Vermont Legislature SmartTranscripts:

[Marc Mihaly (Chair)]: Thank you. Welcome everybody to the House Committee on General and Housing. Today is lucky Friday, Friday, 03/13/2026. We're going to start, the agenda is fluid. What's happening, just for members who are listening in, is this is the final day in which bills have to get out of committees, so it is rather intense, it's been an intense week, things are quite fluid. In addition, we have a number of issues on the floor, so we're running behind. So, we're start today with page seven fifty seven, which is the bill dealing with manufactured housing. That bill was voted out of the state and went to the House Committee on Ways and Means. So we approved the bill. Ways and Means voted the bill out with a strike all amendment, that is, they amended it, and it was on notice today, it's on the floor Tuesday, so when we meet on Tuesday morning, it will be on the agenda for Sekel's reading, which is when Gayle, to the extent she lets me, present the bill as we pass it out. This is the way it goes. Then Teddy, both ways and means, will get up and describe his amendment. When Gayle and I talk about the tax parts of the bill, which is all you're going hear about from Teddy, we'll give everybody a little sort of, kind of a little soup sauna, a little preliminary view of what's coming so people don't get confused. That's the way it's going to happen. You remember everybody that every time, like, ways and means or approach has an amendment, we're in the you know, so Teddy will get up and present the amendment, and then either Gayle or I will get up and we called on it, and what we have to say is that we heard the amendment and we did a straw poll and the results of the straw poll. That's what we're doing right now because we have to be doing it Monday Tuesday morning. So with that said, I'll only say the purpose of the bill underlying was to resolve all kinds of little problems. Remember, you all became lawyers and tax experts on how mobile homes, excuse me, manufactured homes are dealt with, trying to avoid people having to pay more taxes to get a mobile home than they did just a regular home, given that they're our most affordable housing. So, Ways and Means took that and asked us very much, what are your goals? And we explained our goals, and I'm happy to say, at least from my perspective, their amendment, after dealing with complexities with the Department of Taxes, is pretty much follows our goals in a somewhat different way. Teddy, take it away.

[Rep. Teddy (House Ways and Means)]: Yeah. Thank you, Mr. Chair and committee. Think that was a great context setting for what we tried to do with the strike all amendment. So there are some other smaller amendments that I'll let Ledge Council talk about, but the biggest change that we made was to the property transfer tax, sales tax exemption portion of the bill. As you recall, this committee passed out bill, in our reviewer committee, had some purchases of mobile homes be subject to property transfer tax, others, sales tax, and there was some movement there. In talking to the tax department, short version is it would cost the tax department a lot of money to change how they administer the property transfer tax to do what the bill is passed out of your country want. Basically, we just went back and expanded the exemption under the sales tax. So bills of sale, mobile homes or manufactured homes that are purchased with a bill of sale are still subject to a sales tax. Those with a deed, property transfer tax, but we expanded the exemption under the sales tax for those bill of sale purchased manufactured homes from 40% up to 90%. So they will get a 90% exemption from the sales tax for manufactured homes sold under a bill of sale. So basically, the way that math works out is it's basically the same final amount of tax liability that they would have paid if we had gone the property transfer tax route. We're just keeping it under sales tax because it's gonna save the tax department a lot of headaches. So the outcome for the taxpayer is still the same. We just went on a different route to get this.

[Ashley Bartley (Vice Chair)]: So is it at the point of purchase or is it at when you declare your taxes at the end of the year?

[Rep. Teddy (House Ways and Means)]: Point of purchase, I believe.

[Elizabeth Burrows (Member)]: Yeah. The

[Rep. Teddy (House Ways and Means)]: sales tax. Sales tax. Point of purchase. And then the only other tax ish piece that we changed, we just tightened up the language about the LEC is being treated as nonprofits for purposes of getting grants. Grants, big grants. Just got some advice from the tax department, the outcome of the language has not changed. We just changed the wording a bit upon recommendation from the tax department to just clarify that they still have to pay taxes. We'll be able to access grants as not profitable. So some of that wording changed, the outcome, As the chair said, the goals of this bill are still the same.

[Marc Mihaly (Chair)]: You want to come up? Teddy's

[Rep. Teddy (House Ways and Means)]: All right, I have to go back upstairs.

[Marc Mihaly (Chair)]: Yes, you go back upstairs. I'll tell

[Rep. Teddy (House Ways and Means)]: you what. Teddy, you don't have

[Marc Mihaly (Chair)]: to leave for five minutes.

[Rep. Teddy (House Ways and Means)]: I was just about a session. Fine. I'll just

[Emilie Krasnow (Ranking Member)]: He was thinking about travel time.

[Marc Mihaly (Chair)]: No. I just wanna make sure, seriously, that if after John is done, if he has any questions.

[Emilie Krasnow (Ranking Member)]: I'm gonna grill Teddy.

[Marc Mihaly (Chair)]: Yeah. Okay.

[John Ralph (Legislative Counsel)]: It should be on your website.

[Marc Mihaly (Chair)]: So now we have Legg Council who is going to educate us further so we can go we have we have this we have seven minutes. Is that right? When do we have the other

[Rep. Teddy (House Ways and Means)]: Oh,

[Marc Mihaly (Chair)]: really? National Who asked that?

[Emilie Krasnow (Ranking Member)]: Because next week they have a remember they told us that they had a retreat in Concumbent week. So it's just hard

[Rep. Teddy (House Ways and Means)]: because we've

[Emilie Krasnow (Ranking Member)]: arranged like the I'm sorry. It's not your fault. I just no one said that to me. Marc and I had talked to them about

[Marc Mihaly (Chair)]: Today? Yes. So you said

[Rep. Teddy (House Ways and Means)]: ten minutes.

