Counsel)]: think he's very important.

[Herb Olson (Member)]: I've been involved with affordability having the covenants of habitat for manning for a number of years. And these issues come up. But to paraphrase what I think Gary seeing where he needs going is, let's not try to solve the problem we don't have yet. We're early into the process here and work our way through it sensibly without, I think as Chair Coinhires was saying, trying to pull things apart prematurely.

[Rural Weinberg (Executive Chair, West Cove Homes)]: I would like another thing more than never to ask Doctor. T about this again.

[Jessica Hartleben (Executive Director, Vermont Economic Progress Council)]: We all go somewhere. If

[Rural Weinberg (Executive Chair, West Cove Homes)]: things don't sort out that way, I don't want it to be a surprise if there does need to be further conversation. Make this a goal that I think

[John Craig (Office of Legislative Counsel)]: a lot of you voted for. Let's hope

[Rural Weinberg (Executive Chair, West Cove Homes)]: this will be worked out, agreed, the program's about to open. There's a path that's been offered to resolve this through the the the municipal agreements, the compliance process, and let's hope that works.

[Rep. Michael Marcotte (Chair, House Commerce and Economic Development)]: Okay. Other questions before we go? Thank you very much for joining us today. We appreciate it. Thank you. Thank you.