Vermont Legislature SmartTranscripts:

[Marc Mihaly (Chair)]: Welcome back, everybody, to the House Committee on Central and Housing. What we've been doing is we have been reviewing sections of language that the Senate Economic Development and Housing Committee has requested that we consider as the House as a whole, not this committee, including one way or another in 03/28. And 03/28 has left the committee here, and it's in ways and means where this material could be included. And in fact, the ones that John is about to take us through, probably actually really belong in Ways but at any rate, Ways and Means definitely wants to know what we think about these, and so John, we went through four and five, and we went through the vegetable gardens, and now that leaves us seven A and seven B. Okay. And seven A and seven B were generally talked about by, also Cameron, and everybody was reminded that this whole thing was about using revenue bonds as a way of making sure that if the full faith and credit of a city or a town is not implicated, then you don't need a vote of the whole town, you need a vote of the elected officials, and that was that, and he explained that the intent of the bill, I'm just setting this table here, he explained that the intent of these changes was to allow simultaneous use of the assessment bonds and CHIP. But I don't understand how this language does that, and so maybe you can put it up and show us.

[John Gray (Office of Legislative Counsel)]: So afternoon, everyone, John Gray, Office of Legislative Counsel, super helpful intro. I've started here on the screen, I have section seven up, which is what passed in age seven seventy five. So this is what you guys did with the authority for special assessments bonds, which just described, don't implicate the full faith and credit of the muni and therefore don't require a vote of the populace of the municipality. They are secured exclusively by special assessments that are otherwise subject to existing law on how special assessments are levied in the first instance. So there's a new financing tool and I think that's helpful to note too for the next sections because what I understood you guys to be trying to do is increasing the toolkit available to folks. So sections 7A and 7B are ensuring that the toolkit contains tools that work well together and that you don't have tools that conflict with each other. That's the way to think about it. So in the

[Marc Mihaly (Chair)]: You know, I'm gonna just for members of the committee, let me I might interrupt for one minute. Just as a refresher, think of it this way. Let's say a city wants to build a stadium, and they want to finance the stadium. One way they can finance the stadium, and this is not infrequent at all around The United States, is with revenue bonds backed by what? Backed by the revenue from the stadium. And so, when lawyers doing the incredibly boring work, writing bond prospectus, When they write the bond prospectus, they estimate what the revenues will be and what the risk is that the stadium will fail, and, you know, they put all of that in there, and then the bond, the people who buy the bonds, usually aren't your individual mother and father, they're big investment banks, and they will pour over this language, and they'll make their own judgment as to how risky it is, and if they think it's somewhat risky, well, that will be reflected in the interest rate they propose to charge. They'll charge a higher interest rate than they might otherwise charge if the bonds were going to be backed by the full faith and credit of the town, and so when they bid on the bonds, the interest rate is higher, a little bit, and that's the nature of those bonds, but the full faith and credit of the city is not involved if that stadium does not perform as hoped, too bad, it's the bondholders who are left holding the bag. And this is, believe it or not, how much, how many public facilities like stadiums and even airports and other things are financed. They're financed with pure revenue bonds. Okay, go ahead.

[John Gray (Office of Legislative Counsel)]: Yep, so that's helpful too, because it helps frame up the question of what the actual utility of the revenue bonds themselves is, and you may recall that there were discussions, including language suggested by the Vermont Bond Bank, to sort of protect in part the marketability of the bonds to ensure that these are usable. Now we don't know if folks will pick these up or not, but it would be adding to the toolkit. So what you're gonna see in section 7A and 7B, seven is speaking to existing statutory language for fifth districts and seven is speaking to CHIP, it's the same language, it's just for the separate programs. And for TIP and CHIP with any kind of tax increment financing, what's done is that property taxes are swept up into the TIP district or housing development side of its CHIP and that's what's retained to finance the improvements within those geographic areas. As you can imagine, one of the things that is swept into the property taxes that are then retained, a particular percentage retained, are special assessments. And that's the language that you see here, the existing language, this is the non underlying, this is existing law, notwithstanding any charter provision or other provisions, and I'm in section seven A, page 14, line 17. Notwithstanding those other things, all property taxes assessed within a district shall be subject to the provision of subsection A of this section.

[Marc Mihaly (Chair)]: This is special, it's not, this is That's

[John Gray (Office of Legislative Counsel)]: in TIF districts.