[Marc Mihaly (Chair)]: At 02:00?

[Rep. Teddy (House Ways and Means)]: 02:05.

[Marc Mihaly (Chair)]: 205. All right. John. Take it I'll

[John Ralph (Legislative Counsel)]: be quick. John Ralph, Simplicity Capital Cameron will come up as well. I'm to talk through just the sections that representative had hit on, and I actually think he did an excellent job of explaining exactly what this does. The prior draft, as you know, tried to create parity across real property and personal property, manufactured homes, by subjecting all to the property transfer tax regardless of their property status. The testimony that was heard in ways and means is that typically property law doesn't diverge from tax treatment. And so the question was, is there a way to achieve comparable tax rates for those who have personal property manufactured homes as against those who have real property without disrupting the link between property law and tax law? And that's what you see here. You not gonna see any language related to the property transfer tax because that's already a lower tax rate. The sales and use tax, what's useful enough here is it's a 6% tax rate, it's some point you buy or in certain instances, lower residential properties can have a lower property transfer tax up to certain household values. So this is trying to create a similar effective tax rate basically. So what you see is just amendments to the sales and use tax of some risk. There And is a piece here I'm gonna hit for a piece that wasn't noted. The first part is this is a section that speaks to the statutory purposes of the exemptions from the sales and use tax. We set out why these are provided. Under existing law, there is a 40% exemption from the sales and use tax. That's current law for mobile homes and modular housing. And the reason that's done, what you see here if you ignore the struck through but read it as actual language, to is provide an exemption for the estimated portion of the cost attributable to labor. And what you're actually trying to do, I think, is just treat manufactured homes the same as you do any other residential construction. So that's what you see here described as the statutory purpose of the exemption or sub S, and it does this by creating that comparable tax rate through the exemption. It doesn't look the same because it's 90% exemption, but the way to think about it is that it means that 6% is multiplied by your 10% that is subjected to a tax, effective tax rate of 0.6%. So

[Gayle Pezzo (Member)]: originally when it was 40%, that was 40% exemption and 60% was

[John Ralph (Legislative Counsel)]: subjected to the sales.

[Gayle Pezzo (Member)]: So now it's 1090% to the the person purchasing.

[John Ralph (Legislative Counsel)]: So now, yeah, that's a way to describe it. So right now under this proposed language, only 10% of the value of the manufactured home would be subjected to a sales abuse tax. Otherwise there's no liability. The 90% is exempted fully. So 10% of the value of the manufactured home is subjected to the tax, which is what results in an effective tax rate of about 6%, 6% by 10%. The second piece I did wanna hear this subsection PP, this is to create parity, like true parity across. You may recall that either last year or the year before, there was a new property transfer tax exemption for energy efficient mobile homes to ensure the same treatment for real property and personal property that has been introduced to the sales and use tax as well, and that's 100% exemption. Those would be entitled to a full exemption from the sales and use tax, just as energy efficient mobile homes would be exempt from the property transfer tax.

[Rep. Teddy (House Ways and Means)]: Sorry, Mr. Chittenden, I do have to run the last thing unrelated to what John was just talking about, I just forgot to say it. There was a study back at the end of the bill, we took that out and we're just moving it into a different bill that we have above general assessments. So rather than asking them to do a whole different report, we're asking them to do a bunch around assessing statewide. So we just slipped it into that. And it's in

[Elizabeth Burrows (Member)]: language. That's great.

[Rep. Teddy (House Ways and Means)]: Thanks. It'll be a committee bill. Thank you, Teddy. Thanks, guys. Good luck. To all of celebrate. Conservant. Just

[Elizabeth Burrows (Member)]: a very, very quick question, just

[Rep. Teddy (House Ways and Means)]: to clarify because I think I've heard it wrong.

[Mary E. Howard (Clerk)]: Create priority of the tax treatment of new energy efficient rental homes treated

[Elizabeth Burrows (Member)]: as material property. Is that a prebate or a

[Rep. Teddy (House Ways and Means)]: rebate, or just a treaty?

[John Ralph (Legislative Counsel)]: It's just an exemption. It's an outright exemption. There's no liability on it. It's 100 Thank percent, it just

[Marc Mihaly (Chair)]: you.

[John Ralph (Legislative Counsel)]: Section six, this is the actual application of the exemption itself. So this is your sales and use tax extensions, long list of extensions and what you're saying is what we just described. That 40% has now been moved up to 90% to create a comparable effective tax rate. And then you have the addition of this new mobile homes piece to get the same exemption from the sales and use tax as you get on property transfer tax. And this language, this has nothing changed. This is what's in place for the property transfer tax. New mobile homes at bare level, label evidencing greater energy efficiency under the energy star program or that are certified as zero energy ready home by the US Department of Energy. Same treatment, property transfer tax or sales and use tax. That's the set of my sections. I'm glad that representative was brought up. There previously had been in you guys' report section 12, which was cascading the Department of Tax with evaluating the appraisal methods for global health parks, organized and selected equity cooperatives, and that now will detail the original appraisal district's language that our committees keep handles. That's it from me, and I think that Cameron may have some things to do as well, but those are the core tax changes.

[Marc Mihaly (Chair)]: The study was moved.

[John Ralph (Legislative Counsel)]: The study is dropped, and then I think I called out to part of this broader effort to achieve regular and fair appraisals across the state, was a directive related to these particular limited equity co ops.

[Gayle Pezzo (Member)]: I saw it. What is the

[John Ralph (Legislative Counsel)]: Oh god. It's regional appraisal districts. RAD? Yes. Regional appraisal districts.

[Marc Mihaly (Chair)]: Okay. Remember, everyone, one of the problems was that we had a long discussion, in fact, about property taxes and the part of the property that is owned, not by the individual, but by the cooperative. You have all these different ways of taxing it, and there was no uniformity, we want uniformity, we asked for a study. If they agreed, they just put it in another bill. Cameron, are there things you need to

[Cameron (Legislative Counsel)]: There are other changes to the bill, it's just whether you would like me to open them.

[Marc Mihaly (Chair)]: Go ahead. We have four minutes. Four minutes? I'm gonna run out. Which is more time than

[Rep. Teddy (House Ways and Means)]: you Four

[Emilie Krasnow (Ranking Member)]: minutes? That's how long it

[Ashley Bartley (Vice Chair)]: takes to become a co host. Laptop.

[Cameron (Legislative Counsel)]: Well, you're fortunate I was at

[Marc Mihaly (Chair)]: a different room store in my laptop.

[Rep. Teddy (House Ways and Means)]: You're a professional.

[Marc Mihaly (Chair)]: Setting the trigger.

[Ashley Bartley (Vice Chair)]: And the computer says no.

[Cameron (Legislative Counsel)]: There we go. Okay, four minutes. As opposed to walking through all the individual language itself, I will just describe it this way. There were two or I'd say three points of this bill. The first point was addressing transfer transfer of manufactured homes and whether or not they need to be done via deed or bill of sale. There was some language that you all inserted to allow more flexibility regarding the choosing of path of whether it was going to be a deed or whether it was going to be a bill of sale. The current statute said if it had ever been transferred via deed, you couldn't go back to a bill of sale. You all had inserted some language to go a different direction from that and allow people to go back to a bill of sale. The second piece was the tax piece that John just walked through. Third piece was the study that we all just discussed as well as being moved over into another bill. So I'm just going talk about this first piece. The proposal here keeps some of the more technical amendments that you've all made to those sections, but it keeps the underlying structure as it currently exists and doesn't include the amendment that you all had included to allow more flexibility regarding the sale of a bill of sale or deed. I know that may be somewhat difficult if I'm not showing the actual language. But so for example, they kept some of the technical amendments that you recommended permanently cited, one or more of the following, etcetera. But in this section in particular, the section 2,604, which is about when you're selling a manufactured home and it has to be financed via a deed, in this sub B, it says that the owner of a manufactured home, if it's being financed as real estate shall be transferred via a deed. Yeah okay. You all made that a may and then later on in the section you had language that allowed people to transfer via bill of sale whether it had been previously transferred via a deed or not. So that language was removed, the may was removed, they're keeping the structure as it currently exists, which is really dependent on how the purchaser of the home is financing the home. The purchaser is financing the home as real estate, then it must be transferred via a deed. So it's keeping the current system in place because that better aligns with the tax treatment the committee wanted to keep distinguishing between the property transfer tax and the sales tax.

[Marc Mihaly (Chair)]: All right, Cameron before I characterize this, is that it?

[Cameron (Legislative Counsel)]: Without walking you through a line by line, I got it.

[Gayle Pezzo (Member)]: Buying it as personal property, and they get a bill of sale, can they is it interchangeable now? And if it's a bill of sale and then they want a warranty deed once it's affixed, can the bill of can the warranty deed go to a bill of sale or somebody purchasing it that can finance it as real property, can they get a bill of sale on that?

[Cameron (Legislative Counsel)]: Way I would describe it is, if the purchaser is financing it via a real estate mortgage, then the seller has to transfer it via a deed. So if the seller has a bill of sale, they would have to convert it to a deed or I think you heard testimony of having to deed it to themselves and then deed it over so it keeps that framework in place. If the seller is buying it via a personal property loan, if it is deeded, I think you can transfer it via deed that way. If it is a bill of sale, you would be able to transfer it via bill of sale.

[Gayle Pezzo (Member)]: So it doesn't eliminate the purging of a bill sale, which is an expense

[Marc Mihaly (Chair)]: to It does not. The So, here is what's going on, everybody. A couple of things. That's kind of late in We the got comments from the bankers saying, gee, maybe we don't have to use a deed, absolutely have to use a deed for a real property transfer. It wasn't strongly felt, it was just ideal. The other was this conversion of property, excuse me, of bill of sale to a deed is a little cumbersome, and so we didn't deal with that. Well, it turns out there were tax issues, so they took it out. I'm not thrilled, but I'm not I don't think it's the it's the basic underlying need of the bill, which is to allow either way, remember, people who can qualify for a real estate loan, not everybody can qualify for a real estate loan, so we wanted to preserve the bill of sale, even though if you own it, it is real property, you have more protections.

[Gayle Pezzo (Member)]: But that's not really changed.

[Marc Mihaly (Chair)]: That's that much of yeah. So I'm I'm satisfied with this. I mean, I think I think it emerged rather well altogether. Any questions of counsel before we go to a straw poll? I'm going to ask for that in a minute. Any questions of counsel? Okay, in terms of comments, yes, or questions? I have not

[Ashley Bartley (Vice Chair)]: a question for counsel. Question for the sponsor

[Rep. Teddy (House Ways and Means)]: of the bill. How do

[Gayle Pezzo (Member)]: you feel about this? I feel that it's gotten as far as it can go, and there's more work to do next year.

[Mary E. Howard (Clerk)]: Great, go back. Sounds like a veteran.

[Rep. Teddy (House Ways and Means)]: Decades. Yeah? I'm an old soul, right? Not nasty. And

[Marc Mihaly (Chair)]: as a co sponsor of the bill, I feel the same way. Mean, I think think

[Mary E. Howard (Clerk)]: She copied. I

[Emilie Krasnow (Ranking Member)]: like it.

[Marc Mihaly (Chair)]: Well, I just go along with her, whatever she wants. So, I have a show of hands? How are people feeling okay with this?

[Emilie Krasnow (Ranking Member)]: Wow, two are you yeah.

[Marc Mihaly (Chair)]: Okay, so how many of us are there? One, two, three,

[Rep. Teddy (House Ways and Means)]: There's four, one person.

[Marc Mihaly (Chair)]: Ten-zero-one. Okay.

[John Ralph (Legislative Counsel)]: Good job.

[Ashley Bartley (Vice Chair)]: Congratulations.

[Marc Mihaly (Chair)]: So, one of us is going to stand up, remember ten-zero once. Okay, two zero five. Thank you so much, counsel, really appreciate it. Thank you for all the hard work.

[Cameron (Legislative Counsel)]: Let me know what you all need.

[Marc Mihaly (Chair)]: Mary E. Would you please let the other way to send me the staff person know it was 1001.

[Ashley Bartley (Vice Chair)]: Yeah, to look at, sure. Absolutely.

[Cameron (Legislative Counsel)]: I'm sorry. I can't write a report, but I can give you a No, is.

[Gayle Pezzo (Member)]: Didn't know I could get that from you both.

[Marc Mihaly (Chair)]: We're doing this to be live on record. Alright, thank you. Sure. So, next, we're gonna, before we proceed to 607, the institutional investors and single and two family residences. Before we get to that, I just want to have a moment. What is the I want to make sure that we, sometime before we adjourn, that we deal with eight sixty one, so hold on just a moment, we're gonna stay live. Committee assistant, what is your report on that situation? 240. Thank you. Alright, so, is this, who do we have here, Chris? Chris? But okay, great. So, thank you, Chris, Chris Noble. Yes, sir. Do you hear us clearly?

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Hear you loud and clear, thank you.

[Marc Mihaly (Chair)]: Great. So, Chris, I think this is the just to sort of set the stage for you, which I think probably has been set already, right? This is what's called the General and Housing Committee of the House of Representatives in Vermont, and we deal with the issues of housing and also whatever is general, means whatever doesn't fit in another committee, and that includes labor. And today is the final day for us to get bills out of this committee. So, this bill, six zero seven, is not going to be voted out today. What we're doing is holding hearings, beginning to contemplate it, and then we will just continue with that through the rest of this session and quite possibly into next session. But this is the first time really that this subject has been dealt with here in Vermont directly. So, we've been wanting to talk to, you know, various parties and get a sense of what's going on and what their position is. So, with that, I'm gonna ask the committee to introduce itself to you. Why don't you start, Gayle? Yeah. Look at the he's here. He's not there.

[Gayle Pezzo (Member)]: Gayle Pezzo, District 20, Colchester. Welcome.

[Mary E. Howard (Clerk)]: Mary E. Howard, Rutland City District 6.

[Elizabeth Burrows (Member)]: Hi, I'm Elizabeth Burrows and I represent the Windsor 1 District.

[Saudia LaMont (Member)]: Hi, Saudia LaMont, Lamoille, Washington District.

[Emilie Krasnow (Ranking Member)]: Thank you so much for being here. Emilie Krasnow, South Burlington.

[Marc Mihaly (Chair)]: And author of the bill, and I'm Marc Mihaly, I'm chair, and I represent Caledonia, Plainfield and Marshfield, three small towns in this small state.

[Ashley Bartley (Vice Chair)]: Ashley Bartley, Fairfax and Georgia. Leonora Dodge, Essex Town and City Of Essex Junction.

[Marc Mihaly (Chair)]: Tom Charlton, I represent Athens, Chester, Grafton, and Windham. Debbie Dolgin, I represent St. John's Pray, Concord, and Kirby. Chris, where are you from before you start officially?

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: So, PESP is based all across the country, but I am personally from Columbus, Ohio. That's where I live now.

[Marc Mihaly (Chair)]: Where in Ohio? Columbus. Columbus. Yep. I live in wild guys. I was born and raised in Cincinnati. So Oh, wow.

[Ashley Bartley (Vice Chair)]: But we don't hold it against them.

[Marc Mihaly (Chair)]: Yep. Not at

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: all. So

[Marc Mihaly (Chair)]: this committee is actually kind of represents pretty much all of the types of areas in the state. Burlington, which you would think of as a small town, is the big city in the state, and then we have really small towns and medium sized towns, and they're all pretty much represented in this group. The state is very small. The state of Vermont has 630,000 souls in it. Each of us represents about 4,000 people. We're aware that the issue of private equity and institutional owners of single family homes is one that has so far been pretty much an urban issue, but we wanted to get into it before it became a significant issue here. We do have a real housing shortage, and housing has become incredibly expensive here. Thank you. So why don't you identify yourselves for the record and take it away?

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Absolutely. Thanks so much, chair. My name is Chris Noble and I am the policy director for the private equity stakeholder project. Just I want to thank Chair Mihaly, Vice Chair Chris, of Bartley and

[Marc Mihaly (Chair)]: you turn him up? Yes. Okay. Okay. Now we hear you. All right. Go ahead.

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Can you hear me? Yeah. Okay, I'll start again. Chris Noble, thanks for having me here. I'm the policy director for the private equity stakeholder project and PESP for those that seeks to be, bring transparency and accountability to the private equity industry for the benefit of impacted communities and investors. We appreciate the opportunity to testify in support of 08/1967 as we believe it would do much to address the risks associated with corporate consolidation of single family housing markets with at least 1,600,000, housing units in The United States owned by private equity legislation like h six zero seven is necessary to keep people in safe, affordable, and accessible housing. In recent years, private equity firms have significantly increased their presence in the housing market, reshaping the landscape of homeownership and rental housing. These investment companies have capitalized on rising housing demand and limited supply by purchasing large volumes of single family homes, apartment complexes, and manufactured house, which score states relative to each other regarding the risk posed by private equity's presence in their state describes how these trends have shown up in Vermont. Although the risk index, to your point, chair, showed that Vermont is among the bottom 10 states for the share of its single family homes purchased by corporate investors over a five year period. It is among the top 10 states for the rate of growth in the share of its single family homes purchased by, corporate investors over the same period. Therefore, even if the state has historically had a relatively small corporate landlord presence in the single family housing space, the rate at which their share is growing should concern those who care about housing affordability. Private equity landlords have exacerbated housing affordability issues, displacing local communities through large rent hikes and aggressive evictions and diminishing tenants' quality of life. Consequently, policymakers across the country have introduced legislation to limit consolidation by corporate landlords. The private equity business model poses a particular challenge to affordability or affordable housing due to the need to generate high returns on a short timeline. Private equity firms typically seek to generate returns of at least 15% for their investors, about double the return rate of other asset classes. Firms usually strive to generate this return before exiting the business over a short time timeline of just three to five years. This means that private equity firms generally do everything possible to maximize revenue while minimizing input costs, including deferring maintenance, skirting regulations, and saddling tenants with junk fees. Millions of people in The United States are at risk of increased economic instability under this financialized housing model, which is often at odds with efforts to address housing affordability. In addition to protecting tenants, h six zero seven would help prospective homebuyers as well, particularly those looking to enter the, the housing market for the first time. In recent years, individual homebuyers have been frustrated by the pace at which corporate investors are able to purchase real estate. Access to liquidity and industry resources that allow for relatively quick transactions makes corporate investors more attractive buyers for those looking to sell their homes than individuals who need to obtain a mortgage to do so. Therefore, by limiting the ability of corporate landlords to outcompete individuals in the housing market, H607 is a necessary and timely intervention. Earlier this year, the White House released an executive order seeking to restrict large corporate investors from purchasing single family homes and competition with individual homebuyers. Since then, federal and state policymakers have rushed to pass legislation that would codify that directive. Therefore, if Vermont passes such a law, the state will position itself as a leader in a growing movement to preserve housing affordability. A key component of the American dream. PESP would therefore like to reiterate our support for this legislation by passing H six zero seven, Vermont can lead state efforts to regain stability in their single family, you know, not regain actually because Vermont, has a small presence, but ensure, stability in its single family housing markets and become a model for solving the nation's housing aboard, housing affordability crisis. Thank you.

[Marc Mihaly (Chair)]: Chris, I'm gonna ask if members of the committee have questions for you. Before I do, I just wonder, could you tell us a little more about PESP? I mean, is it how big is it? Is this your major project or do you have a number of similar projects? Just to tell us a little bit about that.

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Absolutely. Yeah. So PESP, we're relatively small nonprofit, with, you know, around or under 20 people. And this, you know, our focus is on private equity investments in a variety of spaces, not just housing. We have been focusing on the single family home issue for a number of years. But even within housing, you know, we look at issues concerning manufactured housing parks, multifamily homes, sometimes student housing. But, you know, we're also active in areas related to health care, labor and climate and energy. So in my capacity as policy director, you know, try to make sure that we're involved in a lot of these bills. I've this probably I'd also been sort of described holder Often, folks that are the part the party or sorry, are affected by private equity deals are not, you know, the ones party to the deal. They're not at the table. And so, you know, a a a large part of our efforts are to make sure that those voices are heard and those concerns are considered when, you know, folks are looking at these deals or in the case of policymakers trying to regulate or legislate around them.

[Marc Mihaly (Chair)]: You know, it's interesting because although this committee is not the healthcare committee, the healthcare committee is also looking at private equity.

[Emilie Krasnow (Ranking Member)]: Yes, I believe they've testified.

[Marc Mihaly (Chair)]: Have you testified? Oh, great.

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Yes, sir. Okay.

[Marc Mihaly (Chair)]: Alright. Well, then I didn't have to go running off my mouth on about Vermont. Okay. Do people have questions of Chris? I do, but you go ahead. Oh, I'm calling last.

[Emilie Krasnow (Ranking Member)]: No, mine's on a question and

[Marc Mihaly (Chair)]: I have. Go ahead and talk to him.

[Emilie Krasnow (Ranking Member)]: Chris, thank you so much for coming on such short notice. I've been real One of the reasons that I authored this bill is I've been really inspired by other states, for the last couple of years and folks who had introduced, bills around this topic, nationally. And so I just appreciate this was a wonderful way to start conversations in Vermont about private equity in both housing, healthcare, and other sectors. And I just really appreciate your organization's work on this topic. And I hope that now that we've virtually met and that you will stay connected with Little Vermont on both topics, and we can continue to collaborate and work together on issues. Thank you.

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Absolutely. Thank you.

[Marc Mihaly (Chair)]: Questions of Chris? Hi, yes, go ahead Tom. No, you go ahead.

[Thomas "Tom" Charlton (Member)]: It's a general question and it might not be something we can answer right away, but one of the questions that we know we are going to be looking at is how to right size the regulations for a state the size of Vermont, whether in capital that's involved or a number of Yen that's sure involved. Have you had any opportunity to look at smaller states or smaller markets and see how those things might be calibrated so that we're not eliminating, you know, local investors.

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Sure. That is a great that's a great question that I think comes up, a lot. So just to level set, no state yet that I'm aware of has actually enacted. You know, there have been a few introductions over the last few years, but none has actually enacted, you know, a law that would actually, you know, restrict, investment of this type. A common concern is, you know, what do we do with, you know, mom and pop landlords? How we make sure that small landlords are not caught up in this? And, I do think that that is a qualitative sort of analysis depending on the state in terms of, okay, what is a proper threshold of units, you know, that we've sort of seen corporate landlords, you know, own on average, right? Or, you know, it could be a monetary threshold in terms of the assets. Some states restrict them by or tried to restrict them, like my own state of Ohio had a bill a couple of years ago that would restrict the number of units owned at the county level. So there is sort of an analysis, I think states are trying to get right for their own particular situations. Without seeing anything enacted yet and actually working, it's tough to say, you know, what's the best course of action. But, I do think it's worth keeping Vermont's particular situation in mind.

[Emilie Krasnow (Ranking Member)]: Wait, Chris, what about New York? I thought New York has haven't New York State.

[Rep. Teddy (House Ways and Means)]: Do they not? They

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: they pass a landlord registry. So

[Emilie Krasnow (Ranking Member)]: Okay. Yeah. Oh, I okay. I thought I'm well, I guess we have to bring I modeled this bill after New York's law that was signed into law.

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Got you. Well, I might be talking about a different law.

[Emilie Krasnow (Ranking Member)]: Okay. Last year it was signed into law, this exact bill.

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Okay. Well, I I stand I stand corrected then. Okay. Yeah. I stand corrected.

[Mary E. Howard (Clerk)]: Yes, Gayle. So in New York, because it's a launch, what's the cap? Is there It's the exact same It's what put New York in there. I think 10 was not necessarily from that.

[Emilie Krasnow (Ranking Member)]: The 10?

[Marc Mihaly (Chair)]: The 10 houses. I But the 30,000,000, the 10

[Emilie Krasnow (Ranking Member)]: All those parts. And the whole New York? Yeah.

[Elizabeth Burrows (Member)]: Washington does 50, and what did

[Mary E. Howard (Clerk)]: I tell you yesterday was the other one

[Elizabeth Burrows (Member)]: that does 10? It's like Oh, New Mexico does

[Rep. Teddy (House Ways and Means)]: 10.

[Marc Mihaly (Chair)]: Chris, you mentioned that although you were way down on the list of percentage total that was corporate owned, we were changing rapidly. Is there a database that that comes from?

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Yes, so like I said, analysis, for our private equity risk index and that, that Private entity. Sorry. Private. Private equity risk index, and I can share that, after, after the call. But we got the data from this, company called, CoreLogic who worked with Pew Research to, look at, corporate landlord purchases. They divvied up between, I think it was, yeah, mega, large, medium, and low, investors. And the thresholds, I believe, were, I think, over 10, between, like, twenty and fifty, over a 100. So we can send you the data set as well. But essentially the the data tracked over I think from like 2018 to 2024 whenever we release the the index. What the footprint of those investors were in each state. So, we can definitely send that to you too.

[Marc Mihaly (Chair)]: It would be great if you could send that to us.

[John Ralph (Legislative Counsel)]: Sure.

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

[Marc Mihaly (Chair)]: Thank you. Just so you know, and something for you to think about, one of the things, I imagine we're not totally unique in this regard, we're really struggling to produce more housing, particularly housing that people can afford, which is why we have an interest in manufactured housing, off-site modular housing, etcetera, but all housing. That takes capital, and so there's a need for capital here in the state, and so we're not necessarily in a position where we want to discourage the inflow of capital for housing, what we want to discourage is certain behaviors, and it is true, we understand from other testimony that we've heard, that certain behaviors that we want to discourage, such as increased evictions, flow from certain kinds of ownership. There's no question about that, but we're stuck wanting not to discourage landlords who are simply providing housing and doing a good job of it. And also, had testimony yesterday that showed, like in Trenton was it Trenton? Newark. Newark in Philadelphia, that in fact, their research showed that the corporate entities that were engaged in this kind of private equity activity that's destructive were actually not that big. They were mostly local and they were kind of in the 200, 300, 200, 100 housing. So what we're going to end up having to struggle with here, which we haven't yet to do, is how do we parse that out? And any thoughts you have or any research that you guys have done on that would be, you know, will be helpful.

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Yeah, we can definitely, like I said, follow-up with some more research. I guess to answer your question, going backwards, you might have to remind me of the first one, but in terms of the quality of the types of corporate landlords, you know, or the large or lack thereof in certain cities, we know that, you know, from our research, these types of landlords are often concentrated in certain neighborhoods, in certain cities. You see a lot of activity in the Sunbelt as well. And so the sort of overall numbers I think that the industry likes to talk about a lot, in terms of the, you know, presence isn't that large. You know, it when you dig into the data in terms of the specific localities, sometimes it's like, you know, the the main landlord, you know, for a few blocks. Right? So, you know, I I don't know if that quite answered your question. Sorry. Thank you. I don't know if that quite answered your question.

[Marc Mihaly (Chair)]: Mean, I think it's just I'm putting it on the table for you to realize what we will be struggling with over time. I mean, there's this

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Got you.

[Marc Mihaly (Chair)]: You know, it's we don't want, if someone is in the business, for example, know, of simply assembling, you know, they're a securitizer, or they're just assembling capital, or they go out and create a closed end fund and assemble capital for real estate, and then that is made available to builders who build a lot of low income, you know, they build apartment buildings. That per se for us is not an adverse activity. What's adverse is when those people buy up single family homes or buy up existing or mobile home parks, start raising rents, you know, that they actually want to hold the property as landlords and behave in ways that destroy the community.

[Rep. Teddy (House Ways and Means)]: That is

[Marc Mihaly (Chair)]: the behavior, and I'm not sure yet that we've seen exactly how to do that.

[Emilie Krasnow (Ranking Member)]: And I believe our neighbors should be Vermonters, not Wall Street investors, our neighborhoods. I want to make sure that Vermont is for Vermonters and families, not Wall Street.

[Marc Mihaly (Chair)]: So, that's where we're, you know, so you guys are a research institute, right? So, you can do research if we ask questions. Is that right? Oops, did he freeze? Yeah, okay.

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Yeah.

[Mary E. Howard (Clerk)]: Great.

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Yes, we're definitely happy to follow-up. Any

[Marc Mihaly (Chair)]: other questions of Chris? Gayle. Gayle?

[Gayle Pezzo (Member)]: Not of Chris, but the comment that Emilie just made, I agree 100%, but is that illegal to prevent people from out of state or anywhere from buying or purchasing.

[Emilie Krasnow (Ranking Member)]: Well, I didn't mean I'm sorry. I didn't mean out of state. I meant Wall Street.

[Marc Mihaly (Chair)]: It's not. It's not it's it's a it's fine to use what the Hedge

[Gayle Pezzo (Member)]: funds or speculators.

[Marc Mihaly (Chair)]: Well, I think the question is, it's not illegal. You can't stop people from moving in. You cannot, you know, we can't regulate cross border activity at a certain point. But to say, when she says Wall Street, what she's talking about is exactly the problem we've been hearing about, which is people who move in, acquire neighborhoods or large parts of a neighborhood, and hold it for periods of time. It's that kind of behavior which we have to find a way to get at, which is the case. Any other questions of Chris? Chris, thank you so much for Thank you taking so much.

[Emilie Krasnow (Ranking Member)]: I'll be in touch.

[Marc Mihaly (Chair)]: Thank you. For your flexibility. Alright.

[Chris Noble (Policy Director, Private Equity Stakeholder Project)]: Take care. Take care. Bye bye.

[Marc Mihaly (Chair)]: We're waiting at this point. Katie, while we're waiting, I just want to talk for a moment, again, with respect to six zero seven, just a sort of a few things that I know from my own experience, not about this particular problem, but just about how people develop real estate. The big problem, if you're a developer, let's say I'm in the business of building multifamily housing, The single biggest problem you have is to find capital, and there's only two ways to get it. One is a loan, that's called debt, and the other is either your own money or other people who are essentially putting their own money at risk. That's equity. Those are the only two ways to get it, and the question, debt, you know how to get, you go to banks. The problem is, for most commercial deals, even if you are really a sweet person and the banks know you, they aren't going to lend more than about half the value of the project. The rest of the money you either get from mom, or you have to find other people who are willing to become your partner, you know, invest. Those other investors in the real estate business in The United States, those other investors are they can be anywhere in the world. I mean, know a guy, for example, who I was, you know, when I was on the board of Vermont Law School, I knew a good guy who was on the board with me, and what he used to do is he would put together a fund that he would go around the world talking to institutions and wealthy individuals and say, do you want to invest in real estate? I'm going to put together a fund to do it, And very often it would be what's called a closed end fund. So, a wealthy person would say, well, yeah, do, but I want to get my money out sometime, and he'd say, ten years? And they'd say, yeah. So he would put together a ten year fund. So if you, I'm a wealthy person, he would say, I would say I'm kind of looking for returns in the 10% area, or five, seven, eight, nine, ten, usually with residential real estate, for development it's often 10% or north of there, and they put the money into the fund, and then there he is. Okay, so what does that individual then do with the $10,000,000 that he put together? He looks around for projects, and he finds Marc the developer, finds me, and I've been looking for money, and he says, we'll put money into your project. That is just typical of how it happens. The problem here, and you know, all that I, as Marc the developer, have to show this, person who's put together this fund. The person who puts together the fund isn't the developer. I mean, he could find five projects. It's like the producer. Yeah, I'm the developer, so all I have to do is show him a spreadsheet that says, I think that over ten years, you know, we'll build it, we'll rent it out, and then we'll sell it, or refinance it, which you can get your money out in the year 10, and when you do, overall, given appreciation and earnings, you should earn your 10 on your money. That's the typical way of doing it, and in fact, in Vermont, one of the things we suffer from in Vermont is it's hard to get that capital, and one of the reasons it is, is projects are so tiny that they're kind of don't even they're a blip on the radar of these people. I mean, if I have this big closed end fund with, you know, $10,000,000 in it, I'm going to be looking for a large project of 100 homes, or 200 homes, or if it's I'm California, 500 not looking for 10 homes. I just can't deal with that. So part of our problem in Vermont is trying to find, you know, the biggest actors don't play here as much.

[Mary E. Howard (Clerk)]: Are we still talking about this, though?

[Rep. Teddy (House Ways and Means)]: Yes. Okay. Yeah. I'm just I see.

[Marc Mihaly (Chair)]: Yeah. We're waiting for Katie. Oh, I see. So, anyway, just by way of background, I'm just saying that this is a problem in Vermont is that we're so small that the usual sources of lots of capital to build housing are not easy to find.

[Emilie Krasnow (Ranking Member)]: But I just don't wanna confuse people about building housing.

[Marc Mihaly (Chair)]: No. I know. But when I'm type of thing is a different animal.

[Rep. Teddy (House Ways and Means)]: No, no, know, I know, people watching over the press,

[Marc Mihaly (Chair)]: I know I'm This situation that we're addressing here is a different animal. This situation that we're addressing here are these private equity that is not interested in building new housing. They're interested in acquiring existing single family homes and holding them for a relatively short time and making a lot of money on it quickly, and then, so they take single family neighborhoods, which were owned by individual owners, and turn them into rental neighborhoods, and they become predatory, and the trick for us is to find a way to regulate those bad actors while at the same time we don't discourage the inflow of capital for new housing, which we so badly want. So that's all I was trying to talk about, how new housing is done. Gayle?

[Gayle Pezzo (Member)]: I just want to circle back to what Emilie was saying, because I want to understand the difference between the development and just purchasing. So would you, Emilie, be opposed in your bill if someone was purchasing and they were not from Vermont, but there was certain guardrails where their behavior and their treatment of the tenants would be within certain parameters. I guess the reason why things were getting a little mucky is because it has nothing to

[Emilie Krasnow (Ranking Member)]: do with being a land Like, this bill has nothing to do with landlords or tenants

[Rep. Teddy (House Ways and Means)]: or development. It has to

[Elizabeth Burrows (Member)]: do with Do go ahead. The data shows that what we are actually talking about with regards to private equity in Vermont is private equity companies or entities buying up houses, not apartment buildings, not things that are being developed, but buying up houses and turning them into short term rentals. That is what the data shows. And that is increasing.

[Marc Mihaly (Chair)]: So

[Elizabeth Burrows (Member)]: in Vermont, it's not necessarily about anything to do with developers. It's not necessarily. But according to several sources, there are steps that can be taken for rural states where this is occurring. And I have a list of things that one of the biggest things is prevention. If you see things on the rise, to address it immediately and not be responsive because it's way too late for private equity when you're responsive. But there are several things that we could do legislatively to address it without being paranoid or unrealistic about it. And so when we get there, we can look at those things. But there are several things that we can do, and this is one of them.

[Marc Mihaly (Chair)]: I think that all I meant to do by describing the the sort of usual process of financing new construction is not to imply that this bill is about that. It isn't. It's just that what we want to do is we want to make sure, since what this bill does, it defines a category of activity, and it says that activity, they have to wait to purchase and they don't get tax benefits. We just have to make sure that we define it in some way that doesn't mistakenly embrace or involve the capital sources for new development or mess with our existing landlords that are just normal rental landlords. Yes, Debbie. Yesterday, we heard from Stowe, people from

[Mary E. Howard (Clerk)]: Stowe, it seems like these short term rentals are happening around resort, if you want to call them resort, mountains or resorts, and we don't have enough hotels to accommodate all our visitors, So we have to remember that those short term rentals do meet a need that we have in a tourist state, but we also need to balance it with affordable housing for the people that work these resort areas.

[Emilie Krasnow (Ranking Member)]: Right, and I think this bill doesn't have anything about short term rentals in it, and I think that there won't be housing for people who work at those places if corporations

[Rep. Teddy (House Ways and Means)]: buy up the housing is the point. But this bill doesn't have anything to do with short term rentals.

[Ashley Bartley (Vice Chair)]: Yes. I think for me, this is a super important bill because so much of the effort that we've made for decades in housing policy, and that has built up this country's economy, has been home ownership, and a path to home ownership has been the foundational, and we have talked about this continuously as our mission to ensure that people are on a path, right, from the worst case scenario of being living rough or on the streets, to having shelter, to having housing security, to becoming a renter in a safe space, to being able to maybe enjoy a limited equity housing purchase, to then being able to purchase your own home on the market, regular purchase, with the generational wealth that that suddenly enables and creates, and makes changes for one hundred years next for your descendants, hopefully. And so I think that the focus of the bill on single family homes in a tiny state where every home purchase it makes a big difference proportionally to what the population is experiencing is a very wise and necessary

[Rep. Teddy (House Ways and Means)]: step. That was beautiful.

[Marc Mihaly (Chair)]: Just, we're just waiting

[Emilie Krasnow (Ranking Member)]: for And listening.

[Mary E. Howard (Clerk)]: I just wanted to add that

[Ashley Bartley (Vice Chair)]: there are

[Mary E. Howard (Clerk)]: some large companies that, like Killington for example, is buying houses for their employees. John Pasella bought what was the College of St. Joseph, and he is hiring people to be CVL drivers and they come from all over, and he's housing them at what was College of St. Joseph. So there are big companies that are doing that for their employees. Otherwise, it would be so hard for them. And what happens if they lose that job? Right, the ideal is that

[Ashley Bartley (Vice Chair)]: you have a family that can buy their own home. Yes, we're struggling to have resources. Yeah, this is a struggle for sure.

[Marc Mihaly (Chair)]: I've discussions been involved around corporate ownership of housing for their employees. The ideal is that the corporation, because you can see why they're motivated, they can't hire people because they can't find housing, so they get so desperate that finally the companies say, we'll build the housing. Ideally, what you do when you work with a company is saying, yeah, you build it, but you don't own it, or you don't manage it, because you don't want a situation where, oh, you fire the employee, they're out of the house, you know, because then it turns into, you know, a company town with all of those problems. What? We have plenty, so why don't we go offline? You cannot leave. We're going offline. We're going

[Ashley Bartley (Vice Chair)]: to readjourney.

[Marc Mihaly (Chair)]: Yeah, as soon as we have, in a few minutes, as soon as we have counsel, we'll