Vermont Legislature SmartTranscripts:

[Marc Mihaly (Chair)]: Okay, welcome everybody. This is the Committee on General and Housing. Today is Tuesday, February 1026. So, here's what we're headed for this afternoon. We have half an hour for committee discussion, I at least would like to talk and update the committee on where we are on seven seventy five, that's the rural finance bill. I think, Gayle, in terms of the manufactured home bill, I think we're waiting, right? We're going to wait a little. Gayle's got to do some thinking in light of the discussion that we had last week, but we'll come back to it. And then, after we'll be joined by counsel, and then what I'd like to do is work for the rest of the afternoon, the landlord tenant builds. And I'll get to that in a minute, but for now, I just want to start, and it won't take very long, so we can take a break until we're joined by count at 01:30, right? So, to refresh your memory, the rural finance bill, which we've begun to take testimony on, it has five parts to it. And that bill Tom worked on it, I've worked on it, and our Vice Chair and ranking member, and E. D. Ranning and Mike Marcotte are on the bill. So it's a complicated bill because it has five parts, but what unifies them is an attempt to make it easier, to try to make it easier to build housing in an area of the state where over a month that has been a challenge. And here, just very quickly, are the five parts. There's a tax stabilization pilot. Hey Elizabeth, welcome. You're back, alright. Hi. So, what we're doing, Elizabeth, is just updating. We've got thirty minutes before council comes, or twenty five minutes. Once he gets here, we're going to take up landlord tenant, but now I'm talking about seven seventy five, which is it has a tax stabilization pilot. That is for, it's a pilot for 300 units, towns of 5,000 or less, and projects that are small, maximum size currently 16 units. Remember, we had an opening session that we had jointly with comps. And by a tax stabilization pilot, what it means is that for qualifying projects under this pilot program, the buildings that are built don't pay more property taxes than was originally paid just on the weekend for the duration of the tax stabilization period, is ten years total, but it kind of goes up in the end. So, by the end of the tenth year, you're paying full tax. And the idea being that this is kind of a stimulus for the developer, because one of the problems we have in rural Vermont is that a lot of projects don't, as they say, cancel. In other words, if you know what people can pay for rent outside of Chittenden County, it just costs too much to produce a project, so this helps the developer by reducing one off cost, mainly property tax. The second part is, right now, if you form a special assessment district, let's say you draw it around a development, and everybody in the development who builds is going to pay, in addition to their normal property taxes, they'll pay a little extra to support the assessment district, to build infrastructure of some sort. It could be a playground, it could be roads, it could be a common septic system, it could be whatever the developer wants to do. Right now, the way that works is the select board can form the assessment district, but if they want to float bonds, which you almost always do, because think about it, you want to build this thing up front, right? And the assessments are over time, so you float bonds, which rely on the assessment. Right now, the whole town has to vote on that, And that has resulted in the past on towns using that to vote no, to challenge an assessment. So, what this does is it contemplates situations where the bonds are what we call revenue bonds. They don't involve the full faith and credit of the town. The town isn't backing them, it's just the development, and the bondholders look to the development to pay for it. In that case, there's no vote. Then the third part is the 10% for Vermont. Remember, this is the treasurer's ability. This is why the treasurer testified. The treasurer has this ability to use 10% of the cash balance to make soft loans by soft loans, like at 1%, 2%, 3% rather than 7%, and that's been very successful in helping build out senior housing and a lot of affordable housing projects. That program has changed in that it expanded to 12.5%, and the interest, instead of being dumped into the general fund, the interest goes for housing. I'll get back to that. Then there's the fourth is this off-site remember off-site pre fabricated development like Huntington Homes? This is not manufactured homes like single wides and double wides, this is off-site, the houses look stick built, except instead of being stick built on-site, they're stick built in Huntington Homes factory. And it's expensive, but the thought is if we can do bulk ordering, maybe we can get the price down and help Huntington Homes or whomever expand, and we heard from Jason Webster from Huntington Homes talk about that. And So the idea is that some state agency kind of coordinates this as a pilot program for a few years and sees if they can take small orders from small rural developers and put them together into a big order. But the problem is, how does Huntington Homes know for sure that they'll get paid? So they know they have to know that these orders are good, that they'll really happen. We have all these small developers who maybe don't have you know, they're gonna pay for it eventually, but they may not have the credit or the credit facility, so it allows the treasurer to stand behind those orders, and we have a credit facility to make sure that Huntington Homes can be guaranteed that they're going to be paid for that, so that they can start fitting those things into their schedule. And then the last piece of it was simply very simple, which gave VHC, no. The legal city's accounts? No. Or DHCD? DHCD, thank you. The Department of Housing Community Development, Alex Burrows, SHOP, it gives them the ability to advance the funds for VHIP rather than it's done on a repayment basis. In other words, a landlord who, let's say, has two units in there or three units and they want to rehab the units and make them rentable and up to code, right now they have to come up with all the money, and then they get repaid up to $50 without, if it's not accessible or 70 if it is, this allows DECD to advance the money, again, to help smaller developers. So that's the bill. So I've been concerned because I know full well what ways and means this bill will have to go to ways and means, and I know it's no mystery that their role, among other things, is to protect the education fund. And if we have a tax stabilization, the very first part I mentioned, a tax stabilization project, that means that those 300 units for a period of ten years are not going to be paying property tax, and most of that property tax they would have paid through the education fund. So once again, we are using the education fund to support housing. And it's just the way it works, I mean, it's the way tax stabilization works, it's the way tax increment works with CHIP. Remember we did CHIP last year? CHIP is all about taking that increment as the property value goes up, and instead of giving it partly to the town and mostly to the Ed Fund, it goes to support bonds, support infrastructure for the housing. So, it works, it's easy to administer, but it does come out of the Ed Fund. So the thought that we had was, what if we tried to make the Ed Fund whole? What if the costs of this pilot program for the ten years, we somehow or other made the Ed Fund whole, and what we came up with was the idea that, well, let's say that the interest of treasurer earns doesn't go to the general fund, it goes for housing, but for that ten year period, it's like a carve out, it goes to pay back the Ed fund, for the money that's going out of the Ed fund. So, the treasurer has $100,000,000 of loans out at one or two or 3%, they earn somewhere between 1,000,000 and a 2,000,000 a year, that that money goes to housing, but for ten years in the pilot program, it just goes to reimburse the Ed Fund for the pilot program, the tax stabilization program. So Friday, we met with the treasurer, his staff, JFO, Ledge Counsel, the ones you've met, John, Gray, and Cameron, and Emilie Kornheiser and also Mike Marcotte. The treasurer agreed with that approach. Emilie made a suggestion to even streamline it more, and I think the feeling of the Ways and Means Committee is they're not committing that they're going to do this, but they're interested. So the way I left it was that staff, JFO and Leg Council would work on this and come back to it with language. So, what I'm hoping is that this coming week, not this week, probably not, next week, we'll get a bill we can, it's rewritten that we can consider and talk about. I'm sort of in this situation where I want it to be done right and good, but on the other hand, I don't want it to get lost, where it just never comes to a vote because it's so late in the session, we don't make crossover, and that's, you know, a concern we're just going to have to deal with. There is all the stuff about the treasurer and the special assessment sort of theoretically belongs in government operations. So, I had a conversation with the chair of government operations, and he agreed that this all sounded fine and they wouldn't need to take possession. They just would maybe have a flyby, and we could go down and talk to them, and that's it. So I'm hopeful that won't take a lot of time. So that's I just wanted every to bring everybody up to speed on where we are with that. Joe?

[Joseph Parsons (Member)]: Where are we on the issue brought up by, surrounding the local investment money in

[Marc Mihaly (Chair)]: general? Surrounding which?

[Joseph Parsons (Member)]: The 10%.

[Marc Mihaly (Chair)]: The treasurer believes that he he treats the 10 as 10% of 1,200,000,000.0, which is a conservative number because, in fact, right now, it's 1.5. But he thinks it's gonna go down. And so I'm

[Joseph Parsons (Member)]: talking about the authority to use it the way it's being used. Oh. That was brought up by Ledge.

[Marc Mihaly (Chair)]: Yes. Right. I brought that up, and they feel they have authority in the way it's written because of the first paragraph. The first paragraph simply says he can do it. And I asked him, I said, this isn't our committee's, you know, you think you have authority, I'm glad you think it and you want to let it go, that's up to you, but we don't think the language is great. And he said that they all said they thought they had authority. And I can point you to where they think that it comes from. So if, at any rate, that's the best answer I've got for you. If we think, it's very clear that they have the authority to do the things we want because the sections we wrote give him that. Other questions on that one? Okay, so just quickly this week, today we will work with counsel on landlord tenant issues. Spent a lot of time thinking about this. Our council has really done a great job, but we have 50 pages of side by sides and a lot of text. So what I did is I kind of made a list, which, Lord help me, is four pages long and I've given everybody a copy. It's just a list of the big issues. So the idea being we can walk, my thought is, if people are agreeable, you'll just start walking through these issues and see if we can resolve the big questions in front of us, like what are our preferences? And that will allow counsel to do a markup. And I think that given the complexity of this, I at least volunteer to work with counsel. This is after we've made the big decisions. In other words, this is what we think you ought to do on something like on no cause. This is what we think you ought to do on application fees, this is, etcetera, each of these things, which we decide as a group, where do we want to be? And then, instead of just saying to Cameron, oh, go away, write it all up, I think it's complex enough so that I at least will work with him trying to make sure that all the language is right, and I would appreciate it if anyone else wants to join us, great. But I'm not going to play advocate then. I'm just going to play technical roles. And then the idea being he can bring back to us a bill that we can talk about. I mean, in other words, it's sort of an extended markup.

[Elizabeth Burrows (Member)]: Yes, Elizabeth. Thanks, Marc. My question is, this is landlord tenant. It does not specify that this is specifically residential landlord tenant, and I wondered whether there might be a chance to insert commercial landlord tenant.

[Marc Mihaly (Chair)]: Well, that's up to the committee. It's not in any of the bills before us.

[Elizabeth Burrows (Member)]: I know, but we have, part of the reason I'm asking, because I know it's not, just anecdotally, but I also know that it's not isolated to this one incident, but there is a landlord in Windsor, Vermont, who's a commercial landlord who will not heat his commercial buildings above 50 degrees. And so every single year, the tenants, like anybody who wants to start a restaurant, people come in in May and they're very excited about it and they're gone by November. Like every business that has come in there is gone by the cold season, and it's it's not really fair to businesses that try to, that they have no recourse because it's not residential. And I I wonder whether if we're doing landlord tenant that we could stick something in there that includes commercial as well. Thanks.

[Marc Mihaly (Chair)]: I think we'd have to draft, you know, we'd starting afresh there. I do, speaking, Elizabeth, commercial tenants have more leverage. They just I mean, my first reaction is those people should not be signing a lease that doesn't say his obligation is to eat. Yes.

[Elizabeth Burrows (Member)]: And he somehow gets away with it because it's tax write off for him. Well, mean, it's a if you consider the amount of money that new business owners invest in a brand new business, it's it's it's not fair.

[Marc Mihaly (Chair)]: Yeah.

[Unidentified committee member]: Yes. I think that's interesting, having gone to a restaurant that shall remain nameless where I had to keep my coat on the entire time. The question I have is whether that's not a Commerce Committee issue because it's about a I don't think it would

[Marc Mihaly (Chair)]: be it would be Commerce. Yeah.

[Unidentified committee member]: Yeah. I I I think it's yeah. Just

[Marc Mihaly (Chair)]: That's a

[Unidentified committee member]: good point. I I don't know that it's relevant. Yes. It remained to this bill.

[Elizabeth Burrows (Member)]: Yes. And maybe we ought to specify somewhere in a bill in the bill that this applies only to residences then.

[Unidentified committee member]: Yep. Residential landlord tenant.

[Marc Mihaly (Chair)]: I'm keeping a list here. Okay, what I'd like to do, we have five minutes for counsel, I'd like to go offline and give us a break. We've got five minutes. Let's come back when counsel returns with us, and