[Marc Mihaly (Chair)]: This is TIF district language, yeah.

[John Gray (Office of Legislative Counsel)]: Exactly, so this is title 24, this is the chapter that covers statewide tax increment financing. It's saying that all property taxes are swept into the retention. And then it's spelling out its special assessments, how are they dealt with since they're a kind of property tax. It says special assessments levied under, and these are the chapters that are levied under, chapter 76A or 87, title 24, or under a municipal charter shall not be considered property taxes just for the purpose of this section if the proceeds are used exclusively for operating expenses related to properties within the district and not for improvements within the district. So I'm not gonna talk about the new language, I'm just gonna say what that does. If you're saying that special assessments shall not be considered property taxes if they meet these special conditions, that means that they otherwise are subject to the provisions, A standard special assessment would be swept into the property taxes that are retained for purposes of tax increment financing unless it met these particular conditions. So what's being proposed here is new language to add a new condition, a new thing that would make it such that special assessments of a certain kind are not swept into their attention. And the new language that's added, top of page 15, or if the special assessments secure a special assessment bond issued pursuant to section three thousand two fifty seven, which is the newly created section in section seven and above. So what it's saying is special assessments generally, let's forget these carve outs, are a kind of property tax that's swept into retention for purposes of tax increment financing. However, there are two exceptions to that. One is the existing law provision, it's used exclusively for operating expenses, not for improvements. And the new language is saying, they also wouldn't be swept into retention if the special assessments secure a special assessment bond. And the way to think about it is, if you didn't have this language and you had an existing, let's say you had a special assessment district set up and then you wanted to overlay a TIF district in that same area. Without this language change, the special assessment would get swept into the retention and that bond would become useless, right? Because instead of being secured by the special assessments that back the bond, they would instead be retained by the municipality. So to ensure that there isn't a conflict between the two, but that you could have both kinds of financing available, that's what these sections do and they do it twice because it speaks to tips, and a check, but the idea is to I'm so sorry. Because

[Leonora Dodge (Member)]: I think that there are a lot of terms that you just sit, you know, I think I understood swept into. Swept away. No, so, do I have this right? A TIF or a CHIP basically allow the property values that increase on the development to be used to pay back a loan or to not have to pay the taxes, that increased tax to the municipality? It allows this like, you don't have to pay this yet because you're using it towards the development.

[John Gray (Office of Legislative Counsel)]: Sort of, you're on the right track. The way to think about it is you set in a TIF or CHIP, they're both tax increment financing. You set the property value at the time that you start the TIF district or the housing development site, and then any growth in property values, you do pay the folks within the district or within the housing development site do pay the taxes, but instead of those taxes, the growth in value, instead of all of that going away to the Ed Fund, a certain percentage is retained and applied to finance exactly the projects that you're talking Right,

[Leonora Dodge (Member)]: so the bond does not do that. A bond, you actually are paying the loan back.

[John Gray (Office of Legislative Counsel)]: The bond you're paying the loan back.

[Leonora Dodge (Member)]: Right. And so that's the conflict is that if you wanna be borrowing money that you have to pay back, which is what the special assessment is permitting, this carving out that this one little section of a town is going to suddenly get new infrastructure and new housing, we want them to be able to go ahead and do that. And they're promising that they're going to pay that back. But if then they do a chip or a chip, which means that some of the So you're trying to say these are going be two different types of Yes,

[Gayle Pezzo (Member)]: you can't do both.

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

[Leonora Dodge (Member)]: can't do

[Marc Mihaly (Chair)]: both. You want

[Leonora Dodge (Member)]: to be able to do both types of financing. In both cases, you're getting money upfront or money, you're kind of, I mean, the tip is not really money upfront, it's really like being allowed to, whatever money you make, don't pay into the ed fund.

[Marc Mihaly (Chair)]: It's definitely one way of thinking about this is it's keeping them separate.

[Leonora Dodge (Member)]: No. Get that we're trying to keep them separate. I was trying to the what? Keep the what separate. Why is

[Jake Taubman (Vermont Department of Taxes)]: it that

[Leonora Dodge (Member)]: now I think I get

[Marc Mihaly (Chair)]: Let's say that let's say you set up a district or a gym district, and all this property tax starts to go into risk. And what you do is you wanna build stuff. Like, you wanna build public infrastructure. So you'd float bonds to build the infrastructure, and that money, that property tax, is pledged to pay off those bonds. Then over here, you've got a special assessment that you've created, and that is separate, and you wanna flood separate bonds to pay for that. And you don't

[John Gray (Office of Legislative Counsel)]: want to mix the two together. The thing that's being kept separate are special assessment revenues from other kinds of property taxes within whatever the geographic area is, whether that's TIP district or housing billing.

[Leonora Dodge (Member)]: And when you say a special assessment revenue, are you saying the money being made because there was something built? Who is paying money to whom? Where's the money coming from and going to?

[John Gray (Office of Legislative Counsel)]: Special assessment revenues are the special assessments that are levied on individual property owners to finance a particular improvement that benefits them. So it's separate from chip and tip. There's different statutory procedures to pursue a special assessment, but it's those property taxpayers, what they are paying for the purpose of improvement. Those revenues, what they're paying is being kept separate from the other kinds of statewide property tax or municipal property tax that is otherwise retained for TIFF purposes.

[Leonora Dodge (Member)]: Because that bond, otherwise, paying they their taxes, that money would have gone either to repay the TIFF bond

[John Gray (Office of Legislative Counsel)]: or it

[Leonora Dodge (Member)]: would have gone to the Ed fund.

[John Gray (Office of Legislative Counsel)]: That's exactly right. Because they secured the revenue bond and don't have the faith and credit of the municipality, but the bonds are backed exclusively by the special assessments, If the special assessments instead went to the Ed Fund, to the municipality to apply to the costs of the project within the CHIP or TIF, they wouldn't be available for the special assessment itself. So there would be nothing backing the So the bonds themselves effectively, who would want to take a risk on purchasing a special assessment bond if they thought it could just go away if the municipality gets elected to do a TIF or CHIP.

[Leonora Dodge (Member)]: Right, the bank would be the last to get paid

[Marc Mihaly (Chair)]: back. Yeah, right.

[John Gray (Office of Legislative Counsel)]: Also do have to run-in a second before I'm answering questions about the

[Marc Mihaly (Chair)]: Any other questions? Yes, Tom.

[Thomas "Tom" Charlton (Member)]: Am I correct that while in the CHIP arrangement, I buy a piece of property, I pay my taxes. Out of those taxes did I pay a portion that goes to the bond that's a result of your program. The special assessment, I own a piece of property, I pay my taxes and an assessment. Yes. That's correct.

[John Gray (Office of Legislative Counsel)]: Special assessments are on

[Thomas "Tom" Charlton (Member)]: the This bottom of might enable a developer to do home construction, but it is not necessarily more affordable. But it makes the opportunity

[Marc Mihaly (Chair)]: It gives more flexibility in financing.

[John Gray (Office of Legislative Counsel)]: It allows some upfront money is the way that I think about the assessment bonds is you're gonna have The point of special assessments in the first place is to fund the particular improvement. I mean, that's the whole reason that they exist, but they would only be there as they come in annually. The special assessment bond allows you to take out a bond back by those. You're kind of advanced, the way I think that is you're advancing in special assessments.

[Thomas "Tom" Charlton (Member)]: When it comes to paying it back, the property owner, second scenario, the property owner, not the tax base, is paying for the bond.

[Marc Mihaly (Chair)]: That's correct. And

[Leonora Dodge (Member)]: these are all gonna be pretty much for developing infrastructure rather than the actual homes themselves?

[John Gray (Office of Legislative Counsel)]: So, I know less about how special assessments work as an independent Infrastructure.

[Leonora Dodge (Member)]: And the special assessment, I would imagine, would also be infrastructure, not

[John Gray (Office of Legislative Counsel)]: could be, worth,

[Marc Mihaly (Chair)]: can maybe some Special assessments also.

[John Gray (Office of Legislative Counsel)]: Have delineated purposes, certainly related to infrastructure, but it may

[Marc Mihaly (Chair)]: be special assessments like to build the foundation of the house.

[Gayle Pezzo (Member)]: So Okay. We have I see

[Emilie Krasnow (Ranking Member)]: John has to go, right?

[Jake Taubman (Vermont Department of Taxes)]: I do need to run, okay.

[Emilie Krasnow (Ranking Member)]: Would you like a piece of zucchini bread?

[John Gray (Office of Legislative Counsel)]: I'm okay, thank you though.

[Marc Mihaly (Chair)]: M and Ms. Alright, so everyone, I'm going to Is it alright if I report two ways and means that we listen to this? We understand it and that we don't have objection to these? Thanks, John. That is modifying the rental housing revolving loan fund, these tech directions to the special assessments to allow simultaneous use of CHIP and TIF, and the garden except we might, we're pissed that we lost the bill.

[Elizabeth Burrows (Member)]: My preference would be that we talk about it further at the end of the day today, because I still need to process some of

[Marc Mihaly (Chair)]: that. Okay, we can do that. Thank you. Alright, so we're moving on to the landlord certificate data report. Jake, you here? Good, come on up, and is Abby Magnus here? Yep. You want to both testify Yeah,

[John Gray (Office of Legislative Counsel)]: you can use the

[Marc Mihaly (Chair)]: chair, you can testify together. Yeah. This is part just to set the stage here. I'm going to refresh the memory of the committee. Last year, when we were considering what became s one, we were looking at the we were just trying to address the issue that we just didn't know what was out there. We didn't know how many rental units were and what they were, etcetera. We were also facing the clear opposition of the governor to just simple rental, you know, requirement across the board of rental, what do you call it? Registry. Yeah, rental registry. Right. But what we did discover was that between various sources of information that were sort of already out there, it would be possible to construct a lot of what we wanted to know. And we asked that that happen and asked for the data report, and it came in not too long ago, of course we don't understand what it means. So we thought we'd ask the experts, and here you are.

[Jake Taubman (Vermont Department of Taxes)]: Yeah, thank you for inviting us in. Jake Taubman, tax department.

[Kathy Magnus (Vermont Department of Taxes)]: Kathy Magnus, also tax department.

[Jake Taubman (Vermont Department of Taxes)]: And we're glad to be here. We don't come to this committee very often.

[Emilie Krasnow (Ranking Member)]: Would you like a round of introduction?

[Marc Mihaly (Chair)]: Yeah, that's a good idea. Why don't we introduce ourselves? I'm representative Debbie Dolgin. I represent Saint Johnsbury, Concord, and Kirby.

[Thomas "Tom" Charlton (Member)]: Hi. Tom Charlton, Athens, Chester, Drafton, and Windham.

[Leonora Dodge (Member)]: Leonora Dodge, Essex, US Exjunction.

[Ashley Bartley (Vice Chair)]: Ashley Bartley, Fairfax in Georgia.

[Marc Mihaly (Chair)]: Hi, Marc Mihaly, Alice Plainfield, Marshfield.

[Emilie Krasnow (Ranking Member)]: Emilie Krasnow, South Burlington. Saudia LaMont,

[Kathy Magnus (Vermont Department of Taxes)]: Lamoille, Washington District.

[Elizabeth Burrows (Member)]: I'm Elizabeth Burrows. I represent Windsor one, which is Heartland West Windsor, Windsor.

[Marc Mihaly (Chair)]: Mary, are you there?

[Kathy Magnus (Vermont Department of Taxes)]: I'm Mary I'm representative of Mary Howard, and I represent Rutland City District 6.

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

[Emilie Krasnow (Ranking Member)]: Great. Nice to meet you.

[Jake Taubman (Vermont Department of Taxes)]: Nice to see you again. I think that you guys have a paper copy of the report, and and we can talk about anything in there.

[Marc Mihaly (Chair)]: Can you put it up? Pardon? Can you put it up? The report? Yeah. I mean, if you can I

[Emilie Krasnow (Ranking Member)]: Like, do you have this as

[Jake Taubman (Vermont Department of Taxes)]: Yeah? We could do that, I think. Could Nina? I don't need that. Okay. I I would probably just take it right from your website, but is would it be okay to show a few slides that we've prepared? Yeah. Sure. It's a little bit of kind of what you covered at the beginning. Okay. Mister chair, and I just need to get it going.

[Elizabeth Burrows (Member)]: Okay,

[Jake Taubman (Vermont Department of Taxes)]: so a little bit of context and then we can talk about the report. So some recent history of the landlord certificate. The landlord certificate has been on the books for a very long time. It used to be part of the renter rebate program. It used to be something that renters actually had to request from landlords, and then they would submit a rebate form to the tax department, and we would send them a rebate. It changed. In 2021, we reformed the renter rebate program and turned it into a renter credit. And the very important thing to know is that we made it easier for landlords and for renters to apply. It did get quite a bit harder for the tax department because on the back end of things, we kind of need to match everybody up. But things got a lot easier for landlords. And at that time, there were some alterations of what was needed on the landlord just to kind of codify what was becoming so much easier for them, which is basically instead of for each renter that they have, they would just fill out a form for each rental building that they have, and then they could just list their renters on the form. So it got way easier for them. And then in 2024, there was an effort to kind of change the landlord certificate to try to collect housing data. And at that time, it also created this report that the committee has in front of it. And we, the tax department, were pretty concerned about that because the purpose in our minds of the landlord certificate, it's to facilitate us getting credits to the low income renters. It is not to collect data about apartments. It's to collect what we need about renters to get them the money that they are owed under the law. So last year, the tax department came into this committee and ways of means and senate housing, I think. And we talked about our concerns on the landlord certificate, and we asked that we make some changes to kind of bring it back to making it about the renter administering the renter credit. And we worked out a compromise with PHFA who was asking for some of this extra data to to collect a few of the things they needed. But mostly, we kept it kind of focused on on administering the program. And yeah, so that was last year. This is kind of a strange glimpse into the future. In H95, with the torches education transformation, there is a new tax classification for second homes. And part of that is going to be something called a dwelling use attestation. It's going to replace the homestead declaration, and it's also gonna capture apartments too. And the reason it's necessary is to move any apartments into not the second homes tax, but into kind of the middle tax. So it's gonna be different. It's gonna be in addition to the landlord certificate, which is about the prior year. But this new thing, it's gonna be about the coming year, and it is gonna ask about each individual dwelling unit. And we think that at that time, compliance is gonna be pretty good on this because of the tax implications. Meaning if you don't file its form, you're kind of in trouble. Right. So Abby can speak to the statistics, but right now the landlord certificate is not capturing the whole world of apartments nor does it need to. But in the future, this is likely to.

[Marc Mihaly (Chair)]: Go ahead.

[Emilie Krasnow (Ranking Member)]: And so, just want to be clear for folks watching with committee. So, the last section is not enacted yet.

[Jake Taubman (Vermont Department of Taxes)]: That's correct.

[Emilie Krasnow (Ranking Member)]: So we don't but the other two have been enacted.

[Marc Mihaly (Chair)]: Yep. Thank you. Yes, Gail.

[Gayle Pezzo (Member)]: Does every apartment building or multiple units have, like, a span number?

[Jake Taubman (Vermont Department of Taxes)]: Yeah. Every parcel in Vermont has a span number.

[Gayle Pezzo (Member)]: And then so would the one apartment be one span number, and then you're trying to capture how many, what people are within that.

[Jake Taubman (Vermont Department of Taxes)]: Yeah, yeah.

[Gayle Pezzo (Member)]: It's a certificate, is it?

[Jake Taubman (Vermont Department of Taxes)]: Yeah, we call it a certificate, but you're right. So, you I'm actually proud I should have queued up the form to actually actually showed you it, but you put in your stand. You put in some other details about the building, like how many units there are and and some other things. And then from there, you just kind of list each of your renters and how long they're rented for, which we need to know for for verification. I'm not This is the credit. The renter credit.

[Marc Mihaly (Chair)]: Rent or credit that the landlord fills out? The landlord fills out their piece

[Jake Taubman (Vermont Department of Taxes)]: and gives it to the tax department. The renter fills out their piece and gives it to tax department. We marry.

[Marc Mihaly (Chair)]: What's the credit? What is it?

[Jake Taubman (Vermont Department of Taxes)]: A refundable tax credit that kind of varies based on which county you live in and how big your family is. Sort of order of magnitude? Oh, the size of it. We spend about 11 plus million on it right now.

[Marc Mihaly (Chair)]: I mean, for an individual property, typically.

[Jake Taubman (Vermont Department of Taxes)]: It depends on your income. It is income based. The maximum you could get is 2,500. Okay. It's for it's that's a good point. It's it's only for low income renters. So only 17,000 or so recipients in a year out of the 75 ish thousand renters.

[Emilie Krasnow (Ranking Member)]: 17,000 out of 75,000.

[Jake Taubman (Vermont Department of Taxes)]: Yeah. So is that 25, that's less than 25%. Yep. For low income.

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

[Jake Taubman (Vermont Department of Taxes)]: So here's what's in law for tax year 2025.

[Mary E. Howard (Clerk)]: Hi. This is Mary Howard.

[Marc Mihaly (Chair)]: Go ahead, Mary. Oh, just

[Emilie Krasnow (Ranking Member)]: Maybe she's like on the phone. I'm trying to mute.

[Marc Mihaly (Chair)]: Alright. She's muted. Go ahead.

[Jake Taubman (Vermont Department of Taxes)]: Okay. Here's what we collect on the landlord certificate. The name of each renter, the SPAN or that stands for school property account number of the property, the name of the owner or landlord of the property, some details, contact information,

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

[Jake Taubman (Vermont Department of Taxes)]: then Abby can tell you about the type or types of rental units on the property. That's kind of an interesting housing element. The number of rental units on the rental property is an important statistic. Unfortunately, the quality on that data is not great. I'll kind of do a little tangent here, but from the tax department, dealing with the program is a lot of work. When we get a landlord certificate where maybe some field is empty or we think it's wrong, we don't really have the capacity to go back and try to correct it. If it doesn't count for anything, it's related to the rent it cut. So if it's just a survey field and somebody reports, I have 10,000 units on my parcel, we're not gonna go back to the Walmart and say, do you really have 10,000? And so the quality is not great on that field, so people leave it blank. And Abby had to deal with that quite a bit when she wrote the report. A new thing is this highlighted one that's now on the form and is going to show up in your report at the 2026. It's the number of ADA accessible units on the property. And, yeah, that is pretty much it for twenty twenty five.

[Kathy Magnus (Vermont Department of Taxes)]: So that should be the ADA accessible unit should be on the next report we get to you on, it's December, so

[Marc Mihaly (Chair)]: that will

[Emilie Krasnow (Ranking Member)]: be another. Question, do

[Marc Mihaly (Chair)]: you have any sense of participation? In other words, what percentage of people who are eligible actually fill out the form and get a credit?

[Jake Taubman (Vermont Department of Taxes)]: On the renter credit side of things, we know that there is a gap. The reason that there's a gap is because a lot of low income people are not even required to file taxes, or they choose not to, and therefore they don't fill out their credit claim. The size of the gap, I'm not sure. We haven't looked at that in a while, but it's something. On the landlord side, we know that only about 60,000 units are accounted for in our records out of 75 the state, 75 ish in the state. So that's your gap on rent apartments.

[Marc Mihaly (Chair)]: Yes? How do you know there

[Elizabeth Burrows (Member)]: are 70,000 rental units in the state? The census

[Jake Taubman (Vermont Department of Taxes)]: says something like that. Then the housing experts were coming after us. Probably have more honed in than 75,000.

[Emilie Krasnow (Ranking Member)]: Do you look at different municipalities that have rental registries at all and just compare

[Kathy Magnus (Vermont Department of Taxes)]: anything? Didn't for this report. Just pulled from the limits to good data that we get.

[Gayle Pezzo (Member)]: Yes. There are certain municipalities that have rental. Yes.

[Emilie Krasnow (Ranking Member)]: Like South Burlington, where I represent we have one, and last night, they gave a presentation on their data. Burlington does. Burlington. I forget. That's done by the select board. Okay.

[Gayle Pezzo (Member)]: Yeah.

[Marc Mihaly (Chair)]: And St. Jay has

[Emilie Krasnow (Ranking Member)]: one. Okay.

[Jake Taubman (Vermont Department of Taxes)]: Has one.

[Emilie Krasnow (Ranking Member)]: And then they use, like, the municipality fire and safety. They do a different but I was just curious. Yeah. We had our data presentation at last night's meeting and I was just curious if you guys ever look at that for fun.

[Marc Mihaly (Chair)]: It does sound fun.

[Emilie Krasnow (Ranking Member)]: Right? Riveting.

[Jake Taubman (Vermont Department of Taxes)]: Yeah, I would say like one difference might be that a rental registry might include short term rentals.

[Emilie Krasnow (Ranking Member)]: Okay, yeah. Was just kind of sussing out in my head some of the differences. Yeah, STRs. I should take a look. I was watching our presentation last night, but I should look at and compare to what the requirements are. I haven't we haven't talked to my first biennium a few years back, we worked on rental registry stuff,

[John Gray (Office of Legislative Counsel)]: but it's been a minute.

[Kathy Magnus (Vermont Department of Taxes)]: Yeah, so this is kind of the data that we put together for you all this year, which was we received about 8,400 landlord certificates reflective of roughly 75,000 tenants and 60,000 units. I think like Jake said, like the certificate in our system is set up to do a really good job of identifying tenants and kind of give you a rough idea of units. So I would take those kind of that understanding. Had 24% of all renters that reportedly received a subsidized rental rate. And this was reflective of approximately 4,000 landlords, 87% of which reported a mailing address in Vermont. That is just a mailing address, but that's the data we had based on the landlord's tickets we received. And then in the next slide, we kind of broke it down by unit type.

[Emilie Krasnow (Ranking Member)]: Go ahead. Oh, sorry. Can I interrupt? I'm curious if you have any data. I'm sure folks know where I'm going with this. You did?

[Marc Mihaly (Chair)]: Yeah. I have the same one. Wondering the same thing. Go ahead.

[Emilie Krasnow (Ranking Member)]: About investors or out of state investor capturing that information at all in your data.

[Kathy Magnus (Vermont Department of Taxes)]: No? We don't necessarily know the type of organization. We have the name of the landlord as per statute, and we have their mailing address. So those are the two data points.

[Emilie Krasnow (Ranking Member)]: So you could find out about out of state. And we did.

[Kathy Magnus (Vermont Department of Taxes)]: We have 87% reported mailing address in Vermont.

[Emilie Krasnow (Ranking Member)]: So that's pretty

[Marc Mihaly (Chair)]: high. So 13% are out state.

[Emilie Krasnow (Ranking Member)]: Oh, true. Right. Yeah, like my former partner, they have like there are landlords living in Florida but have like a mailing address here for the Yeah. Okay. So it's not really accurate. No. And the name do people put their name or could they put a Shaw LLC? Defined are we here? They

[Jake Taubman (Vermont Department of Taxes)]: don't have to put their actual names. If they set up an LLC to manage the property, then it might say the LLC. I think in some cases, they might say the property management or something.

[Emilie Krasnow (Ranking Member)]: Oh, you can put that even. It doesn't have to be the owner. That's no good.

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

[Kathy Magnus (Vermont Department of Taxes)]: so the next do you have the next

[Gayle Pezzo (Member)]: one? This

[Kathy Magnus (Vermont Department of Taxes)]: is, we're talking about the type of units that renters are reported to be renting. And then also we have an idea of where those renters are located. So those are kind of the two big data sets we were able to put together from. Oh, sorry. Have the lunch certificate data.

[Emilie Krasnow (Ranking Member)]: Oh, are you Can you get

[Gayle Pezzo (Member)]: it through?

[Emilie Krasnow (Ranking Member)]: What's no location? The location is

[Kathy Magnus (Vermont Department of Taxes)]: they didn't. So I think, again, there's a lot of these fields that are kind of unverified. And so location, there's not really a tax consequence if they don't put in the location and same with kind of rental type.

[Elizabeth Burrows (Member)]: So it's an interesting data set. This is percentage of the renters who completed the

[Jake Taubman (Vermont Department of Taxes)]: Landlords would be completing this, and they're talking about their tenants.

[Emilie Krasnow (Ranking Member)]: So there's

[Kathy Magnus (Vermont Department of Taxes)]: one landlord certificate, then say they have a unit they're renting five people to, we'll get one landlord certificate, but it'll be reflective of five tenants. So that will show up. If they're all in an apartment, then five of those would go into that 16,000 number.

[Marc Mihaly (Chair)]: Do they show, does the landlord certificate show the number of tenants in each unit?

[Jake Taubman (Vermont Department of Taxes)]: Sort of. So there's actually kind of a bit of a gray area there. If there's a family of four, the landlord is not saying, Mom, dad, kid, kid, because the kids aren't filing renter credit claims. So the landlord should be reporting on maybe one of the parents as the person who signed the lease.

[John Gray (Office of Legislative Counsel)]: And then maybe in another unit, if

[Jake Taubman (Vermont Department of Taxes)]: they have two adults who aren't related, they ideally would be telling us about both of those adults, because both of those adults could buy a rent of credit. So that would be the I should say that The tax department has to do this marriage on the back end of matching the data, and there's always situations where somebody files a rent a credit claim and we can't find their record. So what we do is the renter reports to us who their landlord is, we reach out to the landlord and we say, Did you forget to file your landlord's certificate, or did you forget to report this person? And then we get the information after the fact.

[Gayle Pezzo (Member)]: So if two unrelated people live in the same unit, do they get the same amount as far as the credit?

[Jake Taubman (Vermont Department of Taxes)]: No, not as Is it split? It's split, yeah. It used to be that on renter rebate they would have to talk to each other and say, tell me your social security number, tell me all your income for 25 different items of income. And you can kind of imagine how that's not great. So in the rent a credit reform, which the tax department designed, we were responding to studies that said, Hey, you've to make this so that two adults generating apartment can get separate credits. So we did. And so they get independent credits, but they depend on their income. And then it is truncated a bit because they share a unit. So they don't get a full credit, but they do get With a

[Gayle Pezzo (Member)]: these numbers, I know it can't be granular and exact, is there a margin of error one way or the other? You've got these numbers census wise, correct? We got this information from the landlord's certificate. Okay.

[Leonora Dodge (Member)]: Yeah. This information, overall number of rentals they got from the census. Okay. Because this is something, an extra step you have to take, the landlord has to take, whereas the census, like, very easy, it's, you know, so many more workers out there taking the census. So it's more accurate. It'll capture a little more. Not everybody qualifies for a renter's credit, so not everybody's gonna file. Right. Right. Taxes.

[Gayle Pezzo (Member)]: So And not everybody files. Yeah. There's a good percentage that don't Debbie.

[Jake Taubman (Vermont Department of Taxes)]: Do

[Marc Mihaly (Chair)]: all landlords have to fill this out? If you have, like, just an apartment building with two apartments in it, you're still required to fill this out?

[Jake Taubman (Vermont Department of Taxes)]: Yeah, it used to be two or more, and then with the renter credit, I think it became one or more. So they all are required to. Many people don't.

[Leonora Dodge (Member)]: What if the unit's vacant?

[Jake Taubman (Vermont Department of Taxes)]: Then they don't have to say anything, because it's for thirty days or longer, so if it's empty, then you didn't rent it for thirty days. So then in that case, you don't have to file that.

[Leonora Dodge (Member)]: Because it's for the benefit of a renter for getting a credit, so there's no need for a credit if nobody was paying rent. Elizabeth?

[Elizabeth Burrows (Member)]: Thank you. I'm actually looking at the total number of houses and putting those next side by side with, first of all, the number of nursing homes, but also the number of nursing homes plus assisted living. It surprises me that those two numbers are pretty parallel.

[Kathy Magnus (Vermont Department of Taxes)]: Then so something Well, I want to clarify on this is that these aren't the number of units. These are the numbers of renters reported to be living in each type of unit. Yeah. So it's not necessarily the number of houses. It's the number of renters living reported to be living in the house.

[Elizabeth Burrows (Member)]: Yeah. I just it it still surprises me that Yeah. That that assisted living plus nursing home is basically the same as house.

[Leonora Dodge (Member)]: To me, it makes sense. Because

[Jake Taubman (Vermont Department of Taxes)]: That would be a whole house, like an entire

[Marc Mihaly (Chair)]: Yeah.

[Jake Taubman (Vermont Department of Taxes)]: Home. Whereas if you had, like, a duplex or something, that would be an apartment.

[Marc Mihaly (Chair)]: Yes. This I just wanna clarify a really basic thing here. It's an income limited program in terms of the ability to receive the credit. But the landlord is it correct? The landlord fills out the certificate for all units. Right. So but renters don't fill out a certificate necessarily. Yes.

[Leonora Dodge (Member)]: Have to fill they also have to

[Marc Mihaly (Chair)]: They fill out a certificate whether they qualify or they don't?

[Jake Taubman (Vermont Department of Taxes)]: They file a credit claim. And they and the instructions can tell whether they qualify. Yeah. So it would say, you know, they're doing TurboTax or whatever. It says, do you want to file a credit claim? Or maybe TurboTax would say it looks like you may qualify, and then fill out everything.

[Marc Mihaly (Chair)]: So the number of 60,000 apartment tenants is not income limited. That is your data on total, the totals of apartments. People living in houses, people living in assisted living condominiums, etcetera. This is your data. