Vermont Legislature SmartTranscripts:

[Gayle Pezzo (Member)]: Welcome

[Marc Mihaly (Chair)]: back, it is still the January 23 and this is the Committee on General for the Housing. This afternoon we are commencing our examination of the issue of manufactured homes, and we will be referring to them throughout as manufactured homes. Some people online perhaps need to be reminded that that has been traditionally in the past called mobile homes. But manufactured is a better word because A) they are manufactured and B) they are not generally mobile. What we're gonna do today is an introduction and a walkthrough, and we have three councils with us for the walkthrough, but the introduction is going to be done by our illustrious co committee member, Gayle Pezzo. Gayle, do you want to take it away start

[Gayle Pezzo (Member)]: I'm with the Gayle Pezzo, for

[Michael O’Grady (Office of Legislative Counsel)]: the

[Gayle Pezzo (Member)]: record, representing 20 in Colchester. Thank you for allowing me to provide you with summary of House Bill seven fifty seven that addresses manufactured homes and manufactured home communities organized as limited equity cooperative, which I'll refer to as LEC's. Its purpose is to eliminate statutory and regulatory inconsistencies and provide clarity for both existing manufactured housing and future development. The bill strengthens and preserves affordable housing opportunities for low and moderate income households. The bill affirms that existing statute 11 BSA sixteen ten covers the taxation and manufactured home LEC properties and provides clarity to ensure consistent application by local assessors. Under sixteen ten manufactured LEC's are taxed similarly to condominiums. When valuing a home using comparable sales, the value includes the unit homeowner share of common areas and improvements. In this framework, one parcel consists of the home, hang ups and ancillary structures such as sheds as well as LEC owned improvements as in utilities and roadways comparable how condominiums are treated. This is the approach currently used in Brattleboro which taxes the largest manufactured home community in the state under this model. 11, the SA fifteen ninety eight further clarifies that limited equity cooperatives serve as a public purpose by advancing community stability supporting the local economy preventing displacement, promoting social equity and strengthening sustainable communities. Manufactured from LEC properties has no saleable values to residents beyond the membership fee. Upon dissolution, any remaining assets after debts are paid and membership fees returned must be distributed to a charitable organization, public agency or another limited equity cooperative. And in fact, the only value retained by cooperative homeowners upon dissolution is the membership fee. Legislation Council will address these statutes in greater detail during the bill walkthrough. The bill also addresses financial barriers created by outdated and confusing laws governing the purchase of a manufactured home. Existing sales tax and property tax transfer requirements impose unnecessary costs and complexity. Creating barriers for low and moderate income buyers and treating manufactured homes inconsistently with other residential sales. It modernizes these requirements so manufactured home purchases are treated like other home sales improving access to home ownership. In addition, the bill removes outdated statutory and regulatory barriers that limit the development and placement of manufactured homes where other residential housing is allowed. By recognizing manufactured homes as real property consistent with other housing types, the bill improves access to traditional financing and eliminates the costly and unnecessary bill of sale purging process. At same time, preserves flexible financing options by allowing personal property loans for buyers who do not qualify for conventional mortgages. It also updates terminology by replacing mobile homes and parks with manufactured homes and manufactured home communities. This change reflects modern construction standards, reduces stigma and supports long term preservation of affordable housing. As Vermont faces increasingly severe weather events the bill clarifies how the stormwater three acre plus permitting threshold applies to limited equity manufactured home cooperatives. It recognizes that homes as individual resident owned units comparable to site built homes rather than single commercial or institutional development. Dome water permitting is aligned with parcel definition in 11 BSA sixteen ten consistent with property tax treatment. Finally, the bill resolves inconsistencies in how LEC's are classified by requiring that cooperatives with identical organizational structures be uniformly classified as non profits by the Secretary of State. Based on research and lived experience, this bill provides the clear statutory recognition needed to preserve manufactured homes and manufactured home cooperatives as a critical source of affordable housing. Manufactured homes are among the fastest and most effective forms of homeownership to develop, playing an important role in expanding Vermont's grand list while maintaining long term affordability. Based on my experience at visiting a wide range of manufactured home communities and speaking directly with boards of directors, residents and property management property managers. It is clear that resident owned limited equity cooperatives represent the most sustainable resilient and desirable model for manufactured housing both now and for the future. Thank you.

[Marc Mihaly (Chair)]: Thank you, Gayle, I am on this bill, I want to add that by far and away the lion's share of the work was done by Gayle. She's been working on this bill for essentially the better part of a year, and to clarify a few things, what this bill focuses on manufactured homes, It's not dealing with another type of home, which is also important, which is off-site Modular. Modular homes, like those produced, for example, by Huntington Homes. So, it's limited to manufactured homes. Many of the provisions address limited equity co ops, but not all of them. Some of them would apply to any manufactured home anywhere. It is, I'd say, one of the things that was frustrating as we undertook this is that there are so many issues surrounding manufactured homes that it's just been a long time since anybody's looked holistically at the manufactured home community. It's really attractive because it's really the only form of housing in Vermont that is affordable without subsidies to much of the Vermont population. And so, we undertook this first cut. I would call this the first cut, it's elaborate and long, but it's still, there are other issues that we did not address, because we just ran out of time, frankly, to address everything. It's already bad enough that we have to have three legislative councils in the room to explain it to us. So with that, Ledge Council, would you like to take it over from here?

[Cameron Wood (Office of Legislative Counsel)]: Yes, for the record, Cameron Woodhouse of Legislative Council, I'm just going to of tee us up and then hand it over to my two colleagues and then come back. As was mentioned by Representative Pezzo and Chair Mihaly, there are kind of multiple different aspects of the bill, some of which address the sale of manufactured housing, all manufactured housing, mobile homes, etc. We have pieces related to stormwater, we have pieces related to taxes, we have another section related to zoning as well. So the thought here was to allow some of my colleagues to do a walk through of their specific sections, which are a little more narrower in scope, taxes and stormwater, and then I'll come back, we'll pull back a little bit and we'll just review what is currently the mobile homes chapter that governs the sale of mobile homes. We'll review that together and then come back to the bill to look at the remaining sections as it relates to the tax pieces. So that's how we were going to tee this up with the acronym. So with that, I'm going to turn it over to John, who's going to walk you through a specific section of the bill, Michael, who's going to walk you through another section,

[John (Office of Legislative Counsel)]: and then

[Cameron Wood (Office of Legislative Counsel)]: we'll come back together.

[John (Office of Legislative Counsel)]: Okay. Hello.

[Marc Mihaly (Chair)]: Hi, John.

[John (Office of Legislative Counsel)]: John Prade, Oxford Clutchen Counsel.

[Marc Mihaly (Chair)]: I am going to screen share,

[John (Office of Legislative Counsel)]: and unfortunately for you I'm not starting at the beginning of the film.

[Marc Mihaly (Chair)]: Here we are. What's happening here is we're, I mean, ordinarily we'd start with the big picture and then go down. The problem is that John and others who are trying to respect schedules.

[John (Office of Legislative Counsel)]: So go ahead. Thank you. So I've got a lot of text here in the chat section that you're going to see, but the actual concepts are really simple to explore. What page is this? So second five is starting on page 14. And before I jump into the language, I think I can pretty quickly explain what the concepts are here. So as has already been talked about, some of the issues in the manufactured home space relate to confusion and complexity. Sometimes they relate to differential financing terms. There's just confusion, and sometimes it's to the disadvantage of purchasers or residents in these communities. So these sections propose a set of simplifications that also offer the possibility of reducing financial burdens for residents or purchasers of manufactured homes. So what you're going see is currently, if you have real property, if your Currently, if your manufactured home is treated as real property, then you pay a property transfer tax, because it's property like any other real property, like a house, and you pay property taxes. If you purchased your manufactured home and it was treated as tangible personal property, you got different financing terms, then it was taxed in a different way. Would be subject to sales and use tax. So use tax if purchased from out of state, sales tax if purchased within the state. So currently you would have some folks with tangible personal property or they're going through a bill of sale, they're subjected to sales and use tax, which is at a 6% rate, and you have some purchasers of manufactured homes who are paying 1.25% rate on the property transfer tax at the point of purchase. So folks are getting different treatment, and what this proposes to do is to treat all manufactured home purchases the same way, regardless of their treatment as real or tangible personal property. So what you're seeing on page 14, starting at section five, is amendments to the sales and use tax to ensure that all sales of mobile homes as classically defined in Title 10, which Cameron's going get into, but that's your classic manufactured home on a chassis, meeting HUD standards, not a trailer, an unmotorized vehicle or the like, which Cameron will talk about in Title nine. But any of the classic manufactured home is gonna be exempted from the sales and use tax and is gonna be subjected to the property transfer tax. That's really what these sections are doing. Then I have a separate section as well. So section five is just explaining what the statutory purpose is. The exemption for sales of mobile homes is to ensure, and just to note that mobile homes manufactured homes difference, the way that we've approached the drafting here because current law is filled with references to mobile homes, use mobile homes to link up to the definition so we don't have to touch all of those places and have a dramatically large draft. And then there's a final line to say, conforming revisions will be made the future to update

[Gayle Pezzo (Member)]: from mobile home to manufactured homes.

[John (Office of Legislative Counsel)]: I'm gonna be saying mobile homes, but it

[Gayle Pezzo (Member)]: will be updated to management.

[John (Office of Legislative Counsel)]: The statutory purpose of the exemption is to ensure that all sales of mobile homes are treated similarly for purposes of the property transfer tax, which you'll also hear people reference as the PTT. Section six is actually just spelling out that exemption. It's putting it into place. So what you see at the top of page 15 is currently an existing law. There's already a kind of exemption, a 40% exemption for certain kinds of manufactured homes or mobile homes sold as tangible personal property. So that is not being touched, that will continue to exist, and that's for your non classic manufactured home. Again, Cameron's going talk about the differences between the Title IX, Title X definitions, but those stick with their same sales tax if you're purchasing, and I think an example of this is an unmotorized vehicle other than a travel or recreational trailer designed to be towed, designed or equipped for use of sleeping, eating, or living quarters, that's still subject to the sales tax. But your classic manufactured home, full exemption from the sales and use tax. But that's what you're seeing at the top, page 15, and I will pause there in case there are questions.

[Marc Mihaly (Chair)]: I am a little confused, I hate to say it. Sure.

[John (Office of Legislative Counsel)]: So maybe I can back up a little bit. We have a definition in the statutes of mobile homes that's broader than what you might classically think of as manufactured homes that you see in manufactured home communities. That encompasses things which Cameron will talk about that conceivably are movable, maybe more intuitively are captured in that term mobile home, but they aren't your classic HUD defined size specifications on a chassis with connections and hookups and the like. So those things that we don't typically think of as manufactured homes, they're still subject to the sales tax. 40%. Exactly, just as the way that they are in existing law.

[Marc Mihaly (Chair)]: Right, and how are modular homes treated?

[John (Office of Legislative Counsel)]: That's exactly what you're saying here. So modular housing is exempted, 40% of that purchase price is exempted when sold is

[Unidentified Committee Member]: 10%.

[Marc Mihaly (Chair)]: And typically, just so I understand, so those others, not the manufactured home that we're primarily concerned about, they would include like RVs? I

[John (Office of Legislative Counsel)]: think RV is maybe excluded.

[Gayle Pezzo (Member)]: Like a vehicle?

[John (Office of Legislative Counsel)]: Cameron may be better, okay.

[Marc Mihaly (Chair)]: What is this penumbra? I

[John (Office of Legislative Counsel)]: I think Cameron will show you the statutes. Okay.

[Marc Mihaly (Chair)]: They live with the 40%. The classic, what we're calling manufactured home defined

[John (Office of Legislative Counsel)]: In Title 10.

[Marc Mihaly (Chair)]: In Title 10, exempt and that's coming early except

[John (Office of Legislative Counsel)]: from the sales and use tax, that's correct. And just calling out the figures for those sales and use tax, that's 6% of the value. So quite different from what you'll see in the property transfer tax. So that's what's next on page 15 is now that you've exempted classic manufactured homes as defined under type 10 from the sales and use tax, you're now subjecting all manufactured homes to the property transfer tax. Currently, any manufactured home that's treated as real property is already subject to the property transfer tax. This is my point about uniformity and creating regularity across manufactured homes. Now what this is saying is even if your manufactured home is treated as tangible personal property, financed in different ways, it's still going to be subject to the property transfer tax. So the concept is a relatively simple one, subject all manufactured homes to the property transfer tax upon sale, none will be subjected to the sales and use tax. That's the end result of the setup here. You're gonna see a lot of texts that may seem slightly confusing, and the reason for this is that the property transfer tax is a chapter that applies exclusively to real property, as you might imagine, but we're making a carve out to say, not carve out, in addition to say, this special kind of tangible personal property, manufactured homes sold as personal property, we're also gonna subject it to the property transfer tax. And what that means, less important for you guys, but for my drafting purposes, it means that I have to add a lot of language so that we can capture the distinctions between terminology that we use for real property and terminology that we use for personal property. As an example of this, we say deed and title when we're talking about real property, we aren't using those things when we talk about personal property. So any references in the property transfer tax chapter that speak to this applies upon transfer by title necessarily wouldn't pick up manufactured homes sold as personal property. I've So just had to make changes of that kind throughout the statute. So that's what you're seeing throughout these sections, but the concept is simple, subject all manufactured homes regardless of treatment to the property transfer tax. And I'm happy to speak to each of the instances if you're interested, but I don't think it's gonna be something folks are especially excited about. And you could, if you just wanted to include a way to capture these, you could call these conforming changes that have to be made throughout the chapter to subject to the property transfer test. So we can jump all the way down to the very bottom of page 19, so we're almost at the very end of the bill, and we're changing subjects. So the subject that we've talked about thus far is exempting all manufactured homes tangible personal property from sales and use, that paid to property transfer tax, that's your point of sale tax, right? Property taxes are your ongoing yearly taxes, but property transfer tax, sales and use on purchase. We're shifting gears now to an outright tax exemption for mobile home related equity cooperatives, which Rutland and Pezzo gave a good introduction on, and Cameron will additionally speak a good bit about checking statutes. But this is exempting from the ongoing property tax, so not at the point of sale, but your ongoing property tax. Real property owned by a mobile home limited equity cooperative, just outright exemption. And I am going to jump over to one of the statutes that representative Pezzo spoke to just so you can see where some of this concern is coming from. So in title 11, section sixteen ten, this is your setting out different ways of treating as parcels and assessing the components of these limited equity cooperatives, which again, Cameron will dive more into. What it says is that each unit in that cooperative together with the improvements and their cooperative interest in any common areas of that community would be considered a parcel subject to separate assessment and taxation. Basically saying when the assessment is done, the lister or assessor should be looking at your property plus the share of the communal property that you have in deciding what amount of property tax liability that you should have. That may leave some property within the community, which is what the next section addresses. Each unit held by the cooperative, not under proprietary lease, so if it happened to be that the community itself held a unit, together with any improvements and any remaining unissued interest in the common areas would be subject to assessment and taxation as real property and treated separately as well. So if there's remaining property within the community, that would be subject to taxation as a separate parcel. But this means that different communities are treated in different ways, right? If a community had entirely allotied all of its cooperative interest to believe that he would think then, that portion of all of the communal property is gonna be divvied up amongst the owners in that mobile home limited equity cooperative. So that's kind of the background for how you can imagine lots of variation happening in this space, and you can also just imagine variation, different listers practices when they assess properties. And I think that that's some of the confusion that animated this section was just seeing across the state, mobile home limited equity cooperatives with quite different assessed values.

[Marc Mihaly (Chair)]: John, I just want to reflect back again just to make sure I understand. We're talking about the current situation before the bill, and what you're saying is these limited equity co ops range all the way from situations where perhaps just the individual boxes of the homes themselves are considered belonging to individuals and everything else belongs to the cooperative, all the way to a situation where the co op has divided up almost all of its common property into pieces which are attributed to the individual homes, and there's huge variety in between.

[John (Office of Legislative Counsel)]: I agree, the way I would agree is I would say theoretically, that is what is contemplated by this section, that you could have that full range of attributes. It may be the case that practically no one's on one of the ants. It may be the case that all of the communities are divvying up a good bit of property such that no limited equity cooperative owns that much land. I don't know, but it would be an empirical question, but theoretically, yes, that's what the section says, that you could have this poll, each person just has their unit, they're assessed on that parcel in that particular way, and the cooperative itself on some substantial share because they haven't issued out cooperative interest to account for those portions of the property, in which case that would be assessed as a parsonant. But I think what we've seen or heard in background talks is much less of that and much more of the interests have been divvied up what remains to be assessed at the cooperative level. So jumping back to the exemption itself, the practical effect of this, which is an exemption for real property owned by that cooperative is just to exclude the portion held by the cooperative. It would still be the case if any divvied up interest to the owners within that mobile home limited equity cooperative would pay property taxes on the full value that they're assessed there. If you think of it as each of them picking up share of what's accounted for in that community, that's the thinking here. So concept is simple, exempting real property that is owned by that cooperative, but as you can imagine, could have quite different effects depending on how the cooperatives are selling.

[Marc Mihaly (Chair)]: So the co op is exempt from property. Whatever is owned by the co op, whatever it is, and it could vary, is simply now exempt from property tax.

[Gayle Pezzo (Member)]: The LEC.

[Marc Mihaly (Chair)]: The LEC. It's owned, limited equity co op, whatever it owns is exempt from the property tax, the rest is charged, the homeowner pays property tax. And the rationale, to some extent, is that a property tax is a percent of value and that the limited equity co op arguably has no value, because it can't be transferred to anything but another non profit organization.

[John (Office of Legislative Counsel)]: And I think that Cameron will speak more to this when Ian comes up to get some of the background. And people may have debates as to what an appropriate assessment of the cooperative would be. There's instances where we say that property can't be accurately captured by fair market value, and then say, so it should be treated in some different way. This is a simple fix to the problem, which is just say outright exemption, but you could approach this in different ways. It just becomes more complicated as you start to try to build out what is an appropriate assessment of the value of a cooperative that has strict transfer limitations and effectively can't be sold on the open market. That's Yeah,

[Unidentified Committee Member]: I'm just trying to picture when it would apply and when it wouldn't. I'm thinking the only time you're gonna, like a full park, would, everything would already be divvied up. Whereas if you have, Vacancies. Or a tract of land that is owned, but it hasn't been developed yet, have lots, is when theoretically would own two or 50 acres

[Cameron Wood (Office of Legislative Counsel)]: of taxing back land.

[John (Office of Legislative Counsel)]: Yeah, I think the way you've described it.

[Gayle Pezzo (Member)]: Yes, Richard.

[Thomas "Tom" Charlton (Member)]: I just need you to rewind a little bit. Keep your comments. I mean, it's already been answered. Mean, you're my face. A manufactured home prior to this has been purchased as personal property, and sales tax was paid.

[John (Office of Legislative Counsel)]: They put it on a lot. It

[Thomas "Tom" Charlton (Member)]: is still regarded as personal property and is not? It's under property, so sometimes, okay, so do they pay property tax on the value of?

[John (Office of Legislative Counsel)]: Will just get, I think it may be useful at some point to hear from the tax department as to how this is approached, but the general, I think simple way to think about it is at the point of attachment to the land, attachment of fixtures, if you look at it, Department of Tax has some simple guidance on this, although I don't know the rate at which it is followed. There may be variations as description of notes. But the point that you're attached and it's your residence, that's real property, it's unmovable, right? It's become real property and you're subject to, that's the idea, but there may be some variation, which is part of what this bill is kind of inserting itself into, is like why is there so much variation in this space? Why are some treated as real, some treated as personal property? And I will just say it. Gonna be hard

[Thomas "Tom" Charlton (Member)]: to solve all those problems, but. There's not any particular advantage at purchase of doing a sales tax or that we're going to eliminate. Meant for this, I mean we want consistency in our mouth for it. I'm just saying if somebody thinks that it is to their advantage to buy personal property.

[John (Office of Legislative Counsel)]: Oh sure. They would be, I I don't think anyone's going to be opting for sales and use tax over the PTT because the sales and use tax rates are higher. But as to your question, whether different financing or other terms might accompany distinction between real and tangible personal property, there may be advantages to financing as tangible personal property. And basically in that situation if this passed as is, you would find yourself receiving the benefit of the lower PTT as against the sales and use tax you would otherwise have, but also potentially getting the financing terms that accompany a tangible personal property. I can't speak to that, I don't know if there's

[Marc Mihaly (Chair)]: We will have evidence before us on that issue, but very quickly, you will hear many lending institutions lend on the real property basis, but there are people who can't get those loans, because they qualify for them and they tend to go with personal property. But we'll talk about that. We thought about eliminating the whole personal property approach and were told that we would be disadvantaging some people who have to buy them.

[Gayle Pezzo (Member)]: You can't get a conventional loan.

[Unidentified Committee Member]: And just to clarify, personal property would be like an auto loan.

[Marc Mihaly (Chair)]: Right, or a dining room set. I mean, it's the same, it's just personal property as opposed to real property. John, is that it? That is it for me. Any questions for John?

[John (Office of Legislative Counsel)]: Yeah. So don't do that.

[Unidentified Committee Member]: No, we're sitting here going, oh, so you can buy up a lot of land and not pay taxes. Sort of what I heard at some point and I wanted to make sure

[John (Office of Legislative Counsel)]: that I think it will be edifying for you to hear the attributes of the limited equity cooperatives, because the way that you would be advantaged by the wholesale property tax exemption is you have to have this particular corporate structure, which has quite significant restrictions on what you can do. So I think the gamesmanship that you may be fearing will be mitigated once you hear more about how the limited equity profits work. But you're correct that if people want to choose a corporate structure and avail themselves of a property tax exemption, is possible.

[Saudia LaMont (Member)]: A real basic question, don't judge me, y'all.

[Ellen Czajkowski (Office of Legislative Counsel)]: Getting out my scale, we're talking about real property that's like Evan real estate.

[John (Office of Legislative Counsel)]: Exactly.

[Saudia LaMont (Member)]: Okay, I assume so, I wanted to make sure that that's what that meant.

[John (Office of Legislative Counsel)]: The easy way I think about it is movable versus immovable, which is why you can see that mobile homes, and I'm careful to use mobile here because it's relevant for this distinction, that's why this question comes up so much. Mobile home, is it movable or unmovable? Sounds pretty movable. And part of

[Marc Mihaly (Chair)]: what this bill is trying to do, is take a situation that's just chaotic, people, assessors in different towns don't know what to do and they treat it differently, the listers treat it differently, banks treat it differently, we're just trying to create a simpler, more basic system that makes it easier for everybody.

[Unidentified Committee Member]: My question will probably be answered with we're going to have the tax department in for that. But what kind of numbers are we looking at from transferring our tax to

[Cameron Wood (Office of Legislative Counsel)]: Lower rate.

[Unidentified Committee Member]: No, well, the lower rate, but also that money is earmarked for housing and things like that and clean water, to where now the sales and use tax that was permitted goes 100 to education. So we're Yeah, don't know the answer to that.

[John (Office of Legislative Counsel)]: Tax, JFO

[Marc Mihaly (Chair)]: JFO, I think, should

[Unidentified Committee Member]: They're probably going to be able to talk about that.

[John (Office of Legislative Counsel)]: And then you may recall that the budget changed some of the allocations of those weapons too, so the sale of the newts altered

[Gayle Pezzo (Member)]: but I would need to go back.

[Unidentified Committee Member]: Marc? Yes. I was wondering, representative Pezzo, I was wondering I know that you served before your time as a legislator on the mobile home task force study committee, did some of the work from this bill, was that from some of the findings that you guys worked on?

[Gayle Pezzo (Member)]: We didn't get the opportunity. Has anybody read the task force? I have a copy of it if you want.

[Unidentified Committee Member]: I haven't, but I'm just trying to put correlation, because we have all these study committees and I was wondering if any of the work that, similar to now we're putting in action some of the landlord tenant, if the mobile home one went into any of your work?

[Gayle Pezzo (Member)]: I tried. John was on that as well.

[Unidentified Committee Member]: Yeah, know.

[John (Office of Legislative Counsel)]: Yeah, I do have something to add here, think, which was it's not a direct translation of work that was completed during that, but one of the recurring issues that came up was this different treatment of tangible and real property. So I think that it kind of created a catalyst for generating Yeah,

[Unidentified Committee Member]: that was kind of, thanks John. Yeah, that's kind of what I was getting at. I was curious if, so that's great. Thank you.

[Marc Mihaly (Chair)]: Thank you. Is there any other questions or John? John, if we want JFO involved in trying to do an I mean, ordinarily, they wouldn't do it, I guess, until it gets to ways and means, but I mean, if we want to know answers to the question of what are the implications, the fiscal implications, who asks them to You

[John (Office of Legislative Counsel)]: I mean, you guys can reach out to Ted. Yeah. I think I would be the natural person to speak to in this space. Great.

[Unidentified Committee Member]: Yeah. Let's let's get let's get a fiscal note.

[Marc Mihaly (Chair)]: Yeah. We'll we'll yeah. Right. One of us will talk to Ted. Alright. Thank you.

[John (Office of Legislative Counsel)]: Thank you. See you on the future. So

[Unidentified Committee Member]: was that for for laying a fiscal note? No. Oh. Thought that was like a yeah. Right. No. Oh, okay. Nice. Perfect.

[Marc Mihaly (Chair)]: No, the yeah right is, they're busy. Oh, okay. I've talked to Ted already. I think that the difficult thing is here is they're used to doing them for the money committees, and we don't want to wait, because you've asked a question that you want to know, what's the impact on the ad fund, what's the committee, know, what's the impact, so we've got to get numbers from them sooner.

[Unidentified Committee Member]: And I was wondering, does any of it fall under the transportation budget?

[Marc Mihaly (Chair)]: I don't know.

[Michael O’Grady (Office of Legislative Counsel)]: An RV would, but moving

[John (Office of Legislative Counsel)]: an factory home down.

[Marc Mihaly (Chair)]: Yeah, don't think you have to get a license.

[Gayle Pezzo (Member)]: To move it? Is that what

[Marc Mihaly (Chair)]: you're saying? No, a license to drive it. In other words, you

[Gayle Pezzo (Member)]: don't have to get a DMV

[Marc Mihaly (Chair)]: license. That

[Cameron Wood (Office of Legislative Counsel)]: money goes into the transportation fund as well. But I don't think it has respect on transportation.

[Michael O’Grady (Office of Legislative Counsel)]: Go Should I begin? Yep. This is Michael Grady with Legislative Council. I'm going to talk to you about section four of the bill related to stormwater management, but before I do that, I feel the need to give you the background for what you are going to talk about in section four. So we're going to look at 10 BSA quotes before this is the section of law that fuels stormwater management. First, what what is stormwater?

[Marc Mihaly (Chair)]: LBSA section

[Michael O’Grady (Office of Legislative Counsel)]: Twelve sixty four. Stormwater is precipitation and snow melt that does not infiltrate into the soil, material dissolved or suspended in it, but does not include discharges from undisturbed natural terrain or waste sewer overflows. Now this section regulates storm water discharges that come off of impervious surface. What is impervious surface? It's those man made surfaces and paved and unpaved roads, parking areas, roofs, driveways, and walkways from which precipitation runs off rather than infiltrates. Now there are federal storm water permits that the state has to implement. They include things like storm water runoff from industrial sites, stormwater runoff from municipalities of a certain size, stormwater runoff from concentrated animal feeding operation. We're not talking about those federal permits. We are talking about a state permit that originally began in 2004 for the construction and development of one acre, now it's one half of an acre of impervious surface. You have to get a permit, That's called an operating permit. It's not a one time permit, it's an annual permit. When you go into the future with this operating permit, you will be paying and you will have to continue to comply with the management requirements for stormwater runoff from that property. And if you are under a perm of one acre and you expand that acreage So

[Marc Mihaly (Chair)]: it's point five? Pardon? Excuse me, I'm sorry to interrupt.

[Michael O’Grady (Office of Legislative Counsel)]: Yes, it's it's point five right now is is when you are building new.

[Marc Mihaly (Chair)]: And new. Okay. New.

[Michael O’Grady (Office of Legislative Counsel)]: But when you are expanding, it has to be you expand and it exceeds an acre. So then you will also need to get that safe operating permit. So for years the state was just operating under those two standards, one acre then it went down to half acre and then expansion to an acre. But in 2012, the Lake Champlain TMDL was disapproved by US EPA. And US EPA said the state wasn't meeting its its requirements underneath Clean Water Act to provide for adequate surety that the the lake, the TMDL, the cleanup plan let let me step back. Does everybody know what a TMDL is? So it's a requirement, the federal Clean Water Act requires states to adopt water quality standards for the state and every three years the state has to go out and assess all of its waters and determine whether the water or segments of the water are impaired, meaning that they don't meet the water quality standards. If you don't meet the water quality standards, you are considered impaired, and impaired water has to come back into compliance, and usually that's done by adopting a plan which is called a TMDL, Total Maximum Daily Load Plan. Now that plan is like your budget, it's like where you want to get to with what you spend money so you can save other money. But how do you get to that budget? That's what that is called, it's called an implementation plan. And usually the state sets that out and puts in all the requirements that they're going to do in order to meet their budget and EPA approves that. But as I said earlier in 2015, EPA said, no, we are disapproving that state adopted budget and that state adopted implementation plan because it's not meeting the federal clean water requirements. And when that happens, when EPA disapproves a TMDL or a state, EPA is required to adopt the TMDL and EPA is required to be the one to enforce the TMDL and that's problematic because EPA only has six ways to enforce water quality standards. They have direct discharge permits like literally coming out of a pipe, construction storm water when you're disturbing land that you have to get a permit or comply with the general permit, Storm water from industrial site, you have to have the compliance with the general permit. Storm water from municipalities of circumcise, you have to get a permit. Run off from a concentrated animal feeding on a farm, you have to get a permit, and then they have something called residual designation authority, which is like their haymaker. It's like when they determine that you are somehow contributing significantly to the pollution of the water or your waste load allocation of the the measured waste that's coming off your property is necessary to be controlled in order to meet a TMBL, they can require you to get a permit. You might not need a permit in any other way. They can just say, hey, we want you to get a permit and you're gonna get a permit. So that's called RDA or Residual Destination authority. It's like really like, oh, you don't wanna get a permit or you oh, you don't wanna control your storm water or you don't wanna control your wastewater. Oh, we're gonna make you control. That's important because I'm gonna come back to RDA in a minute. Well, in 2015, EPA was gonna say, hey, we're gonna issue this new TMDL, we're gonna use those five or six ways that we enforce the Clean Water Act. And we're gonna require all your wastewater treatment plants to, like, redo all of their equipment. We're gonna require every farm to get a permit. We're gonna require more municipalities to do stormwater control. And the state ANR basically said, you're that's not gonna work. It's not gonna work. You're not gonna get there. You're not gonna get to your budget just with those five or six permits. So the state said, hey. Can we give you a proposal to meet the the allocation, the reduction of waste that is necessary to bring Lake Champlain back into compliance, back into the TMBL? And EPA said, fine. Let's see it and then model it and show us how each one of the things that you propose is going to reduce the phosphorus levels in Lake Champlain so it will come back into into compliance with with the water quality standards. They did that, but they needed to propose new programs. And one of those new programs is something called the three acre stormwater permit. And the three acre permit right here sub seven, in accordance with the schedule established later on in the bill, persons shall not discharge stormwater from a pervious surface of three or more acres in size without first obtaining an individual permit

[Cameron Wood (Office of Legislative Counsel)]: or coverage under a general permit,

[Michael O’Grady (Office of Legislative Counsel)]: if the discharge was never previously permitted, remember from 2004 on that you had a permit,

[John (Office of Legislative Counsel)]: or

[Michael O’Grady (Office of Legislative Counsel)]: was and did not incorporate the requirements of the 2002 stormwater management

[Cameron Wood (Office of Legislative Counsel)]: manual or any subsequently adopted stormwater management manual.

[Michael O’Grady (Office of Legislative Counsel)]: So what does that mean? It means if they went out ANR and looked for impervious surface of tracks of land that were three acres or more and did not have a permit or were permitted

[Marc Mihaly (Chair)]: very long ago. Three acres of impervious surface.

[Michael O’Grady (Office of Legislative Counsel)]: Three acres of impervious surface. And they've based their assessment on tracts of land. And tracts of land were determined by how it was developed. Was it a plant unit development? Was it permitted as one tract of land? Was it transferred as one tract of land? Is it managed as one tract of land? And they did that for any commercial, residential, manufactured home, any community, any development, they've looked at that. And they have a list, a complete list of all those three acre parcels, and there are, from what I can tell, several manufactured home facilities on that list. Now there are some that aren't on that list that you would think if you walked around that manufactured home community have three or more acres of impervious surface. Well, they may be permitted, they may have gotten that permit after two thousand and two and they may not have come underneath this requirement. Or as John was talking to you about, they may have been managed as separate plots that each home is on a separate legally distinct parcel underneath the records of the municipality so that ANR treated those as different parcels and didn't add up everything and that the common property didn't exceed three acres. And in that case, you didn't trigger three acre. And that would have been again for commercial, residential, manufactured home. That's what they did for all of the tracks out there. They went and looked and saw how they were managed, how they were transferred, etcetera, how they were originally permitted. Now what that leads to is it leads to differences in how different manufactured home communities are permitted and the fees that they have to pay. So why are they paying fees? Well, first I told you they have to get an annual operating permit. Right? And that that's a fee that they will pay till you repeal it or somehow the impervious surface is gone. The other fee that they have to pay is they have to come up to compliance with the stormwater management plan, and that means doing everything on your property that you can physically. And once you have done that, if you can't do more and you still haven't met the performance measure under the manual, you have to pay an impact. So remember, have an annual operating fee that you're going to pay until you no longer exist or no longer have impervious surface, then you have an impact fee that you pay if you cannot meet the performance measure and you pay the distinction, the difference between that. That fee can be significant, hundreds of thousands of dollars.

[Marc Mihaly (Chair)]: One time or annual?

[Michael O’Grady (Office of Legislative Counsel)]: One time.

[Unidentified Committee Member]: I have a question. Am I to understand, the annual fee sounds like it's probably, right. It's like it's not a tax, it's a fee. Right? So it goes towards the administration of all of this oversight. Yeah. I'm imagining that the the penalty fee is because you the cleanup costs so much. And that's why it's so big.

[Michael O’Grady (Office of Legislative Counsel)]: So the annual operating fee goes into what's called the environmental permit fund and the environmental permit fund is used to pay for the cost of EEC's programs. That's what that fee is supposed to be measured to about how it costs the agency to provide the services and to manage that program. The impact fee goes to another fund that's used to pay for other restoration projects in that water shed. So where you have something that you don't know if somebody owns it or nobody's taking possession of it or it's a municipal property and the municipality can't pay for it themselves and they're not subject to any requirement and required to do it on their own. The state has this mechanism to find those types of projects and use this money and other money to pay for that.

[Unidentified Committee Member]: And build these beautiful stormwater retention ponds,

[Gayle Pezzo (Member)]: and over

[Michael O’Grady (Office of Legislative Counsel)]: the replace culverts and stabilize stream banks and put in forested buffers and all of that.

[Marc Mihaly (Chair)]: So that's the status quo.

[Michael O’Grady (Office of Legislative Counsel)]: That's the status quo. That's where you are. So you have this three acre permit that some manufactured homes are subject to because of how A and R looked at their track and determine whether that track was one track with three acres or more. It was managed previously at multiple tracks and it didn't trigger three acre. And so what section four of the bill would do would be to exempt all to a permit under subdivision c seven, a three acre permit for stormwater discharges for pervious surface owned or controlled by a cooperative housing corporation registered as a limited equity cooperative, those parcels would be exempt from the three acre permit. So they wouldn't need the annual operating permit if they didn't already have one. They wouldn't have to bring the parcel up to compliance with the manual, and therefore they wouldn't have to pay that impacts fee. So as John told you earlier, this is a limited subset of manufactured home communities. This is not every manufactured home community. It is just a limited subset and those would all be treated equally. So instead of looking at the parcel, it looks at how they were formed. So as John showed you earlier, that section of law that says for assessment of property tax, don't treat the entire tract as being one tract for property tax purposes, look at each parcel that's owned by the homeowner and treated differently. So that brings more equity and assessment of property taxes. This brings more equity for assessment across limited equity cooperatives. Now you're gonna get an argument that there are similarly situated residential properties, residential neighborhoods of low to moderate income that are subject to the three acre parcel that should also be exempt. So just so you know, this is a high emotion issue for those property owners that are subject to the three acre permit. How they will be assessed, what fees they will be assessed, when they have to come into compliance, high emotion, high emotion. So there will be arguments about equity across not just the manufactured home parcels, but low to moderate income residential communities that are not manufactured.

[Marc Mihaly (Chair)]: But wouldn't they have to be common interest subdivisions? In other words, it would have to be communities where there is some sort of residual, like, Shared property, right?

[Cameron Wood (Office of Legislative Counsel)]: Necessarily. See, okay. Remember it's

[Gayle Pezzo (Member)]: all how

[Michael O’Grady (Office of Legislative Counsel)]: that tract was formed or how it was originally permitted. Full disclosure, before I was divorced, I lived in a three acre parcel in a three acre property. And when Homer Duvalis first permitted that tract, he went to South Burlington and got it permitted as one track. And he got a stormwater permit for the entire tract. He then subdivided the entire tract into single parcels that he sold to individual homeowners. No homeowners association ever formed, I doubt ever one will ever be formed because there's too many attorneys at Bivens. And so that's called an orphan system because it has no responsible party to manage the entire tract. And so no common interest, just common interest in how it was originally permitted as a tract. And ANR is still assessing that as a three acre parcel.

[Marc Mihaly (Chair)]: Go

[Unidentified Committee Member]: ahead. So when you said ANR went out and looked at whether to treat three acre groups or whatever as individual subdivisions or not. It had nothing to do with what's in the tax files look like, who or the deeds, like nothing to do with property or finance, it was just what was the original permit asked from ANR.

[Michael O’Grady (Office of Legislative Counsel)]: Sometimes they looked at how the tract was transferred, if it was transferred as one tract and purchased as one tract, they looked at it sometimes in that regard. I have talked to them, It's if they're somehow linked together. If they were permitted previously under a permit or the impervious surface were on a single parcel of tract of land, that's how they're going to look at it. So in some places like

[Gayle Pezzo (Member)]: Sorry. Where do you Westbury.

[Michael O’Grady (Office of Legislative Counsel)]: Westbury, they said, no. It's not because of the multiple parcels of land and that the way that it was formed that each manufactured home was one parcel and those didn't add up to three acres and the common ownership didn't add up to three acres either. You're still paying a stormwater fee because you still have the annual operating fee, remember? And you might even be paying Colchester because Colchester is one of those municipalities that's subject to the municipal stormwater permit. And so you might be paying them at a stormwater impact fee.

[Unidentified Committee Member]: Wait. Why do some municipalities because they're on a big stormwater? Like, they feed into a lot of

[Michael O’Grady (Office of Legislative Counsel)]: Underneath Title 24, any municipality that has a board of sewers, basically a sewage department, and even if you don't, there's a way to do it, You can adopt an ordinance or bylaw assessing a stormwater impact fee on impervious surface in the town. So South Burlington, Burlington, Essex, Colchester, all have St. Albans, they all have a fee that is used to pay for the management of stormwater in their municipality, usually because they're what's called an MS4 community, one of those municipalities subject to the federal stormwater requirements. I won't talk to you about how that's assessed, that is assessed entirely. It's a formula that would make

[Marc Mihaly (Chair)]: matters That's true, we do want

[Michael O’Grady (Office of Legislative Counsel)]: to focus on mobile homes. Right, yeah. So remember, three acres was part of the TNDL for Lake Champlain. It was part of the formula that added up to the budget that was gonna reach the goal. Whenever you take away anything from the formula, EPA says, what are you going to replace? Or, oh, maybe it's not so significant that it needs to be replaced. I don't know how they would quantify this exemption, whether or not it would need to be replaced, or they would say it is not significant enough that it needs to be replaced. If they say it needs to be replaced, remember the book, remember the RDA, they can just say, we don't care about the state exemption, you still need to get a permit, because they have override authority

[Marc Mihaly (Chair)]: over So what you're saying is that this part of the bill, if it passed, would have to be reviewed by EPA for compliance with the TMDL plan?

[Michael O’Grady (Office of Legislative Counsel)]: Think ANR would have to do that. That they would have to say, listen, part of the wasteland allocation has changed, please look at this and see if it's okay or if you need it to be replaced. In another committee, in another bill, ANR has already said, we're gonna waive the impact fee for everyone, for everyone. So you just do what you can physically do on your property and anything over that, we're not gonna require you to pay that $100,000 fee anymore because it was just very emotional for me. And so that I think will probably go through, and that I think EPA is gonna say fine with because you physically do on the property what you can do.

[Unidentified Committee Member]: You say budget, do you mean wasteland? Yes. Like particles? Yes. Okay. Yes, Tom.

[Thomas "Tom" Charlton (Member)]: Just to clarify, for the purposes of the three acre rule, would a three and a half acre lot, with a two acre warehouse and a one acre parking lot, be viewed the same way as a 15 to 20 acre development with an aggregate of three acres of impervious surface between housing units and driveway or access road. Spread out is three acres, but it's not confined. It's on a lot, one lot, but it's certainly not one solid surface. Is that gonna be viewed the same up in three acre?

[Michael O’Grady (Office of Legislative Counsel)]: Yes. For purposes of triggering the permit, for purposes of what you do management wise, that's gonna be managed different.

[John (Office of Legislative Counsel)]: Okay, and the fee

[Thomas "Tom" Charlton (Member)]: is likely to be different.

[Michael O’Grady (Office of Legislative Counsel)]: Annually. Well, you probably if you said 15 to 20 acre, you're gonna have a lot more opportunity to do Mitigation. Mitigation on-site than the 3.5 pervious parking lot and

[Gayle Pezzo (Member)]: roof will have. Okay. Gayle? Is the other bill removing the impact fee if they can't meet the performance or they're just?

[Michael O’Grady (Office of Legislative Counsel)]: They are removing the impact fee, and this is ANR's proposal, period. Period. For every for all For the three acre

[Marc Mihaly (Chair)]: They're just taking the impact fee out of the three acre. And this is legislation before in

[Gayle Pezzo (Member)]: the House side? House and bar. Six thirty two.

[Michael O’Grady (Office of Legislative Counsel)]: Okay. So it wouldn't just be, it would be all properties.

[Marc Mihaly (Chair)]: Right, okay. Is

[Unidentified Committee Member]: that the chair still? Yes,

[Gayle Pezzo (Member)]: in the environment, H632.

[Michael O’Grady (Office of Legislative Counsel)]: It was effectively DEC's miscellaneous bill.

[Marc Mihaly (Chair)]: So if that passed, it

[Thomas "Tom" Charlton (Member)]: would obviate the need for this?

[Michael O’Grady (Office of Legislative Counsel)]: No, no, remember this is a requirement that you get the permit, and this is an exemption from the requirement you get the permit, and you do what's physically possible on the property. Right,

[Marc Mihaly (Chair)]: it's exempting the whole thing.

[Michael O’Grady (Office of Legislative Counsel)]: Right. It's exempting the whole thing. That just exempts that impact fee.

[Marc Mihaly (Chair)]: The impact fee. Okay. Thank you. Anything else?

[Cameron Wood (Office of Legislative Counsel)]: No. I think that's pretty much it. Okay. That's a lot. It's a lot.

[Marc Mihaly (Chair)]: I know we'll revisit this.

[Michael O’Grady (Office of Legislative Counsel)]: I mean, it's evolved over twenty plus years, know, it's just something that continues to change and evolve.

[Gayle Pezzo (Member)]: Removing that impact fee is

[Marc Mihaly (Chair)]: Yeah, mean, that may be the majority of what we're after, so we'll have

[Gayle Pezzo (Member)]: to think about that. I'd be happy with that.

[Cameron Wood (Office of Legislative Counsel)]: You can

[Gayle Pezzo (Member)]: Some manufactured homes said the impact is 125,000, the smaller ones 45,000, if they don't have the facility to do something. I mean Westbury is a little unique because the way that it was modeled, or do you use it as a model? Affirmative. Yeah, it's individual, so we don't have the impact fee for the individual. We pay almost $9,000 for the

[Unidentified Committee Member]: Annual rate, like annual rate. Thank

[Cameron Wood (Office of Legislative Counsel)]: you so much. You're welcome.

[Marc Mihaly (Chair)]: Have a good weekend

[Gayle Pezzo (Member)]: everyone. You too, nice.

[Cameron Wood (Office of Legislative Counsel)]: Ellen to go next because she also has a section of

[Michael O’Grady (Office of Legislative Counsel)]: a bill related to zoning. That's okay. Sure. Of course.

[Cameron Wood (Office of Legislative Counsel)]: Welcome to my Ellen. This one's simple.

[Ellen Czajkowski (Office of Legislative Counsel)]: I'll take out the Office of Legislative Council. You are looking at 757, right?

[Unidentified Committee Member]: Right.

[Ellen Czajkowski (Office of Legislative Counsel)]: That conversation not sound like anything to

[Unidentified Committee Member]: do at 757? I'm always

[Ellen Czajkowski (Office of Legislative Counsel)]: interested to listen to Mike, but I wasn't sure where he was reading from. So I drafted section three of this bill. That's at the bottom of page 11, but the change is on page 12. And it's pretty small compared to what Mike was talking about. This is a zoning amendment. There's already a provision that exists that says that towns in their zoning are not allowed to prohibit mobile homes, modular homes, prefabricated homes. This is expanding that further to say in any zoning district that allows year round residential development, the municipality has to allow mobile homes, modular homes, or prefabricated homes. So what has happened in the past is because they were not allowed to exclude those types, they would sometimes just designate one district where they were allowed. This is saying in any residential district, they have to allow them.

[Unidentified Committee Member]: And that's it. But it still says on the next paragraph that municipality may establish specific sites. Standard.

[Ellen Czajkowski (Office of Legislative Counsel)]: Yes, which is true for other types of homes as well. For single family or extended families.

[Unidentified Committee Member]: Within, oh yeah, within a

[Marc Mihaly (Chair)]: Any questions? Ellen, thank you. You're welcome.

[Unidentified Committee Member]: Did you hear from? Yes. Okay. And so you're all set.

[Marc Mihaly (Chair)]: Okay.

[Gayle Pezzo (Member)]: Great.

