Vermont Legislature SmartTranscripts:

[Emilie Krasnow (Ranking Member)]: Thank

[Marc Mihaly (Chair)]: you. Welcome everybody to General and Housing Committee. It's Tuesday, 02/17/2026. We're going to take up first seven fifty seven, which is relating to manufactured homes and limited equity co ops, and then we will move to a discussion briefly on the rural finance bill, an act relating to creating tools for housing production, and then finally take some testimony on the residential rental agreements for tenant bills. But first, on seven fifty seven, we have with us our council before we ask our council to update us on changes to the bill, I'd like to just, for the committee, summarize what's in this bill. And rather than do it in the order that's in the bill, I'm just going to do it very simply. This will take me one minute because there's actually, it's not that complicated. The reason, I think we've spent a lot of time on it, and one of the reasons we've spent a lot of time on it is that we've learned all about mobile homes and limited equity co ops, and a lot of it is very technical. And we've heard from lenders and their attorneys, etcetera, but in fact, the changes in the bill are pretty straightforward. So, I'm going to divide it into two parts, changes that are on all mobile homes. They don't have, you know, they're not about limited equity co op mobile homes, parks, they're just all manufactured homes. One thing to change, so here are the changes. One change is, that from now on in the future, instead of using the word in the code, mobile homes will be changed to manufactured. Okay? Another is, we're to we're making clear a technical direction that defines what it means when something is attached, you know, the mobile is attached. It makes it clear there's four criteria, it makes it clear any one of them means attached. This is what Landry wanted us to clarify. Another is that they're exempt from sales tax, but that the property transfer tax applies. And those are the major pieces of the bill that have to do with all manufactured homes. Then there's limited equity co ops that are organized as manufactured home parks, and there are three major provisions there. I'm just summarizing the bill. One is, has to do with subleasing, which is generally limited, and now you can recover cost, but I have a feeling we'll go into that more today, but that's all it is. Another is, there's no exemption from sales tax, you'll hear there's a sales tax study. Again, the goal here is not the amount of sales tax, what? Property tax. Property tax. Excuse me, property tax. There's just a study that says, and the reason that we're doing it is not because of the amount of tax, because we want to try to create uniformity across the state where there isn't, which is very typical of this whole field. If I had to characterize this whole bill, which doesn't have a lot of piece to it actually when you get down to it. It's just trying to make it simpler, easier, more straightforward to finance and to own. So there's a property transfer tax study? No. No, it's property tax. Yes, tax study. All, in terms of taxes, all mobile homes under this bill are exempt from the sales tax, subject to the property transfer tax. But limited equity co ops, there's a study as to what is the recommended way they should be subject to property tax. And we are putting in the study. Yeah.

[Joseph Parsons (Member)]: Okay. It's not really a study. It's just asking who? The government of taxes. Yeah. So instead of the exempt from education property tax, it's asking the Department of Taxes to think, how are these all supposed to be?

[Emilie Krasnow (Ranking Member)]: So we're not creating a study in which we then have to appropriate that study. Correct. Thank you.

[Marc Mihaly (Chair)]: It's just a report back to Yeah.

[Emilie Krasnow (Ranking Member)]: Thank you.

[Marc Mihaly (Chair)]: Okay, so that's all that's in this bill. I'm not trying to say that we have labored to produce a mouse. I'm just saying, it's actually, after all of the learning we did and all the testimony we've done, it's pretty simple. Okay, counsel, want to tell us about the changes, walk us through the changes?

[Cameron Wood, Office of Legislative Counsel]: Vice President Cameron Wood, Office of Legislative Counsel. I'm going to share my screen, and then we'll walk through this next version. This is draft 3.1. As you can see in the top left, should be on your committee page. This is a strike all amendment to seven fifty seven from the committee. The changes there are two changes, and they are highlighted in yellow. And it begins on page 10. So I'm going to jump to page 10. This is in the section related to limited equity cooperative. So just to orient the committee, that's what we're discussing, limited equity cooperatives. If you all recall from our conversation last time, when you read the subdivision seven, it says that in a limited equity cooperative, the subleasing of a unit, the charging for that sublease is capped at 110% of the proprietary lease costs of the unit. That is staying the same. What changed is in this sub-eight. So what we have now is notwithstanding sub seven, for a mobile home park organized as a limited equity cooperative so we're narrowing the scope of the entities we're talking about, just the mobile home parks that are registered as a limited equity cooperative. The Articles of Incorporation shall prohibit the subleasing of a unit unless sub one year beginning on line 13, a member demonstrates a hardship, in which case the board of directors may by an affirmative vote of the majority grant an exemption from the prohibition. That was in the last version. And so the articles prohibit the subleasing unless you have a hardship and the unit is subleased to an individual of low and moderate income. If you all recall, those are defined terms. So it's just saying you have to limit it to the people that the park is intended to serve, which are individuals of low and moderate income. And so you prohibit subleasing unless there's a hardship and it's to an individual low and moderate income and the articles have to we're in the sub B here now moving to the bottom and top of the next page articles have to require that a unit owner shall not sublease a unit for a higher amount than necessary to cover the cost of the unit to the member, including the cost of the monthly payment for the unit provided in the proprietary lease. So your membership fee, the cost of any mortgage for the unit owner, and any cost of utilities passed on to the subleasee.

[Marc Mihaly (Chair)]: I see. I think you see nodding. I think you've done a good job, counsel.

[Emilie Krasnow (Ranking Member)]: So this can I just Yeah, please? So because it says including, it could be other expenses? Yeah. Yes, ma'am.

[Cameron Wood, Office of Legislative Counsel]: In theory the property tax, yes, mean if there's more yes, yes, sir,

[Thomas "Tom" Charlton (Member)]: could include that.

[Cameron Wood, Office of Legislative Counsel]: I mean at the end of the day this

[John Gray, Office of Legislative Counsel]: is gonna be up to

[Cameron Wood, Office of Legislative Counsel]: the board of directors to piss about the limited equity cooperative. Yeah. Okay, so there's that change and then the next change, We're going all the way to page 18. Okay so this is where as we were discussing a second ago, a lot of the sections above this are about the sales tax and not treating these as sales tax anymore and treating any transfer of a manufactured home subject to property transfer tax. But if you all recall, there was another section about exempting manufactured home limited equity cooperatives from having to pay property taxes. And so you replace that with this report from the Department of Taxes. I will not take credit for the language. My esteemed colleague John Graves in the room drafted and brought this together. But just to quickly walk through it because it's relatively straightforward, it's a report on or before November fifteen of twenty twenty six of this year coming to this committee in Ways and Means, Senate Committee on Economic Development and on finance with an inventory so we're starting here on line seven an inventory and analysis of the current appraised value of each mobile home park registered as a limited equity cooperative. So an inventory and an analysis of the current value of each of these entities, the report shall include a description of the different appraisal methods used, an examination of any justifications for differences in approach, and recommendations for ensuring consistent and appropriate appraisals, taking into consideration the limitation under 11 BSA fifteen ninety eight, the limitation on the property's value if the corporation dissolves. Limitation on the transfer of the remaining value of the property if the corporation dissolves, I should say.

[Gayle Pezzo (Member)]: Questions? Yes? So I have a question why it's not mentioned about 11 BSA sixteen ten as far as the method being one of the methods being used since that's already statute.

[Cameron Wood, Office of Legislative Counsel]: So remember as we talked last time the way I read sixteen ten is just about how you divide the parcels. It's not, it doesn't say anything about how the property itself should be appraised. Remember, it talks about if you have a proprietary lease and you have a lot that is designated for you, you take that with all of your interest in the communal property and that is a parcel. And then you can take the remaining parcels that are not subject to a proprietary lease, subject to some by member living there, and you could treat those as a separate parcel. And then you don't have any other parcels after those two things. So I guess where I'm driving at is I don't think you need to reference it here if you're trying to get at what is the appraised value and how does the appraiser come to that value and why is it different, I don't think you need to reference 1610.

[John Gray, Office of Legislative Counsel]: John? John Gray, Office of Legislative Counsel. Just agreeing with Karen here. I think the way that I think about this section is that you're being agnostic as to the approaches that folks may take across the state. So you're not trying to say, you're doing it wrong or you're doing it right under a particular statute. You're literally trying to understand the current state of affairs. And so you're just gonna get a description of the way that that is done. And then the reason we do have a particular fallout under subdivision three, it would be one thing if you just said recommendations for ensuring consistent appraisal because you could be consistent in all kinds of ways. You could be consistently wrong because you can be consistent in all kinds of ways. So a second piece is this qualitative determiner, appropriate. And so it's tying in, hey, the genesis of the conversation was something like, does fair market value make sense for these kinds of cooperatives given the constraints on the transfer value? And so this is saying, keep in mind when you think about what an appropriate appraisal is, these limitations on transfer value, because they might lead you to think that typical methods of appraisal trying to capture standard fair market value may not be appropriate here. They may also be, but it's for the Department of Taxes to look at and see. So the section is trying to be information gathering, non evaluative, let's just hear what people have to say as to why things are done differently, but we want to know why they think it's done differently, and then come on, tell us, what is the right thing to do in considering this particular case? Okay.

[Marc Mihaly (Chair)]: I think, again, well done. I think to put this in context, what we want now is we want something as good as we can make it, because it's going to go to ways and means. Where John is going to sit in ways and means and tell them what it means, and then they're going to do what they do. But this is giving an opportunity to Go ahead. Any other questions about this section? Yes?

[Joseph Parsons (Member)]: Not necessarily about this section.

[Marc Mihaly (Chair)]: Should I hold off? Well, it's If it's a

[Joseph Parsons (Member)]: about done it or that's the last change anyway?

[Cameron Wood, Office of Legislative Counsel]: Oh, that's that's the last change. Yeah. It's just those two.

[Joseph Parsons (Member)]: Yeah. So I'll just while we're on the subject, not looking to change anything, just curiosity. So that limitation being spoken of is, like, when you sell the property, the proprietary leaseholders get their money back. And then everything else has to go to nonprofit or whatever. Does that work with buying into the proprietary lease? Is there an upfront payment when you join the park?

[Gayle Pezzo (Member)]: Pretty much. Bill, plus the board, it's $100 that you mentioned fee, and you receive a share.

[Joseph Parsons (Member)]: So I buy in.

[Cameron Wood, Office of Legislative Counsel]: It could be different depending on the LEC. The cost could be different.

[Joseph Parsons (Member)]: Yeah. But it's basically, here's a $100, here's my little thing saying that I'm a member of this LEC.

[Cameron Wood, Office of Legislative Counsel]: You already issued a share.

[Joseph Parsons (Member)]: Does it change, like, if I exit that LEC a year later versus thirty five years later? Is that share worth anything different? Just my I get my $100 back.

[Marc Mihaly (Chair)]: Mhmm. It's kinda like

[Gayle Pezzo (Member)]: So when

[Emilie Krasnow (Ranking Member)]: I say a

[Gayle Pezzo (Member)]: $100, the fourth the 17 that I know of, that all manufactured home LACs is $100

[Joseph Parsons (Member)]: Yeah, was just curious if there was Okay, that's all I was wondering. So

[Cameron Wood, Office of Legislative Counsel]: sorry I was trying to pull up the statutory section here. So if we go back to the limited equity cooperative section, not only should you buy in but the cooperative in order to fulfill its public purpose for providing housing for individuals with low and moderate income sorry, I'm sorry, sorry. The articles of incorporation after required that cooperative interest be sold at not more than the transfer value determined by this limited equity formula contained in the articles. And so you have the share and you have this limited equity formula that they build in to ensure that it's going to individuals of low and moderate income, and then you can't sell it beyond that. So the individual members are capped at what they can sell the share or the membership for. And then if it dissolves, you just get your cost of your share back. The cost of your membership,

[Marc Mihaly (Chair)]: I should say. And there are other, what I would like to do today, which is on the agenda for both, I would like to give anybody here who would like to say anything a chance to discuss, talk, raise, issues, etcetera. This has been, first of all, I personally want to thank everybody for becoming more expert than you ever wanted to be on mobile home excuse me, manufactured home parks, limited equity co ops organized as manufactured home parks, etcetera, and lending and etcetera, I think. So, would anyone like to say anything one way or the other? Yes.

[Emilie Krasnow (Ranking Member)]: I want to thank the person that spearheaded, that turned our faces to look at all of this, because you know what the, Gayle knows what the have been, we're trying to address it, we're trying to create something consistent. And so often we legislate once the problems have gotten way out of hand, and this is looking at nascent problems and looking at the horizon as what could be more problematic and trying to resolve it with great consistency. So thank you, Gayle, for all of your hard work on figuring out, talking to the stakeholders and just like, this is a lot of grassroots work and a lot of expertise that no one else could have brought this committee. So thank you. Anybody else?

[Marc Mihaly (Chair)]: I just want to say, well, first of all, my name's on it, but really the laboring war here was Gayle. And very often people who are actually personally involved in a matter they bring to a bill end up getting really so angry and upset at the legislative process that they essentially implode, and I Gayle has not done that. Congratulations.

[Emilie Krasnow (Ranking Member)]: Yeah. So, again, it

[Marc Mihaly (Chair)]: leaves the committee for sure. Also, you know, my own view is this thing we're trying to do, which is to take an entire regime, this mobile home, manufactured home regime, and begin to bring order to it, is going to be a layered effort. This is the first cut. You know, well, then we'll find out more. We'll find out other problems we didn't know. We'll get more into it, and there may be a follow-up bill next year, but I think that's

[Cameron Wood, Office of Legislative Counsel]: So I

[Marc Mihaly (Chair)]: was just gonna mention when I was crafting the bill, there

[Gayle Pezzo (Member)]: was 14 other items on my wish list. So, and we, I mean, we at least got here, so if it makes it at the committee, if I'm here next year, I want to tackle those other items.

[Marc Mihaly (Chair)]: So, is there a motion on the floor to move H? Wait, can we just continue talking?

[Emilie Krasnow (Ranking Member)]: Thanks. Do you mean

[Marc Mihaly (Chair)]: I can't even ask for emotions?

[Emilie Krasnow (Ranking Member)]: Do want us to riff? Was gonna say riff, please. Well, I'll chime I appreciate that this looks at expanding opportunities for Vermonters to have different access to different types of things and providing, I just love options, options are my favorite thing. And so this provides so many opportunities for low income Vermonters to have access to something that they may not otherwise And then that expansion on just trying to find workarounds just made sense as we were evolving. And so I appreciate all the work that you've done. Thank you. It's my home ownership and without needing to stop. We need a diverse housing, and this contributes to that diversity of our achievement.

[Cameron Wood, Office of Legislative Counsel]: I will take a quick moment to add an addendum to what I said in response to Rep. Parsons' comment. The limited equity formula can be amended by the co op throughout its life, but it still has the restriction that it has to maintain that it's affordable for people of low and moderate. So I don't want to those dues can be amended. It's not set at once and set up forever. But the individual is designed such that the member is only ever going to get back that limited membership share.

[Marc Mihaly (Chair)]: So, you may have a motion.

[Emilie Krasnow (Ranking Member)]: I make a motion that we vote on H seven fifty seven? No. Favorable. That we I've okay.

[Marc Mihaly (Chair)]: I you did have said you moved seven fifty seven. No. No. It's there's more words.

[Emilie Krasnow (Ranking Member)]: Make a motion to find H757 favorable with amendment. Okay, so I make a motion that we move to find H757 favorable with amendment. As long

[Joseph Parsons (Member)]: as that amendment is draft 3.1. Oh,

[Emilie Krasnow (Ranking Member)]: draft 3.1. Draft 3.1. Thank you. Whoops. H the amendment is seven fifty seven draft 3.1.

[Joseph Parsons (Member)]: There we go.

[Marc Mihaly (Chair)]: Could do it through

[Cameron Wood, Office of Legislative Counsel]: a different version. Someone could do it a different

[Emilie Krasnow (Ranking Member)]: Yeah, here's your chance.

[Marc Mihaly (Chair)]: Let's move back to the 115.

[Joseph Parsons (Member)]: Did anyone second that?

[Emilie Krasnow (Ranking Member)]: I did. Perfect. Is there any other committee discussion?

[Marc Mihaly (Chair)]: Clerk, will you please follow the rules? The acting clerk is going to be our ranking member today acting because we have the vice chair.

[Emilie Krasnow (Ranking Member)]: Rep Bartley votes yet. Rep Burrows? Rep Charlton?

[Marc Mihaly (Chair)]: Yep.

[Emilie Krasnow (Ranking Member)]: Rep Dodge? Yes. Rep Dolgin, yes. Rep Howard, Rep Krasnow, Rep Lamoille, Yes. Rep Parsons?

[Joseph Parsons (Member)]: Yes.

[Emilie Krasnow (Ranking Member)]: Rep Pezzo? Yes.

[Gayle Pezzo (Member)]: Rep Mihaly?

[Marc Mihaly (Chair)]: Yes.

[Emilie Krasnow (Ranking Member)]: Alright. Final tally is eight zero three. Who is reporting this?

[Marc Mihaly (Chair)]: I think that the I think Gayle Pezzoille will be reporting.

[Gayle Pezzo (Member)]: The show. I would like to report it, but I would

[Marc Mihaly (Chair)]: like you to report. What you do is you just review report. Okay. But I don't know that it's gonna be reported yet. What it is gonna happen is it's gonna be referred to ways it

[John Gray, Office of Legislative Counsel]: means. Yes.

[Marc Mihaly (Chair)]: Mhmm.

[Emilie Krasnow (Ranking Member)]: But Gayle has to

[John Gray, Office of Legislative Counsel]: send

[Marc Mihaly (Chair)]: it I to you and I, at the end of today's testimony, let's go to the clerk, let's find out exactly how that works. Okay? Let

[Cameron Wood, Office of Legislative Counsel]: me get you a clean copy. Okay. When you go to

[Marc Mihaly (Chair)]: Yeah. Alright. And electronically clean too. Okay.

[Cameron Wood, Office of Legislative Counsel]: I'll send you this PDF. I'll just have

[Emilie Krasnow (Ranking Member)]: to remove the highlights. I wrote graph 2.1 on here. Okay.

[Marc Mihaly (Chair)]: Okay, now we're going to move on to

[Emilie Krasnow (Ranking Member)]: It's okay, it

[Marc Mihaly (Chair)]: works. Gayle, you're going have to send an email, but okay. Two. She'll help you, Mary will help you.

[Emilie Krasnow (Ranking Member)]: Were more votes today, right?

[Marc Mihaly (Chair)]: None were good.

[Emilie Krasnow (Ranking Member)]: Apparently that was much more difficult than I thought.

[Marc Mihaly (Chair)]: Congratulations, committee. Okay, now, A-seven 75 is what I call rural finance bill. It's officially an act relating to creating tools and housing production. I want to set the stage because there have been some major changes to this bill that I want to lay out for you. Then, as to the changes, particularly, we'll ask counsel to walk us through them, or some of them. This is not for vote today. This is for discussion and a chance to talk about things. As you may remember, this bill originally was put together with its authors intended as a package of things that would facilitate financing development, particularly in rural Vermont. The sense was that CHIPS is a good start, but there are communities and projects that would not work, because of the complexity of chips or the small size of the projects wouldn't generate tax increment, etcetera. So, I'm going to start by saying what was in the bill and then I'll tell you what the changes are. One, there was a pilot program for tax stabilization. Two, there was something to facilitate project specific assessment districts to fund infrastructure. Right now, under the law, the way that when you create an assessment district for a development where everybody in the development has to pay a little more than their normal taxes, that money goes to support a bond issue to pay for infrastructure that relates to the development. When this bill provides that when the financing of the bonds are of such a type, it's called remnant bond, that no one is responsible for the payment ever except the development itself, then there's no vote.

[Emilie Krasnow (Ranking Member)]: The third Municipal wide vote.

[Marc Mihaly (Chair)]: There's no municipal wide vote. The developer presumably wouldn't propose it unless the developer supports it. Then there was a whole section on the treasurer, and remember the treasurer is 10% for Vermont? It's a process by which the treasurer issues RFPs for developments, some of them we heard from the treasurer, you know, of them are seniors, a lot of them are affordable projects, and what the treasurer would do is just make available to the chosen developer money at a very low interest rate, like one, two, 3% for short term loans and maybe up to 5% for long term, but in any case, way under market. And in return for that, it would enable a project to be built with almost entirely private capital, but the loan really was the stimulus for it. So this made three additions. 10% is now 12.5%, and the treasurer was comfortable with that. The second was, he could use one of those percentages to backstop or otherwise provide some sort of guarantee that would allow another part of the bill to work, it's the part of the bill that had to do, which I'll get to in a minute, that had to do with aggregating lots of small orders of off-site manufactured, off-site modular homes. And the developers are going to pay for it, but the treasurer would stand behind. And then the interest on those loans, instead of just going into the general fund, would go into house, back into his projects. And then finally, two more. There was this off-site accelerator, which is the one where, as I said, it has DHCD kind of in charge and it aggregates smaller projects and tries to come up with bulk orders of like 40 units for Huntington homes or for some similar entity to allow them possibly to deliver the units if they're all the same at a lower price. It's a pilot project too. And then finally, a little piece just gave or clarified that the people who run the Mihaly have the opportunity, if it's appropriate for a smaller project, to advance the funds rather than have the developer or the owner have to pay them upfront and get paid back. That was the bill. So it's a cluster of things. So here are the changes which you will see reflected. You with me, all with me so far? One is, I was requested by the speaker, and in light of that request I agreed, that the schedule of ways and means with education finance was so crowded that it was unlikely that this the tax stabilization piece would get through this year, and I was asked to take it off the bill, and I did. I mean, I did in this draft. The committee has to agree with all of this. Also, would add, there are unresolved issues. I was partly influenced by that. It's not clear yet exactly what the best agencies are to devise the rules, run the pilot project, etcetera. It needs a little work. And I said to ways and means that I would get together with my co authors and we would work on this over the summer, assuming, of course, I'm returning the notice, and that we would introduce a bill next year to address this issue, and I was told by the chair of ways and means that they would take it up if we did. So that was one change there. Just to clarify, you're talking about the 1% for bulk purchase or

[Emilie Krasnow (Ranking Member)]: No, the whole just

[Marc Mihaly (Chair)]: one of the five pieces. The one that's tax stabilization pilot program, just that. That would leave the assessment district, everything with the treasurer, the off-site accelerator, that's all still in the bill. Then two things are added to the bill. One, at the request of Chair Marcotte of the Commerce Committee, you may have heard, in fact we have testimony. The Vermont Economic Development Authority, VIDA, came and testified here. They make loans for commercial projects. They wanted to be able to make loans for residential projects. There was some hesitancy about that on the part of VHFA, and VHFA and Vida worked that out. And so there is language which was provided to us, and I gather actually written by our esteemed counsel, was provided to us to include in this bill. So that would allow VIDA, in addition to others, to lend. It just increases the amount of capital that is available. And then finally, I'm going turn it to you, finally, there is another proposal which has been kicking around and is in several bills, but not in a standalone way, that we think is very valuable, and?

[Emilie Krasnow (Ranking Member)]: So we have asked Cameron, so currently in H602, which is in house environment, and then S328, which I believe is currently still in house economic Senate. Thank you, Senate Economic Development. It's an omnibus housing bill, is my understanding. They have language regarding the housing targets. So when we had the administration's bill do a walkthrough for our committee, this came up, and I think it was really important that we, as a committee, have this conversation and include it in the bill. So what this would do is regarding our housing targets that we established in statute and the Homes Act, and then going back to Act 181 where we're asking for a where are we with our targets, it is mandating that municipalities who, if they reach their goals, that's great. They don't have to do anything besides reach their goals. If they are unable to, what this would do is require them to tell us why. There's no teeth in it, but it's just for our understanding of why are you not meeting your housing targets? And I think, from my feeling is that is the way for us to hear back. We've continuously put pressures on our municipalities, asking them to do more without necessarily more support. And it's kind of a check back saying, okay, what do we do in the future? How can we help legislate this? So that is language that I spoke with Cameron this afternoon to add.

[Marc Mihaly (Chair)]: I want to just clarify. One of the problems, one of the things that I'm beginning to realize is that it's important to set the stage for things. You can't do everything at once. I think we really need data. I think we need to know these housing targets are out there, but so what? What this bill does, it says you've got to incorporate these housing targets in your plan, or if you can't make it, you gotta tell us why not. Is it flooding? Is it regulatory? Is it you know, what is it? Actually, I think Joe may I quote you, sir? Joe, he doesn't know what the hell yeah, right. You know, Joe said, it's an off ramp, and I think that that's exactly what we need in order to find out if these targets are realistic or not, and if not, what is missing? For example, are we going to find that a lot of towns can't do it just simply because they don't have infrastructure? Well, then we know if we don't put more money in infrastructure, we're not going to make the targets, or, you know, etcetera, etcetera. We need to know more why, and this sets the stage for that. And and I will say, we'll get some quick testimony in here, but I will say, somewhat to my surprise, the Vermont League of Cities and Towns is favorable for this. And so, you know, a lot of people seem to like this idea. So anyway, we thought, well, let's put it in this bill because it would certainly help rural Vermont to get these targets the real meaning of these targets straight. Yes and yes.

[Emilie Krasnow (Ranking Member)]: I was just wondering what will we will we see the language this afternoon?

[Marc Mihaly (Chair)]: Oh, wait.

[Emilie Krasnow (Ranking Member)]: Wait. You might not My question is, is what the hearing from the towns kind of look like? Can you talk a little bit about what? I can definitely go into that. I have my notes from earlier today to just kind of walk through it. But pretty much what it is saying that the municipal plan shall identify and analyze existing and projected housing needs for the projected population of the jurisdiction, or if they cannot, they have to include an analysis of why. Okay. I mean, I can read the whole thing. So we're gonna get like a written report back of all of the towns and kind of aggregate data on Yeah.

[Marc Mihaly (Chair)]: MTHCD is gonna take willing to do that, and the bill requires that the RPCs help the towns. Because remember, the RPCs are the ones who created the town by town things,

[Emilie Krasnow (Ranking Member)]: and so So it'll be part survey, part multiple choice, part no qualitative feedback. And hypothetically, one of the things we talked about is a municipality can just say, we're not 100% sure, but we don't think we have enough wastewater. And that can be their reasoning why. Again, we're not trying to put more pressure, but I think a lot of the times we keep asking for things with never really understanding why we're not getting. Cameron and I met at 11:30 today, which is why we don't have the exact language yet. But we were bringing it up in the conversation.

[Marc Mihaly (Chair)]: And our plan is DHCD, we met with DHCD today, they're enthusiastic, but we bring to you the Regional Planning Commission, DHCD, and Vermont League of Cities and Towns. Yes, Joe.

[Cameron Wood, Office of Legislative Counsel]: Yeah, I'm just gonna finish

[Joseph Parsons (Member)]: off that excellent quote of mine. Yeah, I would like something like that in this bill because as I said and you quoted, I feel like towns need to have that feeling of, we're not going to hit that goal. So you're aware and not just being out in the ether that you didn't hit the goal. You must not be doing something. An easy way to explain why you're not hitting the goal. Because I can only speak for the towns I represent, and I can only believe that there's a heck of a lot more of small towns in this state that feel the same way, which is these housing targets are gonna be used as a future club for what was the end of that. Because there's always a carrot and a stick. So that's part of their concern as to here's your housing targets. What does that mean if I don't hit those?

[Marc Mihaly (Chair)]: I agree. I I just don't think these housing targets are gonna be real until they're socialized anymore. And I don't think they can be socialized by anyone except the towns who are affected.

[Cameron Wood, Office of Legislative Counsel]: Can't make people go home.

[Emilie Krasnow (Ranking Member)]: That would be a lot easier.

[Marc Mihaly (Chair)]: So that's for all by way of background of what the bill was, where it is now. I do want to say that although I welcome the chance to improve the tax stabilization thing, it's something that we agreed to because of the internal timing and nature of the various committees involved. More than a desire to delay it, and I think there are gonna be developments where we're gonna have to work over the summer to help them out in other ways to make them move forward. Tom, do you have something to say?

[Thomas "Tom" Charlton (Member)]: Yes. I have a separate question. I'm just checking that the the request for VHIP in base funding, that's embedded in the budget? It's in

[Marc Mihaly (Chair)]: the budget and it's oh, I drafted a No, it's not in this, Phil. I drafted a rough draft. I have created a very rough draft of our letters to appropriations, and that's right up there. Camera, can you take us through the changes to the extent that you are prepared to do so? That's all we're going to do today, other than anything anyone wants to say by way of comment.

[Cameron Wood, Office of Legislative Counsel]: I'm gonna mention a few things, then I'm going to turn the chair over to John to walk you through the first piece. And for the record, Cameron Wood, Office of Legislative Counsel. As was mentioned, so as a quick mention, this is drafted as an amendment to seven seventy five from this committee as a strike all amendment. So just the first thing as you've mentioned, Mr. Chair, is it is missing the first few sections of the bill as introduced.

[Marc Mihaly (Chair)]: So I have a technical question. I should have done the answer to this by now, but I don't. When you're simply taking the text of an existing bill and adding and subtracting, why is it called a strike call?

[Cameron Wood, Office of Legislative Counsel]: It's not. You, well, you can approach the amendment process in different ways. You can either do instances of amendment, So you

[Marc Mihaly (Chair)]: just to go through and each do an each do it. It would look like a bunch of instance of amendment.

[Cameron Wood, Office of Legislative Counsel]: Right, it would say first by striking section one in its entirety. Second by striking section two in its Third, by striking for in this section on this line. This word, strike this, add this. So it depends on the level of complexity of the request. And it just means that no

[Marc Mihaly (Chair)]: one will be able to understand what the hell really was happening.

[Cameron Wood, Office of Legislative Counsel]: And there may be strategic reasons you want to do instances as opposed to a strike all, but in this case where you have removed multiple sections, I completely restructured two sections, you've added sections in a lot of instances that may be easier to just strike the whole thing and start a new. Okay, thank you. So as I said, the first two sections have been removed. So the rural financing pilot program where it was going to build up to or the language was intended to build up to 300 homes in municipalities, less than 5,000 people, that section and the corresponding section have been removed. So we're starting off with the special assessment bonds. And there was an amendment here that I'm going to turn over to John and let him cover so you can release him to do the steady job.

[Marc Mihaly (Chair)]: Hello,

[Gayle Pezzo (Member)]: Hi, John. I

[John Gray, Office of Legislative Counsel]: think I already introduced myself, but in case you've forgotten, I'm Gray, Office of Lexington Council. Pretty simple change here for section one. Just to orient, the special assessment bonds are sets of bonds. This is granting authority to municipalities to issue bonds backed by special assessments, are already provisions that exist in existing law. So this is just creating clear authorities for municipalities to issue those bonds as the chair described. And the change is not to any of the meaningful authorizing sections. It's just to this subsection C on page two. The way I described this the last time as you may recall was this is a limitation on issuance that is related to marketability, something that came from the Vermont Bond Bank's office. You can think of this as suggestions that may help protect the bond markets, ensure that debt that is issued under this section is not going out without the market, basically. And so it introduces restrictions on the conditions you have to meet for your issuance in order to satisfy this section. And what you may recall from last time is that we had a couple of things. We had something saying you had to get a commitment, you could meet one of three conditions. You got a commitment letter from the Vermont Bond Bank. You got something from a private bank that's qualified as a qualified institutional buyer, which is a technical term under the Securities and Exchange Commission rules. And then there's a separate piece about whether or not you've got a minimum credit rating. So these are marketability concerns. The updates that you see here are not as big as they look. This is still a marketability section, it's just slightly changed the structure in part because one, it was recognized that the banks that would qualify will by virtue of their nature already meet the qualified institutional buyer qualifier, so you don't need to call that out as a particular thing. It also expands and makes clear who the regulators are for the entities from whom you would receive a commitment letter. Just as a credit oriented why you would want something like this, these are folks who you could think of as providing sufficient assurances that it's going to be a meaningful bond issue. So reliable purchasers, and that's what you can think of in your subdivision C1. The municipality may issue a revenue bond pursuant to the section only if one or more bond conditions is met. You've received a commitment letter for the issuance from one of these reliable entities. Vermont Bond Bank, just as the last draft had, a bank regulated by the FDIC, OCC or the Federal Reserve, or a credit union that is regulated by the National Credit Union Administration. Again, all stuff that comes from Vermont Bond Bank, but you can think of it as just, are you getting a commitment letter from a reliable purchaser? The second condition you could meet is that, and it's the same as in the last draft, it slightly it slightly clarifies what a credit rating agency is for these purposes. So the other thing you could do is for your instance, if you got a nationally recognized statistical rating organization that has an active United States public finance practice, I'll come back to this in just a second, but if one of those entities raised the issuance at a minimum credit rating of BBB equivalent, we'd also meet the conditions here. So be a minimum credit rating, and it has to come from a particular kind of organization. There is a list, you can think of these as your credit ratings agencies, Moody's, Fitch's, Standard and Poor, those will be the ones that you're likely familiar with. There are others, there's an actively maintained set of these nationally recognized rating organizations in our SROs on the SEC website. And the qualifier that you see here that has an active United States public finance practice. There's different sectors that these credit ratings agencies review and one of those public finance. So municipal finance falling within that area, this is just ensuring that you're getting that rating from a nationally recognized such organization that is active in The US in this space. So it's just clarifying from whom that rating should come. So this is not a dramatic change. While it looks like it, it is not a dramatic change from the prior draft. Is just clarifying who are the reliable entities from whom you can receive a commitment letter to meet the conditions here, and then who are the organizations from whom you could receive that credit rating. But otherwise, it's the same concept as the last draft. Questions for John?

[Marc Mihaly (Chair)]: I guess just a couple of questions. Well, go ahead, you go ahead. Well, I'm just confused about why you the

[Emilie Krasnow (Ranking Member)]: rating and not the lender, proof that you have a lender? Why would it be or and not like, and a statistical rating? Like, two.

[John Gray, Office of Legislative Counsel]: You're asking why or versus and?

[Emilie Krasnow (Ranking Member)]: Yeah, like, what would be the scenario where you only have two, where you only have the rating? Like if they're rating the developer? Municipality So

[John Gray, Office of Legislative Counsel]: the rating is for the issuance itself. So you're rating the particular debt issue that you're going out on, which is also worth flagging because from a timing consideration, it means that you'll be pretty far down the line at the point at which you can determine that you can fit under the statute. You have to put together a lot to get to the point where you could receive the rating. But the condition where you would have just two and not one is if you found a reliable purchaser and it wasn't one of these listed. So you didn't have the bond bank available, you but found someone in the municipal market willing to purchase these bonds. And then you had separately received a credit rating of this kind. So you're either getting a assurance that's purchaser is someone that we can rely on, they're going to back this thing up, or the issuance itself is deemed by one of these credit rating agencies to be of a particular quality. And I think what you may recall Michael Gaunt saying is, this is the threshold at which these are considered investment grade bonds. So that's why this triple D or equivalent is shown. So two different kinds of protections and it's just saying, get one or the other of these, but it is a policy choice what you would like to do. I mean, the more restrictions you put in place, the harder it is for someone to access the markets for these issuances.

[Marc Mihaly (Chair)]: A couple of questions. Well, first of all, course, the bond bank, this is typical of them and that they're interested in making sure that we don't produce any kind of financing issuance here that would fail, you know, no one would bid or else that they'd be junk bonds or anything like that. I do have a process question. With respect to normal bonds that aren't revenue bonds, that are backed by full fading credit, the typical bonds, my experience has been, if the bonds aren't issued by the local government, they're issued by the bond bank, they're accumulated together. So, you know, if town x, like my town, for example, wants to issue it, needs $400,000 for a dam, they don't try to go out onto the market for a $400,000 little itty bitty bond and go through, have their own bond counsel and all this stuff, they submit an application to the bond bank, bond bank accumulates everything, and then they go out in the market and get issue the bonds, and then they enter into an agreement with my town saying, oh, here's 400,000 and you better pay us back. And is a parallel process involved here or not?

[John Gray, Office of Legislative Counsel]: I frankly don't know, but you raise a question that I hadn't thought about, which is what it means for an issuance to see a particular credit rating, if it's pulled with a bunch of other

[Marc Mihaly (Chair)]: Yeah, if it's the I wouldn't be surprised, and it might be good to find out. I don't think we need to know, but I sure would just like to know whether all of these things are in there, because that's what the bond bank always does when it accumulates everything. It's the kind of guardian where it's interested in maintaining Vermont's overall credit rating, And so I'm just wondering whether that isn't, why that's in there.

[John Gray, Office of Legislative Counsel]: And think that's a really good point too, that I struggle to make when doing these walkthroughs as to why a particular subsection is included. This is not language that you have to have to authorize municipalities to undertake these things. This is something proposed by the bond bank as a protection for the markets. So it's not something that has to be done if you're just trying to do the basic grant authority to do these particular pieces. And you could say, would it just practically be the case that someone could only access the markets anyway if they met these conditions? But if that's the case, then it also wouldn't hurt to have these provisions because they would be meeting them anyway. So I think you have some empirical questions about how the practice will actually work. But it is important to flag this is not language you have to have in order to achieve just the basic of revenue bonds backed by special assessments. This is done for a particular purpose that you guys may find attractive.

[Emilie Krasnow (Ranking Member)]: So this language, this authority is not just within the sphere of the rural growth project? Like this is for any development This

[John Gray, Office of Legislative Counsel]: is just for revenue bonds backed by special assessments. It's a pretty niche. These provisions do not apply to your general publication bonds, it doesn't apply to any bonds issued under any section other than this newly created section about special assessment bonds. It's just for project specific special.

[Emilie Krasnow (Ranking Member)]: Right, but there could be a one massive project

[Marc Mihaly (Chair)]: across the country, many developments are financed in part using special assessment bonds that are not full faith in credit bonds, that are just bonds backed by the special assessment district. Okay, counsel. Perfect. Go on. Thank you, Sean. Sure. I am

[John Gray, Office of Legislative Counsel]: gonna leave the room unless you guys need

[Marc Mihaly (Chair)]: anything else from me. Do we really want to let them escape? I don't think it's fun. Okay, thank you.

[Cameron Wood, Office of Legislative Counsel]: I'm shocked. I should have commented, just for the record again, Cameron Wood, Office of Legislative Counsel. I should have commented at the beginning of this version. I've been pulling together based on feedback for the past few days. And it doesn't include, for example, the housing targets that you were just speaking about a minute ago, I will have that included and added for the next time you all want to review. It has not been edited. It's I see that from the watermark on it.

[Marc Mihaly (Chair)]: Yes, but

[Cameron Wood, Office of Legislative Counsel]: it is draft what? It is draft 1.1 of your amendments. And most of the language is what was in the bill is introduced. The highlights are the changes, but because we have changed language, we would run that back through our editing process and we have not yet done it. So I'm just flagging for you. Okay, section two. Now we have the Vermont Housing Special Funds section. These next two pieces are about the credit facility for the Vermont State Treasurer's Office. And so you will see a new structure in section two. What I've tried to do is take all of the language that the State Treasurer's Office provided regarding the credit facility amendments that they would like to make and regarding the establishment of this Vermont Housing Special Fund. And I have reorganized it in a way that, from my perspective, more efficiently for what you're trying to accomplish. I just wanna add that for the committee's

[Marc Mihaly (Chair)]: information, what happened was when this idea came up, the treasurer's office provided light. And in the typical manner of legislation, which people are pressed for time, we just dumped it in the bill. Then we started to read it carefully, and we realized that it was a little ambiguous and needed a little work and asked counsel to do that, which is he has done.

[Cameron Wood, Office of Legislative Counsel]: I had made an attempt. I have not run this by the treasurer's office, so as I know that you would, and I'm happy to do so in your direction, share it with them and So have them you're gonna see some of this language up front, just so it's not new language, this is me just moving language around. So before I jump into here, you all know, because we talked about it when we did the induction of the bill. The treasurer's office has the current authority to create a credit facility of up to 10% of the state's average cash on hand. They've had that authority for a long time. There's a separate credit facility that they have to deal with certain environmental projects. And so what this proposal is, is to increase the cap from 10% to 12.5% for their overall credit facility authority, and then to give them an additional or within that 12.5, a 1.5 or excuse me, 1% get twisted up my apologies. 12.5 is the total, 1% within that can be used for this off-site bulk purchasing, know, off-site manufacturing housing. So when I jump into the language here, initially this was set up as like a subdivision a, b, c, and then adding e, d, f. Right? And I've gotten rid of most of the other subdivisions and tried to incorporate everything up here at the top under the sub one. So we have the lead in language which is not new, it's just being moved. Notwithstanding any provision of 32 BSA four thirty three A, what is that? That's the limitation on the state's investment of money and what they can invest their monies in. So this is saying, we're not going to limit your investments here. You're going to be able to invest in other things that you as the treasurer of dean Public interest. Right. So consistent with the prudent investment principles and guidelines pursuant to that section. And I can pull that up if you all would find that helpful, but it's not new. As you can see, I've simply struck it here and moved it up here into the heading. So overseeing all of this. What you have now is credit facility of 12.5%. State treasurer can also authorize under the B a credit facility of up to 1% of the state's average cash balance provided that the credit facility established under subdivision A shall be reduced by an equal amount to any credit facility amount established under B. So it's 1%

[Marc Mihaly (Chair)]: of the 12.5%.

[Cameron Wood, Office of Legislative Counsel]: Yes, but the key thing to keep in mind is you have the state's cash on hand, which I think they've said is averaging out to be 5,000,000,000. So they can set up a credit facility of 10% of that. What you don't want to do is say of that 10% only 1% of the 10% that's not trying They're to trying to say

[Marc Mihaly (Chair)]: no it's still 1% of the

[Cameron Wood, Office of Legislative Counsel]: average cash on hand but what we don't want is we're not trying to get to 13.5%. So that's why it's a little tricky language here to say, you have the authority for the 12 under A, under B you have the authority for one, but any authority you do under the one is going to equally reduce the total amount of the 12.5.

[Emilie Krasnow (Ranking Member)]: Why can't you just say one of the 12.5?

[Cameron Wood, Office of Legislative Counsel]: Because it's not necessarily one of the 12.5. Think about it this way,

[Marc Mihaly (Chair)]: you have

[Cameron Wood, Office of Legislative Counsel]: $100 10% of that's $10 1% of that is $1 If you limit down to the 1% of 10 is different than 1% of 100. So you have to phrase it right so it's not 1% of the amount that's established under the 12.5% and trying to make sure that language accurate is what we've been trying, the puzzle we've been trying to accomplish and I believe this accomplishes that. It does.

[Emilie Krasnow (Ranking Member)]: As opposed to saying one out of 12.5.

[Marc Mihaly (Chair)]: Right. Would have, yeah. The other one. 20%.

[Cameron Wood, Office of Legislative Counsel]: So that's the A and the B. You get these credit facilities. Now the two, three and four are going to limit what this 1% is for and can do. So when you read the number two, so the credit facility established in the Subdivision 1B, so this new 1%, may be used only to facilitate housing development through the bulk purchasing of off-site constructed housing and to aid in

[Marc Mihaly (Chair)]: the purchase of off-site constructed housing units. Okay, that's the original language, right? Off-site I

[John Gray, Office of Legislative Counsel]: added in the word only.

[Marc Mihaly (Chair)]: Yeah, but I mean it's off-site constructed housing.

[Cameron Wood, Office of Legislative Counsel]: Yes, sir. The language into is their original language that I have put together in one subdivision and included it. So we haven't deleted anything or added anything substantive.

[Emilie Krasnow (Ranking Member)]: Does that mean then that this is forever?

[Cameron Wood, Office of Legislative Counsel]: What do mean for this? This is intended to

[Emilie Krasnow (Ranking Member)]: Yes. We are. Right. So so now from now on in perpetuity, what percent of that is always going to be for buying bulk services?

[Marc Mihaly (Chair)]: It's available. If

[Cameron Wood, Office of Legislative Counsel]: they choose to use it, They're not required to, but if they choose to, then it would be that 1% piece would be limited to only investments in.

[Marc Mihaly (Chair)]: But was limited to only before? Or is it may? I'm having a hard time with may and only.

[Cameron Wood, Office of Legislative Counsel]: Yeah. Right. So here's where we get into this sub b here, which exists. So currently, there's the a, which says you can establish the 10% credit facility and then you have this B which says the treasurer may use amounts for mobile home infrastructure projects. There is a question about whether B limits A and how much would it limit A? Does B mean that you can only use A for mobile home parks? No, okay.

[Marc Mihaly (Chair)]: That's not their interpretation. I've spoke with

[Cameron Wood, Office of Legislative Counsel]: the state treasurer's office and they say no, B didn't exist before A, they didn't come into existence at the same time, so it's not a shall and so I can understand their interpretation and I don't necessarily disagree with it that this isn't a full limitation on the credit facility. They can use the money for mobile home parts and they can use the money for other things. It's just something. I don't like the drafting.

[Marc Mihaly (Chair)]: Wish I draft it differently, but

[Cameron Wood, Office of Legislative Counsel]: it is what it is. When you look at the C, which is the other credit facility that they can establish of 2.5%, now this is, the treasurer may use looking at line 13 down, the treasurer may use amounts under this subsection only to provide financing for climate infrastructure and resilience projects. So the reason it's a may is because you have this 12.5 plus the one and if they're going to use the one, it's reducing your 12.5. So you want to give them the may, they may do it, you don't want to force them to do it. But if you're going to use this 1%, you're only going to use it for these purposes.

[Marc Mihaly (Chair)]: And I think you do So they could decide we're going to use half of 1%. Correct. And the other half we'll just use for the But same general

[Cameron Wood, Office of Legislative Counsel]: I also think it's important to limit it only here, because if you're going to say, I'm not saying this is their point, but if the treasurer's office came in and they said, we don't want to limit it to just purchasing both off-site construction, we want to be able to use it for other things. I would say then what's the point there? You have the authority under the 12.5%. You have the authority to invest in all of these other things. So what is the point of calling out the one unless you're going to limit it to a very narrow subset of projects? Do you follow me? So what this language would do is it would say, if you're going to establish this 1% credit facility, you're only going to be able to use the funds for that 1% for bulk purchasing under lines thirteen and fourteen, bulk purchasing of off-site constructive housing and the purchase of off-site constructive Okay, so let me clarify this as best I can.

[Marc Mihaly (Chair)]: Yes. This draft, as it is now, there's nothing in this draft that prohibits them from not doing any credit facility. They're not required. They could just use the whole 12 and a half percent for other things. Yes, sir. Or they could use half a percent or three quarters. But whatever they use, when they set up a credit facility, which is denominated as a facility under blah blah blah one b, its purpose is this and only this. Yes, sir. I don't think that constrains their discretion. Still have the Maybe little confusing. They still have

[Cameron Wood, Office of Legislative Counsel]: the discretion under everything in A to invest in things that the treasurer's office deems worth investment.

[Emilie Krasnow (Ranking Member)]: Didn't it used to say something about public interest? Now that's not

[Gayle Pezzo (Member)]: even. There

[Cameron Wood, Office of Legislative Counsel]: This is here under the mobile home parks piece.

[Emilie Krasnow (Ranking Member)]: Right, but under the authorization for the 10 or the 12.5, what is

[Cameron Wood, Office of Legislative Counsel]: They are constrained by the guidelines that are set out in statute for the investment of funds in the Prudent Investor Act. Which just

[Emilie Krasnow (Ranking Member)]: means you're going get paid back? It doesn't mean

[Cameron Wood, Office of Legislative Counsel]: I haven't reviewed the Uniform Prudent Investor Act to date. They have to invest these monies responsibly, and there's no change in current law or this amendment to change.

[Emilie Krasnow (Ranking Member)]: Right, but there's no policy goals or for the

[Marc Mihaly (Chair)]: No, no, it's neutral. It's very neutral. Just The funds

[Emilie Krasnow (Ranking Member)]: you get paid fast as long as it's Responsibly. Responsibly, but cashless, financially prudent, not in any way, like, benefit of climate goals, housing, health, whatever.

[Marc Mihaly (Chair)]: So it could just be any. Right. Part of what's going on here is that we roach with the treasurer's people that maybe the overall statute can be written a little more clearly, and they were not interested in a complete rewrite of their authority. They feel clear that they have the authority to invest their 10% slash 12.5%, so we're not dealing with that. So,

[Thomas "Tom" Charlton (Member)]: they have the authority to establish up to 12.5%, and they may invest it, the extra GNAB in these things.

[Marc Mihaly (Chair)]: And they may invest 1%, a total of 1% of those cash on hand out of that 12 and a half. They may invest one of the cash on 10% of the total cash on hand in a credit facility only for the purpose of blah blah blah. So

[Thomas "Tom" Charlton (Member)]: my question is, are we writing policy that depends on a certain person being the treasurer to be effective? Should we write it in such a way that regardless of who is treasurer,

[Marc Mihaly (Chair)]: there are certain guidelines?

[Thomas "Tom" Charlton (Member)]: The treasurer might decide the cryptocurrency is a better investment. Yep. Okay.

[Emilie Krasnow (Ranking Member)]: We're building a navy. Sorry.

[Cameron Wood, Office of Legislative Counsel]: Well, no. I should visit. Believe the champagne.

[Thomas "Tom" Charlton (Member)]: You know that? It's the the May works and I know we've had conversations with Mike and and, you know, we've had this all this dialogue. But that doesn't mean ten years down the road that this is gonna get done. It may not need to

[Marc Mihaly (Chair)]: be done ten years down the road.

[Thomas "Tom" Charlton (Member)]: They need to have some discretion. But if we if our understanding is that that two and a half percent is for generally, these these purposes. It's also at the discretion of future treasurers to not do it. The 1%

[Marc Mihaly (Chair)]: of the I'm just gonna say the 1% of the cash value that's part of the 12 and a half percent, there we specify what that's for.

[Thomas "Tom" Charlton (Member)]: If they use it. If they use it. But

[Marc Mihaly (Chair)]: they don't have to spend a total of 1%. That's right. They don't have to. I think we should think you should hold on to that. Let's talk about it. Yeah. Go on. Cancel. One second. I mean, that's a very important point. We'll talk we'll get to that.

[Cameron Wood, Office of Legislative Counsel]: Okay, I was just pulling off the $4.33 B and C, so you all are aware investments have to be made with judgment and care under the circumstances of surveillance.

[Marc Mihaly (Chair)]: This is the Uniform Investor Act?

[Cameron Wood, Office of Legislative Counsel]: This is four thirty three B and C, which is a requirement. And then separate from that, there's the Uniform Prudent Investors Act, which I have not reviewed in significant detail. But there are these restrictions on what the treasurer is able to invest the money in. And I would also comment that the funds have to be made in accordance with written guidelines adopted by the treasurer. And my understanding is those guidelines are developed in collaboration with their local investment advisory committee. So there are specific guidelines on what to invest in. I understand the concern that's being shared, but I don't know that they're going to go invest in certain things that the treasurer

[Marc Mihaly (Chair)]: I'll back up. You don't know how much discretion there is. I don't know.

[Cameron Wood, Office of Legislative Counsel]: I think there's a lot of discretion what they invest in because you've exempted them from the A here which is a limitation on all state investments but my point is simply they have to comply with these kind of fiduciary obligations if you will so they're not going to be making wildly speculative investments in the future, or at least the treasurer shouldn't be. And they do have to conform with these requirements and with their own guidelines that are developed. So there is some check there, if you will. Okay, moving back here, so you have the 1% is in the B, the 2% is what those funds can be used for, which is limited to these off-site constructive housing units. Sub three here states that financial losses from that credit facility, the 1% credit facility, shall be repaid from the Vermont Housing Special Fund. That's where the interest goes under this proposal. That is language that was in the previous draft is introduced, so I just need to get around. Four is what you all requested. Prior distributing funds under the 1%, the 1B, the treasurer shall consult with DHCD, State Housing Authority, Housing Finance Agency, and Housing Conservation Board. So that's just the 1%. You want that to apply to vote, can think that could be 1%, they have to consult with those four additional entities. You all had requested that last time I was here and we were discussing the bill. So what that does by adding everything up under the A there, it just cleans up a lot of the subsections that were here. You still have this E, the treasurer shall retain interest paid on the loans. The interest shall be transferred to this new Vermont House Special Fund. This was in the bill as introduced. So then we have the special funds consist of monies appropriate from the general assembly, monies transferred from other entities, federal, state, local governments, etcetera. Any interest paid on the loans authorized pursuant to section 10, so all of the interest for those credit facilities that are created in 10, all of them, all of the interest goes into this fund. And then this is language that was previously in the section above where the credit facility is. It really should exist here because this is telling you what you can use that interest money for. So similarly in language here.

[Marc Mihaly (Chair)]: This is partly your answer, Tom.

[Cameron Wood, Office of Legislative Counsel]: Part of your answer. Notwithstanding the 32 a in alignment with these investment limitations, the treasurer now here's a further restriction on the use shall use the funds to provide capital for housing projects that in the treasurer's discretion are necessary moving to the top of the next page, necessary to promote the increased availability of housing, including the whole purchasing of off-site constructed housing as authorized in A2 of the previous section. That is all language that was exactly as

[Marc Mihaly (Chair)]: it was written and the bill is introduced. My question is, I like that language. I understood it was their language. Shouldn't it apply to the entire 12.5%? Not just the interest on the 12.5% that gets dumped into that special fund?

[Cameron Wood, Office of Legislative Counsel]: If you're wanting to limit their 12.5% credit facility to only going to housing projects, then yes, you would want that. But that language doesn't exist now and the treasurer is not required to invest that 10% in housing. It's just what the treasurer has been investing in recently. That money can be invested in

[Emilie Krasnow (Ranking Member)]: school construction, hospitals, medical debt.

[Marc Mihaly (Chair)]: Sorry. Deborah. I think we have in touch. I got to talk to the treasurer's office and see what their intention is, because I think there's a very good chance that this bill will pass after this interest is stripped out of there and left in the general fund. Yeah, so, and if this only applies to stuff that's in the fund,

[Cameron Wood, Office of Legislative Counsel]: then This would only apply to the interest.

[Marc Mihaly (Chair)]: Yeah, then it wouldn't have

[Emilie Krasnow (Ranking Member)]: any meaning. It's soaks little

[Marc Mihaly (Chair)]: money. Yeah, it wouldn't have

[Cameron Wood, Office of Legislative Counsel]: any meaning. Well, it's just you're not limiting the credit facility to housing. Okay. Okay, so again, that's the limitation there in the one, so the interest shall be used for that purpose, so it wouldn't be able to be used for anything else except the two, which says they may use funds to pay the administrative costs necessary to credit facilities. And then I simply change the headings here for the T1 and the two because I've added language up top. So the treasurer shall credit the fund all interest and income derived, any unexpended and unencumbered money stay in the fund. That's the same language. Okay. Change the subsection headings. Okay, now you get into the off-site construction accelerator pilots. This is all the language except for some minor tweaks based on feedback you all had last time we discussed. In the sub D, the pilot shall occur in one or more municipalities willing to participate. Then the municipal planning grant shall be made available to the participating municipalities for all. There was you all wanted to clarify there could be more than one. So we've added that clarification. And then similarly in the report, a recommendation you all have, the report shall include information on whether to enact a statewide building code or codes for off-site construction. Those are the only changes that I've made. I will say my understanding is the administration has further recommended changes to this section at least based on testimony they gave at the Senate that cannot so you may want to hear from that. Okay, section five, you have VHIP. Nothing changed there. If you all recall, this is giving the department the authorization to upfront the loans or grants in VHIP. Now we get to a new section six. This is where we have the language regarding Diploma Economic Development Authority. So VIDA, this is amending the definitions of the chapter that governs VIDA. And what you have is the definition of an eligible facility or an eligible project, which is important because these are the things that VIDA can actually fund. It has to be an eligible facility or an eligible project. You get all the way down here to a new subdivision U, after consultation with and with deference to the Vermont Housing Finance Agency on applications that are eligible for financing from both the authority and the agency, VITA can fund multi unit housing developments of five or more units when requested by and jointly financed with a financing lender, except that the authorities shall not finance housing developments that utilize funding issued by the agency. So if the agency is providing any money for the housing development, VITA cannot fund it.

[Marc Mihaly (Chair)]: This was the terms that the HFA and Vida could agree on.

[Cameron Wood, Office of Legislative Counsel]: I have not run this specific language by them, but based on their draft language provided to me, this accomplishes what they were looking for. But you may want to hear from them for a formal sign off. Then you have the position section. I apologize if I moved too quickly through that. If anybody has any other questions?

[Marc Mihaly (Chair)]: Gay, reptile. Sorry, so I'm just

[Emilie Krasnow (Ranking Member)]: Yeah. So this is just saying that VHFA has the first divs?

[Cameron Wood, Office of Legislative Counsel]: It's saying that they have to discuss with VHFA and defer to BHFA, and they can fund a project unless BHFA is funding it. And if BHFA is giving any money to that project, BETA cannot give any money.

[Emilie Krasnow (Ranking Member)]: Okay, that's what they kind of agreed on.

[Marc Mihaly (Chair)]: Yeah.

[Emilie Krasnow (Ranking Member)]: Yeah, okay.

[Marc Mihaly (Chair)]: Okay, anything else?

[Cameron Wood, Office of Legislative Counsel]: Positions, effective dates and then as mentioned, I will be adding in the housing We'll targets

[Marc Mihaly (Chair)]: schedule subsequent time. We have at 02:40, we are scheduled to have judge Zonie and Sheriff Gamalin one after the other. Let's take a five minute break. Judge Zonie is already on Zoom, so let's not keep him waiting. Could you please be back here as quickly as possible? Could you and we can go could you inform