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

[Gayle Pezzo (Member)]: you see how simple that was? Have you. Do

[Cameron Wood (Office of Legislative Counsel)]: any water? Coffee. More spice. Good afternoon. For the record, Cameron Wood, Office of Legislative Counsel. Before I jump in, I will comment, I hope it does not happen so I can remain here with you all. There is a chance that I may have to step out to go to house appropriations to speak to a particular provision that may be in the BAA related to the housing choice vouchers from the state housing authorities, etcetera. So I apologize if I'm sitting here monitoring my email, I may get a call and have to go over it. So please forgive me

[Marc Mihaly (Chair)]: for that. Maybe what you should do is start with the overview, and then we'll get as far as we can, and if we have to continue it on Tuesday. That

[Cameron Wood (Office of Legislative Counsel)]: was my thought, was before I jump into the actual bill itself, I'm just going to talk about mobile homes, manufactured homes, I had hoped to actually do a little bit more background presentation, but I got caught up this week in some other tornadoes and wasn't able to do so, so forgive me. I'm trying to use the phrase manufactured home. Just understand as John mentioned, throughout the current statutory sections they are referred to as mobile homes. In the draft bill seven fifty seven, there is a provision at the very end as John mentioned, which gives our office legislative statutory revision authority to go in and change that from mobile home to manufactured home, but that's why you see it even throughout the bill, it continues to refer to things as mobile home because we didn't want to make that change halfway through. We didn't want to start calling things manufactured homes when all the definitions refer to them as mobile homes and kept it as mobile home, give us the revision authority to go back in and change everything at the same time. So what are we talking about? And I guess I should also just briefly mention, what does the federal government refer to them as? HUD refers to them as manufactured homes. Prior to 1974, I believe, 1974 Congress passed some federal legislation to give Housing and Urban Development oversight over what they then termed as manufactured homes. And subsequent to that, I believe they went into effect on 1976. There are a lot of regulations and standards that HUD put in place in regards to the building of these homes. So they are built in manufacturers and by manufacturers, excuse me, and they have to meet certain federal requirements. And there are certain inspections that have to be done along the way and they have to meet certain HUD standards before they can actually be sold. So the state doesn't regulate the manufacturing process of these homes, but the state can regulate how they're sold and the requirements about what has to be done when they are sold, and I'll get to that in just a second. But I will just start with the definition, we're all kind of referring to the same thing.

[Marc Mihaly (Chair)]: Can you make it bigger? But when you say HUD, so when we hear, you see it on signs all over the place, HUD certified or HUD homes, it refers to homes that meet these HUD right here,

[Cameron Wood (Office of Legislative Counsel)]: which started when, effective when? I believe it was the mid 70s. I want to double check, I believe it was 1976,

[Unidentified Committee Member]: when

[Gayle Pezzo (Member)]: things And were each bottle colored box, a mobile manufacturer has a tab on them that say it's UD certified with a certain number. Correct. And I have a question also just so that I don't forget. I think we need to add in here the definition of what's called now is a mobile phone park, Okay. But we need to say mobile manufactured home community. Okay.

[Cameron Wood (Office of Legislative Counsel)]: So if you all, as we've discussed, it's your committee bill now, so if you all want to make that change that is something that isn't in the

[Marc Mihaly (Chair)]: bill as long as you maintain a list of all these suggestions then we'll go through them.

[Cameron Wood (Office of Legislative Counsel)]: You would potentially change it to a manufactured home community as a set of a mobile home park. Right, okay, Because there's two really two different things you got to keep in mind that we're talking about here. I think we've primarily been talking about manufactured homes and how they're sold and there's some amendments in the bill that address that. We've been talking about limited equity cooperatives which is a certain organization structure. So it is a business organization structure that people utilize that want common ownership of certain housing. But taking a step back, as I have been, you have the chapter in Title IX that deals with, it's called mobile homes, so it deals with how mobile homes are sold to each other, to individuals, what are the processes that have to be in place when you sell them, what needs to be in a bill of sale, for example, how you convert it to a deed, etcetera. Separate from that, in Title X, there is a chapter related to mobile home parks. So now we're talking about individual owns a mobile home park, the people in the mobile home park own their mobile home, and I'm just using the statutory terms as they are now, own those manufactured homes. What are the relationships like between those individuals and how are those governed? So we have two separate chapters and two separate titles. Title IX, which is what we'll primarily be dealing with, refers back to Title X, which is the mobile home park or the definition of what is a mobile home. So that's just where I wanted to start. What are we talking about here?

[Gayle Pezzo (Member)]: And what is a mobile home park?

[Cameron Wood (Office of Legislative Counsel)]: And that's in here, right? So what are we talking about? So in current statute, a mobile home, which under this bill we would change to manufactured home, manufactured home means a structure or type of, sorry I'm just needing to be able to see on my screen, a structure or type of manufactured home including the plumbing, heating, air conditioning, electrical systems contained in the structure that is built on a permanent chassis, designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, transportable in one or more sections, and has certain dimensions. At least eight feet wide, 40 foot long, when erected, three twenty square feet, or if the structure was constructed prior to 1976, that's when those standards went into place that we talked about, at least eight feet wide, 32 people. So because of this, these are not as you talked about in the beginning of the testimony this afternoon, these are not modular functions that are built potentially off-site and brought onto site and then constructed. These are not RVs, these are not trailers that you pull behind fifth wheels, etcetera. Are not I was thinking tiny homes, etcetera. Right, so these have to meet these specific definitions. Okay, quickly mobile home park is any parcel of land under single or common ownership or control that contains or is designed, laid out, or adopted to accommodate more than two mobile homes. So keep in mind, you're talking about just a wide range of circumstances that exist. You have individuals that own a piece of property and they own a manufactured home that is on that property. They own both. You have circumstances where an individual owns a manufactured home, but it's on someone else's property and it's just one home. And then you have mobile home parks, manufactured home parks, manufactured home communities that are going meet this definition, that it's where someone or multiple individuals own a common piece of land that has more than two manufactured homes on it. That one parcel. Yes. Okay,

[Marc Mihaly (Chair)]: so I'm gonna jump over. Is that the mobile home definition and the mobile home park definition in title IX or title X?

[Cameron Wood (Office of Legislative Counsel)]: This is in title X, so this is under the mobile home parks chapter. When you go to title nine it just references that stuff. And there's nothing in the bill that's changing this definition. Mean at this point, assume I have a cross reference to the HUD definition but I'm assuming it's pretty tied to what the federal government defines as manufactured home. Okay, now we're in title IX, which is commerce and trade. Title X is conservation and development and that's where you have the mobile home park manufactured home communities regulations. Now we're over here in commerce and trade and we're talking about mobile homes. And as you can see in this chapter, everything about this chapter is related to selling, transferring them, financing them, real estate transactions, etcetera. So that's what I'm just going to walk through with you all before we jump into the field, just to give some context to how these things transfer ownership between individuals. For starters, we have a few definitions here. As was mentioned, mobile home simply references back to Title 10. And then the other thing I want to comment here is the definition of permanently cited, because this somewhat is important as we talk about how do you finance a mobile home. Remember when John was here and he was talking about whether it's personal property or whether it's real property? So and we discussed real property would be real estate subject to property transfer tax, etcetera, personal property subject to sales tax. So one of the kind of, I don't want to necessarily call it attention, one of the things that you have to understand and keep in mind when we're talking about these things, you're talking about them in most circumstances when they've been permanently cited. They're in a location in somebody's property that they own, that they may be selling entirely to somebody else, or it's a home in a manufactured home community that somebody's purchasing and moving in. And leasing the land. Right, they're paying their lot rent to the mobile home park. But opposite of that, how do they get there? Where do they start from? You go to a manufactured home dealer is an option and you buy from them, but then the home has to be moved and it has to go somewhere. So they can be movable at least at points in time of the manufactured home. There's a lot of history there as to if you're asking, well, why do we treat these as personal property to begin with? Or why were they treated as such, it's because just like a car, you can go to a lot and you can purchase one and then you can drive off with it. Now obviously a lot more goes into that, you have to have the permits to be able to put it on the road, etcetera. But my simple point being, I can come into Vermont and purchase a mobile home at a mobile home dealer and then I can take it out of the state somewhere else. So you're kind of dealing with interstate commerce issues, etcetera. It's just to clarify,

[Marc Mihaly (Chair)]: the typical mobile home is on like a couple of I beams, you know, with platform built

[Cameron Wood (Office of Legislative Counsel)]: to I Remember, has to have a chassis on it.

[Marc Mihaly (Chair)]: Yeah, chassis. And then that's got a hook on it, and then it takes a truck to move it.

[Cameron Wood (Office of Legislative Counsel)]: And I'm just bringing that up also to recognize that by nature of that fact, historically these things have been treated as personal property, not real property. When you think of real property, you think of real estate, land, these things are subject to things like federal uniform commercial code statutes, etcetera, that deal and regulate the sale of goods throughout the country. So just keep that in mind as we'll walk through some of these things.

[Unidentified Committee Member]: Can I ask a question related So to when you say that, so that's almost Like the way that the FDA regulates food and drugs, something that regulates other goods? But earlier we also mentioned that there is also a HUD regulation, so are they double regulated or is it that some are by HUD and some are not by HUD?

[Cameron Wood (Office of Legislative Counsel)]: It's a little bit of depending on what aspects you are talking about, the manufacturing of the homes themselves, what the structures have to meet, HUD, and then certain

[Unidentified Committee Member]: Appliances or the

[Cameron Wood (Office of Legislative Counsel)]: Well so think about it this way, states have a residential building code, So when somebody comes in and they build a house, it has to meet a certain code that has been defined by the state or by an entity of the state. So when you're building a manufactured home, you have to meet HUD's building codes, think about it in that context. Separate from that you have the uniform commercial code which governs, they send you know, it's been a long time since I've seen it, secure transactions, I wish I had brought my book in that would be great. You know there's a code that governs the sale of goods and contracts and how they're paid for, how security interests work when you're purchasing goods etc.

[Unidentified Committee Member]: So it's not a quality control of the product, it's about like who's selling it.

[Cameron Wood (Office of Legislative Counsel)]: There warranties so when you're selling something, what are the warranties that come with it, etc. So a little bit of overlap, but also somewhat some distinction. Okay, so I'm gonna jump right into section 2,602 here. So we're talking about the sale of a manufactured home. Again, multiple different circumstances here, you're buying it from the dealer or you're purchasing it from someone else. So first off, there are certain appraisal requirements and disclosure requirements. A1, if it's appraised, it has to include a cover sheet that itemizes the value and the value of the adhesion structures and land. In the case of a new home, the seller has to provide the prospective buyer with a written disclosure about the retail price, any applicable taxes, set up fees, transportation costs, etcetera. You're buying from the dealer, you have to have it transported somewhere else. What are the costs of that? What are the costs to have it set on a foundation, etcetera? And then you all added a few years ago this sub three. If the individual, if you're selling a mobile home, you have to provide to the prospective buyer flooding history to slowly hear, we talked about this last year a little bit. Okay, when you get to the sale of a mobile home here under sub B, okay, B1 prior to the sale, the seller has to provide a copy of the bill of sale to the town clerk, and in the case, this is in sub B here, in the case of the mobile home being sold or transferred separately from the real property on which it's located, you have to provide the bill of sale to the record owner of the real property. So think about this as I own a piece of land, I own a mobile manufactured home that's on it and I'm selling it to you because you're going to take it and you're going to go put it into a manufactured home community. You need to provide that bill of sale to the clerk of the municipality where you're going and you need to provide that bill of sale to the individual who owns the property. So maybe the circumstances I gave you slightly different, own the land, I'm renting the or representative Charlton owns the manufactured home on the land, he's renting from me to just have the mobile home there and then he's selling the home to Representative Pezzo, she's coming to pick it up off my property, she's buying the manufactured home from Representative Charlton but it's on my property, she has to notify me that she's selling or buying. The clerk has to endorse the bill of sale indicating that property taxes have been paid. This is in sub two here. As we talked about with John, you have a manufactured home, but it's in a manufactured home community, you're still paying property taxes on the home itself. So you have to go to the clerk, and the clerk has to sign off that you've paid all of your property taxes on the manufactured home before you can sell it. Then we get to the buyer then has to go to the clerk of the town where the mobile home is going to be located and execute that bill of sale. It could be moved. I'm assuming in most instances it's probably in the same town. I imagine it's not moving. As we talked about, these things, especially nowadays, I imagine when they're cited, they tend not to move. But the key piece here is they could. And so you have to go to the town, municipality, where it's going to be located, and record the bill of sale here. Why are we recording a bill of sale? Keep in mind, when it was initially sold, it was personal property. So it doesn't come with a deed. It comes with a bill of sale. You're purchasing that personal property in the same way you get with your car and your title. If the mobile home this is number five here if the mobile home or manufactured home is going to be relocated on real property that's not owned by the person buying the home, then the buyer has to provide a copy of that bill of sale to the owner of the real property. So again, think about this in the context of a manufactured home community. You have to notify the mobile home park owner that you're purchasing the home, or you have purchased a home and you're moving it in. Okay, let's see, where do I want to get to? I want to get to eight. This subsection shall not apply to a valid transfer of a mobile phone by deed when financed as residential real estate. We're gonna get to them, we're put a plug in that, we're gonna come back to that in a second. We've been talking about bill of sale, why are we talking about deeds in real estate? We're going to come back to that in just a minute. And also the subsection doesn't apply to when a home is abandoned, there's a specific process by which an individual home that's in a mobile home park that has been deemed abandoned, the mobile home park owner can take possession of that abandoned mobile home. But I don't know that we're going to get into that today. Okay, so you have this bill of sale, it has to be signed off by the clerk, you have to give it to the buyer, the buyer has to endorse it, you have to give it to the individual who owns the property if you're moving the mobile home off that property, you have to give the bill of sale to the individual who owns the property if the mobile home is going on to their property, follow me.

[Unidentified Committee Member]: Sorry, the bill of sale to the person whose property you're moving it from? No, where it's gonna go? Both. Oh, both, okay.

[Cameron Wood (Office of Legislative Counsel)]: So think about it if you're moving it from one manufactured home community to

[Marc Mihaly (Chair)]: another, you're notifying the person who owns this piece

[Cameron Wood (Office of Legislative Counsel)]: of property and the person who owns this piece of property.

[Unidentified Committee Member]: Is that to prevent people from double selling, like double leasing the same property?

[Cameron Wood (Office of Legislative Counsel)]: I don't know the origin behind it, but I imagine it's a broad consumer protection and protection for the person who owns the property that

[Marc Mihaly (Chair)]: What you're moving it you're going to hear is that some of these, nobody does them, they're not

[Gayle Pezzo (Member)]: necessary. But

[Cameron Wood (Office of Legislative Counsel)]: it's on the books.

[Marc Mihaly (Chair)]: You're just showing us

[Gayle Pezzo (Member)]: And it's more of an expense for the person behind. Have to merge that bill of sale when it becomes real property, I mean it's a lot of unnecessary and confusing and the people that are going to come and testify will tell you to attorneys and bankers, it's impossible.

[Cameron Wood (Office of Legislative Counsel)]: So I'm just wanting to orient you with what is

[John (Office of Legislative Counsel)]: on and the

[Cameron Wood (Office of Legislative Counsel)]: then as was mentioned, there are striking a lot of these things in the proposed bill and you'll hear from a lot of people about why they're proposing to do that And then you'll hear some concerns about why you may not want to do that. Okay, so we have the bill of sale, well what is a bill of sale and what does it require? This is in statute, this is what the bill of sale has to include. I'm not going to walk through this line by line. It's here. You all can go review it. But it does include information that you would assume would be there. The names, addresses, make, model, serial number, current address, etcetera, etcetera, etcetera. Again, I'm not going to go through this entire list here. The next subdivision has a, it is a requirement that the bill of sale be substantially in this form. It doesn't say it must be in this form, it says it substantially needs to be in this form. My assumption here is you have all this information that's required, great, can I write it on this piece of paper? And then that's a bill of sale. I'm assuming a previous legislator wanted some sort of continuity between what a bill of sale should look like. Again, you'll probably hear some testimony that this may not be followed in this manner. But the statute says that it should be in this form here.

[Unidentified Committee Member]: That's what's crossed out in our bill.

[Cameron Wood (Office of Legislative Counsel)]: It is one of the things that is crossed out

[Michael O’Grady (Office of Legislative Counsel)]: in the bill, yes ma'am.

[Unidentified Committee Member]: I mean the base section. Okay,

[Gayle Pezzo (Member)]: so

[Cameron Wood (Office of Legislative Counsel)]: as you'll see here, it's just notice some standard language, information from the seller, information from the buyer, information about the manufactured home itself, information on the location, and then information on whether it constitutes a retail installment transaction. And I'm going to come back to that here in a second. Any liens, any deficiencies? Are you selling a mobile home as is? Certain warranty provisions are implied if you're selling it as is versus not, no means, etcetera. This is where the town clerk would endorse it. Again, you're supposed to give it to the town clerk to get their endorsement that you don't owe any taxes. Subsection D here is just saying you can't move a mobile home unless the operator has a copy of the bill of sale, etcetera. Then we get to subsection E, so we talked about bill of sale, this is what you have to do with the

[John (Office of Legislative Counsel)]: bill of sale, this is what

[Cameron Wood (Office of Legislative Counsel)]: the bill of sale has to look like. We haven't even talked about how you finance these things yet, that's where we get into subsection E. Rent to own agreements. An agreement to purchase a mobile home on a rent to own, lease purchase on sub one here. Rent to own, lease purchase, or similar basis means any agreement other than an agreement to purchase a mobile home that finances real estate, which sub A, a buyer agrees to pay consideration in one or more installments to the owner of the mobile home, and upon full compliance with the terms of the agreement, the buyer is bound to become the owner. And then it has requirements of a rent to own agreement. It has to be in writing, so this is the sub A here. In order to be considered under this, it has to be executed written retail installment contract that complies with chapter 59. And then the mobile home transfers ownership. What does this mean? The reason this is here is it's saying if you're going to do a rent to own or lease to own agreement with somebody for the purchase of a mobile home. It has to meet certain things, it needs to be in writing like I said, and at the end of that conclusion of the purchase, the ownership of the home transfers to the other person. This section is saying if you're going to do that, we're going to treat it as if it's a retail installment contract. Which I'm not an expert here, but as was mentioned, personal property, when you go buy a car, you go purchase these things. They're technically retail installment contracts. You're paying on them on a monthly basis until you pay off the loan that you've taken. These are going to be treated like that. If you don't comply with this, then it's gonna be a residential rental agreement, is what this section says. Just gonna pause in case there's any questions.

[Gayle Pezzo (Member)]: I have a question. None of this would apply to an LEC because the articles of association don't allow renting.

[Cameron Wood (Office of Legislative Counsel)]: Not talking about an LEC, these are just the sale of a mobile home. So again, this is a circumstance where you're not buying it from a dealer. If you're buying it from a dealer, you're potentially buying it under a retail installment contract and there's the next section which says that a dealer actually is required to disclose to you that there are other ways to finance a mobile home, including going to places like the Vermont House of Finance Agency and others to try to get better financial terms to purchase the home. But if you're going to a dealer, you're getting it under a retail installment contract, again, think about it as if you're going and buying a car, because that's what they are, they're treated as personal property in that instance. But let's go to a different scenario where you're purchasing it from a mobile home park owner. Mobile home park owner has vacant lot, they purchase a manufactured home, they move it in, you're going to come in and rent it, but you're wanting to own it, so you get into a rent to own agreement with that mobile home park owner. Private owner. Yes ma'am. And so in that instance if it's in writing and you're going to take ownership of that manufactured home at the conclusion of the final payment there, they're saying we're going to treat that as if it's a retail installment contract. So,

[Gayle Pezzo (Member)]: sorry this is a lot, I'm trying to follow the dots. Totally.

[Cameron Wood (Office of Legislative Counsel)]: That's why we're starting here.

[Saudia LaMont (Member)]: So in the LEC, do those, okay, you have to own, you can't rent, right? Okay, can, like, so I'm trying to think of in what situation would this, would this, be appropriate part of that conversation, like, so, like, would it be if someone was to buy a manufactured home from someone else, would they be allowed to move into or are they closed? Is it like it has to exist and when it exists upon creation, that is what it is and you can't change it? I'm just trying to understand the dynamics of the LEC. Does that mean

[Gayle Pezzo (Member)]: there's a available then and you purchased a home wherever you purchased it from and you made an agreement with the cooperative, the LEC, you can place that home on that lot. You know, own or not close.

[Saudia LaMont (Member)]: But it's not closed, so there is opportunity, so that would, I'm just trying to connect the threads.

[Cameron Wood (Office of Legislative Counsel)]: And I should have started off here. There's a lot of depth to these manufactured homes as we're reviewing now. And this is where we wanted to start here, just again to try to orient everybody to the depth of this area of the law. Separate and aside from that are these limited equity cooperatives, which we will get into, we're gonna have to get into that separately. My ask of you is just somewhat think of them as distinct, don't worry about thinking about them together at this point in time. Not every limited equity cooperative is a mobile home park or a manufactured home. There are limited equity cooperatives that are just apartment buildings. And that's what I'm saying, I don't want to conflate those two things. We're going to circle back to limited equity cooperatives when get there.

[Saudia LaMont (Member)]: Okay, one more question then, hold on. So, is this particularly, I'm just trying to figure, am I framing my brain in reference to seven fifty seven or this is just general knowledge, because is this only for LECs? No. Okay, so this is not only

[Marc Mihaly (Chair)]: for LDCs.

[Saudia LaMont (Member)]: Thank you, just trying to connect

[Cameron Wood (Office of Legislative Counsel)]: it So there are the first few, I think it's the first section, the first few sections of seven fifty seven are going to change this stuff, probably nothing to do with the limited equity board meeting, and then we start to

[Gayle Pezzo (Member)]: get

[Cameron Wood (Office of Legislative Counsel)]: into changes for limited equity.

[Saudia LaMont (Member)]: Okay, wonderful, okay thank you.

[Cameron Wood (Office of Legislative Counsel)]: The tax stuff that you walked through, the storm water piece that Michael O'Brady walked through those were limited to just limited equity deposit.

[Saudia LaMont (Member)]: Oh okay, thank you.

[Cameron Wood (Office of Legislative Counsel)]: And now I'm backing up a little bit and we're just talking about manufacturing.

[Saudia LaMont (Member)]: Okay and because we're going to be referencing them

[Marc Mihaly (Chair)]: in goal of the legislation is to simplify this, what he's going through is to simplify it.

[Saudia LaMont (Member)]: We're going to simplify this, that's what we're working, that's

[Cameron Wood (Office of Legislative Counsel)]: what That is my understanding of the intention.

[Saudia LaMont (Member)]: Oh wonderful, yes let's do that. Okay,

[Cameron Wood (Office of Legislative Counsel)]: so right here under the three and four as I mentioned, this subsection E is saying rent to own agreements. These occur, I'm just, it's not in here I don't think I'm just up here in the statutory section. So rent to own agreements, this is what they need to look like, if they look like that we're treating them like a retail installment contract. If it's not, this is under four, if doesn't meet the requirements of subdivision two, it's a written rental agreement. Because if you're buying it and it's a retail installment contract, guess what doesn't apply? Landlord tenant law doesn't apply. Remember, you're purchasing this potentially from someone who owns the property where the home is located. You own the home. They own the There is what appears to be some sort of landlord tenant relationship there, but you own the home. You're not renting it, you're not renting the home itself from somebody, So under these installment contracts, rent to own agreements, we're not going to treat you like you're a landlord tenant circumstance.

[Marc Mihaly (Chair)]: Alright.

[Unidentified Committee Member]: So if you're not treated as a tenant, is it more like a mortgage?

[Marc Mihaly (Chair)]: Like is it more like you're the banker? It's an installment contract, like when you buy something, you buy a firm piece of furniture on an installment contract, you pay a certain amount each month and then you end on it.

[Cameron Wood (Office of Legislative Counsel)]: And the member is selling you the home is the banker if you will or the entity by which you're purchasing the property properly. But that's just one way of doing it. Just one way, okay. Because what we're going to talk about next, moving into the next section, we're gonna start to talk about real estate and financing them as residential real estate. So the sub A here is saying, except as provided in this next section, the mobile home may be financed under a retail installment contract, that's what we've just been talking about, okay. Purchasing it on a monthly basis, right. A manufactured home that is or is intended to be permanently cited for continuous residential occupancy on land that is owned, one here, owned by the owner of the manufactured home. So you're buying a manufactured home and you own the land on which it's going to go on, that shall be financed as real estate, you go get a mortgage for it. You don't have to worry about this retail installment contract, you go get a mortgage, right, real estate.

[Saudia LaMont (Member)]: That's when you own your own land. Correct. Okay, that's

[Cameron Wood (Office of Legislative Counsel)]: easy to finance. So now the sub two, you're purchasing the manufactured home but it's going to be on land that you lease. Which is the typical park. It's going into a mobile home park or you're just leasing it from somebody who owns the land that it's on. Again, I mean there's a lot of circumstances here, I don't want you to think it's either mobile home park or it's

[John (Office of Legislative Counsel)]: not, right?

[Cameron Wood (Office of Legislative Counsel)]: You could be leasing it from somebody who owns, you know, I own land, I have my home on it, I have an acre there that has a manufactured home on it, I sell the home to somebody who's just paying me for a lot rent on that place, it's not in the park. It may be financed as real estate, it's not a shell.

[Marc Mihaly (Chair)]: Just so you know, we went round and round on whether we should turn that into a shall too, because to make it all real estate, it turns out we just didn't want to do it, because there are times when it's really, there are people who cannot qualify for a mortgage, they need to go with the other routes of personal property, buy it as personal property, rent to own or something.

[Unidentified Committee Member]: So those mortgages are You need 20%, you need

[Gayle Pezzo (Member)]: a rating. Score Yeah. Credit score, etcetera. Some of the banks, if they're even gonna give it, that's a thirty year mortgage if you choose, where with a personal chattel loan, it's only fifteen years, possibly twenty, so there's such a variation, and the interest rate is higher for the personal property. But this gives you the option to do either.

[Marc Mihaly (Chair)]: Gives you the option. Well,

[Cameron Wood (Office of Legislative Counsel)]: it's not necessarily going to give the purchaser the option. So what I mean by that is if I own the property under it and I go to a bank, it has to be financed as real estate, right, but it says it may be financed as real estate, you're leasing it, who's making the determination? Well if you're going to ask someone else for money, in theory they get to make the determination because they're the ones giving you money, so I just want to make sure you know the purchaser isn't the one making that determination, it's going to depend on where they can access finance. Only if you own

[Unidentified Committee Member]: the land, are you guaranteed a mortgage If rate and a mortgage

[Marc Mihaly (Chair)]: you go to a mobile home dealer and you're going to plant your mobile home in some park somewhere, you can go to a bank and see if you can get mortgage. If you can't get your mortgage, you can get a personal loan. The bank may just say, we can't give you a mortgage, we'll give you a personal loan, higher interest rate, and we could have eliminated that, you'll hear about this in a minute, but the problem is there's definitely low income people who

[Saudia LaMont (Member)]: No, cannot no, I get that part. It's the bank,

[Marc Mihaly (Chair)]: If they can get a mortgage, it's better for them.

[Cameron Wood (Office of Legislative Counsel)]: Okay. C and D, I'm not going to get into. C is related to provisions of the Uniform Commercial Code, I'm not going to dive down in that area right now nor do I think it's relevant to the bill structure that you have. D simply says that a mobile home that's permanently sited in a manner to continue with residential occupancy, so this doesn't talk about whether it's finances personal property or real property, this just says is it permanently cited, somebody living on it, is it a home loan? Yes, okay then it's a homestead. So that's going to impact you know you're paying homestead property tax, etc. So E is what I mentioned earlier, at the time a motor vehicle retail installment sales contract for purchase is taken, so when you're going to the dealer and you're getting that retail installment contract from them, the dealer has to provide a written disclosure that clearly states there are other financing options available and again as I mentioned you can get financing offered by PHFA and others etc. So just wanting to inform individuals that there may be better financing options than doing a retail installment contract with a dealer. So now we're moving into the section related to real estate deeds, so any mobile home purchased from a dealer on or after 2008 that's financed as residential real estate has to be conveyed by warranty deed.

[Marc Mihaly (Chair)]: You know what I'm going to ask you to do? I'm just thinking about time and people's capacity. Focus now on just things that you know are going to change.

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

[Marc Mihaly (Chair)]: I've two sections. Great, okay, then we'll talk about what we do next, but go on.

[Michael O’Grady (Office of Legislative Counsel)]: Sounds good, okay.

[Cameron Wood (Office of Legislative Counsel)]: This section, we're saying that again, if it's going to be financed as real estate, it gets a warranty fee, Remember not all of them are financed as real estate. If it's not going to be financed as real estate, what are you getting? You're getting the bill of sale. So then this next one is, this was remember, A, that's from a dealer, an owner of a mobile home shall upon financing your refinancing as real estate, you're given a warranty deed or a quick claim deed and the rest of this section is just saying that if it's a warranty deed, here's what that provides, which I just want to comment that it says that the grantor has the good right to sell and warrants and defends the right to sell. The quitclaim deed does not come with those protections. But so these, the rest of the section is just saying if it's a warranty deed, here's the protections that come with it and here's what it needs to look like. If it's a quick claim deed, it doesn't have those same protections and here's what

[John (Office of Legislative Counsel)]: it needs to look like.

[Cameron Wood (Office of Legislative Counsel)]: So similar to where it said the bill of sale has to be in substantially the same this form, the deeds say the same thing right here. No owner of land on which a mobile home is cited shall unreasonably, it's required to comply with this section and you have to get the individual who owns the property on which you're selling it, you have to get their sign off and they cannot unreasonably withhold that permission. Okay, next section, mobile home bill of sale conversion process. Okay, so what do you do if you purchase a mobile home and you have a bill of sale, but then maybe later you're putting it on property that you own. So now we're under a circumstance where I bought it as a bill of sale or under a bill of sale, maybe I didn't own the land on which I put it, you know I wanted to buy the home first and then maybe I'm gonna buy the land later, later on I buy the land, I own the land now but I have a bill of sale, don't have a deed, what do I do? You need to convert it to a deed and that's what this section allows you to do.

[Marc Mihaly (Chair)]: Which the folks don't understand.

[Cameron Wood (Office of Legislative Counsel)]: So just quickly, of the owner of any mobile home that was initially financed pursuant to a motor vehicle loan, motor vehicle retail installment contract or other form of child mortgage shall, If it subsequently finances real estate, they can file their request to purge the security interest with the clerk of the municipality, and then at which point it can be converted to a deed, which is here in substitute. Upon filing with the clerk of the municipality, the mobile home shall become residential real estate.

[Gayle Pezzo (Member)]: In that purging, you need an attorney and it costs money, correct? I

[Cameron Wood (Office of Legislative Counsel)]: do not know the answer to that question. I don't know that there is a requirement for you to have an attorney, but I assume as with most real estate transactions, probably in your benefit. I imagine most people don't want to go about it.

[Marc Mihaly (Chair)]: But it only applies if you own the property. So if you buy something as bill of sale, like from a dealer, then you move it into a mobile home park, I mean, a manufactured home community. You move it in, you plant it, at that point, you still don't have a deed. Right? Can you get use this section to get a deed or is It it only if you own the

[Cameron Wood (Office of Legislative Counsel)]: says that if it's initially financed and then it is subsequently financed as residential real estate, so keep in mind the May earlier.

[Marc Mihaly (Chair)]: Yeah, it's only if you're willing,

[Cameron Wood (Office of Legislative Counsel)]: if you're able to get financing as real estate then at that

[Marc Mihaly (Chair)]: point whether you own the land or not. Okay, alright is that it?

[Cameron Wood (Office of Legislative Counsel)]: There is a section related to relocation from another state, we don't need to go into that because I don't think it's necessary, I don't think there's any real impacts of the bill, penalties for the chapter and then there's the abandonment of mobile homes, just on the section I'm going to get into that. Not impacted by the draft here.

[Marc Mihaly (Chair)]: So just one comment overall. If this seems complicated to you, that's the problem. In other words, what it is, is this is a marriage of two completely different regimes. One regime was set up to deal with buying shirts, you know, buying furniture, buying, you know, stuff like that, and finance, and what if it's financed, and what are the rules, the you Uniform Commercial Code is what applies. The other is this whole real property regime, and there's almost no place else where the two have to really come together, and they have come together in a way, which as you will hear from me, a way which the people who work in this business just ignore half

[Gayle Pezzo (Member)]: of this, or a lot of it. Because it's complicated.

[Marc Mihaly (Chair)]: Because it's so complicated, and the people who are doing it don't have a lot of money, and so what we're trying to do is simplify it, make it easier, get rid of sections that nobody uses any time, that kind of thing. That's what this bill does. My question for the committee is this. We have witnesses scheduled to come in next Tuesday starting at ten. Would you like us to there's two options.

[Unidentified Committee Member]: Not Tuesday, probably you mean Wednesday. Tuesday at ten, we're probably on the phone.

[Cameron Wood (Office of Legislative Counsel)]: He'd met at one.

[Unidentified Committee Member]: Sorry, 01:00. 01:00.

[Marc Mihaly (Chair)]: So, there's a couple of possibilities. One is, we can take a little break and then he can take us through what the changes are that are made. And I think that will take us to about four or something like that. That's one way we could go. Another possibility, if you're available, would be for us to come in, start at nine on Tuesday, and take an hour before the floor and go through the bill. What's your pleasure? Good afternoon. Shall we just take a break now and go on? Can you do that?

[Cameron Wood (Office of Legislative Counsel)]: Yes, sir.

[Unidentified Committee Member]: I thought you were saying go on till four on Tuesday.

[Gayle Pezzo (Member)]: No, no. Now.

[Marc Mihaly (Chair)]: One option is just take a little break and then keep going for an hour and go through the bill. Another option is to stop now for the day and come in instead of just saying, we'll commit, we won't do anything in the morning, you know, would be we'd start at 09:00, the floor is at ten, we'd start at nine, and we have an hour to go through the bill. So would you rather do it now, or would you rather do it Tuesday morning first thing? I don't know if I about I

[Unidentified Committee Member]: have to leave. I don't know if I

[Gayle Pezzo (Member)]: have to leave. I think, I know. Because of the weather. And this is overwhelming, it's a lot. I think that we should do it on Tuesday.

[Unidentified Committee Member]: Meet earlier on Tuesday. Can

[Marc Mihaly (Chair)]: people get here?

[Gayle Pezzo (Member)]: At nine? Did you want to stay?

[Thomas "Tom" Charlton (Member)]: I can, you know, I

[Marc Mihaly (Chair)]: can get here early if I'm not finally so Well, other thing, okay, well let's just go a little further. We have our first witness coming in at 01:00, giving us background, and then we have three witnesses at 02:15.

[Gayle Pezzo (Member)]: Well, let me ask you something, do you think, because it's complex, dividing it up with some of the witnesses that they do this as a regular job and then coming back to the

[Cameron Wood (Office of Legislative Counsel)]: middle? Here's what I would say, I mean, can quickly in probably five minutes walk through the first section of your bill which amends this stuff, but at some point, like my next thing, if you wanted me to keep going for a while, I would probably switch gears and start talking about limited equity cooperatives next and I feel like I don't know how much of that on Friday afternoon at 03:00 after everything we just went through.

[Marc Mihaly (Chair)]: Okay, well then why don't we

[Saudia LaMont (Member)]: fix I would say if you could go through it in five minutes, then that part, if in five minutes, in a short period of time, can reference what we just digest while it's fresh, I would say that. But if it's longer, I would say no. But if

[Marc Mihaly (Chair)]: it's No. I think if you can do it quickly, you should. Because it's fresh. And then what we'll do is we'll continue after our testimony. We'll fit it in on Tuesday.

[Cameron Wood (Office of Legislative Counsel)]: I can come back on Tuesday and talk about limited equity walkers.

[Marc Mihaly (Chair)]: Yeah. Only one of the witnesses deals go up, so

[Cameron Wood (Office of Legislative Counsel)]: I will say that your committee assistant is so great. She already booked me for 09:00 on Kingston.

[Marc Mihaly (Chair)]: Rachel Siegel, no Rachel Siegel,

[Gayle Pezzo (Member)]: Hugh. Yeah that's fine, okay.

[Cameron Wood (Office of Legislative Counsel)]: Okay very quickly, section one manufactured homes, so this is why I said let's keep the LEC thing separate, we're not even talking about LEC, we're just talking about manufactured homes. Section one, chapter 72, the chapter we just walked through, here are some amendments. First thing permanently cited means the mobile home has become affixed to the land. Factors that tend to show a mobile home is permanently sited include and this is just adding some language to try to make it clear that not all of these things have to be done to indicate it's permanently sited. One or more follow.

[Marc Mihaly (Chair)]: Okay, good. We heard there was confusion some people were saying some banks it has to have all of them online. Yeah, it was just all over the place.

[Cameron Wood (Office of Legislative Counsel)]: Because remember this kind of implicates whether somebody can potentially be eligible for a real estate mortgage and whether it's considered a homestead, I don't know if it's that much of a problem on the homestead fees but just wanted to try to clarify some language here. Okay then we get to section two thousand six four, this is bottom of page three starting line 15, real estate deeds and then what this is doing is saying for these real estate deeds they don't need to be drafted in substantially the form provided in subsection C and then everything else in this section is just removing the requirement that it looked like substantially that form.

[Marc Mihaly (Chair)]: That's all those pages, and I'll just add, at first we wondered, is this whole thing a consumer protection kind of thing? And it just turns out it's not. It just turns out nobody uses, necessarily uses this form.

[Unidentified Committee Member]: It doesn't mean that you won't do honors, that whatever helps you Exactly.

[Marc Mihaly (Chair)]: It was like in the rest of the sale, know, when you want to buy a home, there's only one form your contract can have.

[Unidentified Committee Member]: So no one has taken somebody's home away from them simply because their deed didn't look Right. Like Okay.

[Cameron Wood (Office of Legislative Counsel)]: So one thing I will comment, and as you have some of your witnesses come in and they talk to this in particular, I would also ask them about the bill of sale piece, because remember the bill of sale also says substantially the same form, we didn't strike that, that wasn't a recommended opinion, so just have that conversation but everything in this is just saying listen you know you arguably entities that are issuing out deeds know what deeds need to work like, so you're taking out the requirement that it looked like this. There was also a recommended so that's why I'm scrolling all the way through because that's all this section is doing is it's doing some cleanup to say let me just point out real quick here on page four subsection three because it's saying we're reviewing substantially the same form where it says specifically warranty deed there on line 17. I've had to add a warranty deed here to just clarify that's what this section is referring to. You strike out the form then you get to subsection D on page six same thing I added quitclaim here to clarify this section is talking about a 15 D and then I removed the fact that it has to look like this form okay next section 2,605 which is on page seven and that's line 11, it's removing the conversion process of a bill of sale into a deed. My understanding is the request here is because this is very confusing and a lot of town clerks may not understand how this works, etcetera. But it never happens. I will flag for you all that if you remove this section, you're removing the statutory authorization to confer a bill of sale to a deed, so I have some issues with just that concept, but I'm not doing this on the ground, I'm not in practice the one who's actually, you know, I'm not a town clerk, I'm not the one doing the conversion, I'm not a real estate banker, I'm not the one issuing these loans. What we're going to

[Marc Mihaly (Chair)]: do is hear from Rachel and a bank, her lawyer, and we can ask this.

[Cameron Wood (Office of Legislative Counsel)]: So that's the end of the Mulan stuff. When I get to page eight, we start talking about limited equity cooperatives and I feel like before we jump into that hole, we need to just, similar to what we did with manufactured homes, we just need to have a quick conversation about what is a limited equity cooperative. What does it mean? How are they organized?

[Marc Mihaly (Chair)]: One of the things, just by way of clarification, as a general matter in the law, A warranty deed is generally viewed, it's what we think of as a deed in the plot. They are almost always called warranty deeds, and all it means is that the person giving the deed is saying, I own it, I have the power to transfer it to you. And the problem is in consumer law, which has to do with buying and selling, buying a I'm going to keep using the example, buying the dining room set on time, man, the abuses that there have been in those kinds of sales are terrible and the UCC tried to, you know, deal with those. You mean rent to own? No, it's kind of rent to own, but it's usually an install, there is a difference between rent to own and

[Unidentified Committee Member]: Like rent to center.

[Marc Mihaly (Chair)]: Yeah, it's an installment contract. And there's just all kinds of problems, not the least of which is, let's say there's 20 installments, but you miss installment 18, they come and take the stuff. Even though you're mostly at home. And so, it's an inferior device, but if you have no money, and you can't get a real estate loan, it's what you got. So anyway, that's all. Is aimed at trying to simplify, trying to bring it into the same world as when you buy a house, so that it isn't all complicated by this weird idea that they're all going to be moved, you know, they're mobile homes, and make it easier. I understand something because this

[Gayle Pezzo (Member)]: is important with the bill of sale court. What the clerks and what the banks say is if someone passes away, it's very hard to find the title, because there's no title, it's a bill of sales somewhere and some of the clerks file it differently, or if, it's another example, it kind of went right out of my head, but they're the ones that say this is difficult and there was an incident maybe a month ago that somebody purchased the home, it was supposed to be a warranty deed and it was a bill of sale and when I asked the bank, the banker said, oops, the lawyer made the mistake, it should have been a warranty deed. So this is how confusing it is even to the people that do this on a daily. We're trying to get to the point where the actors who are in this day in and

[Marc Mihaly (Chair)]: day out are not confused all the time.

[Unidentified Committee Member]: I feel like I've already learned like five bajillion new things from storm water to tax credits.

[Gayle Pezzo (Member)]: And it stays cost that buyer money. So who's going to make good what they wound up paying for the sales tax? So it's the purchaser that bank might make good, who knows? But it was the attorney's mistake.

[Marc Mihaly (Chair)]: Yeah, lot of attorneys who don't specialize don't understand don't their know. A realist, just a general real estate attorney doesn't understand it. The clerks don't understand it. The, what do you call them, the listers, every count of

[Gayle Pezzo (Member)]: them, they treat It's them really

[Marc Mihaly (Chair)]: a bizarre world, which we're trying to simplify. I think it's now three twelve, and we are going to come in at ten, no, ten is house floor, at one we will start testimony. The first person who is going to testify is from Pew Trust, and they are wonderful, they've done great work on manufactured housing, they're advocates, you should know, they're advocates for manufactured housing, they feel that it is, for all the reasons you know, that it's affordable and that it's been messed up and difficult, and they're first. Starting at nine No, we're not starting at nine

[Unidentified Committee Member]: You don't want Cameron to put it at nine to walk us through?

[John (Office of Legislative Counsel)]: The alley. Nine. Equity thing.

[Unidentified Committee Member]: That what? Is is any of the witness testimony on on Tuesday afternoon tied to the limited equity stuff? Like, because I'd love to have I'd love to have your background.

[Marc Mihaly (Chair)]: I'm worried that people can't make it.

[Unidentified Committee Member]: I'm not gonna know what to estimate.

[Marc Mihaly (Chair)]: Did I hear that people can or cannot make it

[Cameron Wood (Office of Legislative Counsel)]: at nine? Well, Someone said they can't. Well,

[Thomas "Tom" Charlton (Member)]: if I'm not plowing snow still, I will be here well before that.

[Marc Mihaly (Chair)]: Okay. Otherwise You you and I are here first. I

[Gayle Pezzo (Member)]: can log in on the gym. Okay.

[Unidentified Committee Member]: That'd be the worst case scenario.

[Cameron Wood (Office of Legislative Counsel)]: I'll be

[Unidentified Committee Member]: I'll be on Zoom.

[Marc Mihaly (Chair)]: Okay. Why don't we come at nine? And we'll do limited equity co ops and then we'll have our witnesses.

[Cameron Wood (Office of Legislative Counsel)]: Okay, I think it may, and the reason I say that is, I think it may be worth letting you know and or asking them if they have any opinions on, there are some other states that use limited equity cooperatives, I think more expansively than in Vermont, many states probably don't, but they may have an opinion on it.

[Marc Mihaly (Chair)]: Just in broad, really broad strokes, people have been complaining and working on this problem since I was a lawyer, which is way back. A lot of the problem is, if you don't own the land, you rent the land and you own the box, private owners, someone new comes in, jacks up the rate, someone new comes in and wants to sell it to build new condominiums, what do you do with your home? So, solution is to give people the option, homeowners, the option before the sale of turning it into a cooperative, which is exactly what Gayle once it's a cooperative That's

[Gayle Pezzo (Member)]: the law already.

[Marc Mihaly (Chair)]: Once it's a cooperative, then everybody owns it, and then their home, even though they don't own the land, the entity that owns the land, is dedicated by its very purpose to a mobile home park or manufactured home community, and if they want to sell it, they can only sell it as a manufactured home community, and they can't sell it to,

[Gayle Pezzo (Member)]: they can't sell it for a huge profit. It's because they have a manufactured home land trust.

[Marc Mihaly (Chair)]: Yeah, it's exactly what

[John (Office of Legislative Counsel)]: it is,

[Marc Mihaly (Chair)]: it's like a manufactured home, and in fact, it's the same thing, I know I'm going get crap for doing this, it's the same thing as the whole mechanism that was, the preservation trust of Vermont advocates to protect stores, it's to keep a store from just being sold by a private landlord for a single family home. The idea is you create a community trust that trust buys the building, and the purpose of the trust is to maintain it as a store, then the trust leases the store on a long term lease to an operator to operate it as a store. They can transfer the lease, etcetera, but it means that if in the future that operator wants to retire or doesn't want to do it anymore, it doesn't, you don't lose the store, it's just that trust has to find another operator, and

[Gayle Pezzo (Member)]: it's the same, the cooperative, it's the same idea. To maintain it as affordable housing in perpetuity.

[Unidentified Committee Member]: I'm interested to hear the part where you can't.

[Gayle Pezzo (Member)]: What did you say?

[Marc Mihaly (Chair)]: You can't what?

[John (Office of Legislative Counsel)]: Use the system to

[Unidentified Committee Member]: Yes. What are we have

[Cameron Wood (Office of Legislative Counsel)]: to contact

[Unidentified Committee Member]: How are we preventing people from just buying land and claiming it's a cooperative?

[Marc Mihaly (Chair)]: Well, I think they can, but then you have to deal know what is in the cooperative.

[Thomas "Tom" Charlton (Member)]: It's

[Unidentified Committee Member]: Especially if it's just like, well, if you if because don't religious institutions don't faith institutions? Yeah.

[Gayle Pezzo (Member)]: The five zero one three c stuff. Yeah.

[Marc Mihaly (Chair)]: So the co op is not a five zero one c three, is it? What? A co op is not a five zero

[Gayle Pezzo (Member)]: one c three. It's a five zero one something or rather, but it's not an overseas.

[Thomas "Tom" Charlton (Member)]: It would be similar, but with nonprofit

[Unidentified Committee Member]: Yeah.

[Thomas "Tom" Charlton (Member)]: Once you establish something as a nonprofit, you can only disperse the property to another nonprofit. You don't build equity as an investor. So those are the people that are looking to build equity in what they own, they're not going to go looking at it as a

[Gayle Pezzo (Member)]: So you need to

[Cameron Wood (Office of Legislative Counsel)]: It really is

[Thomas "Tom" Charlton (Member)]: a significant trade off.

[Marc Mihaly (Chair)]: Sorry, Joe. I know, I can see

[Michael O’Grady (Office of Legislative Counsel)]: your

[Marc Mihaly (Chair)]: wheels turning, but you must have some nice piece of land you're

[Gayle Pezzo (Member)]: gonna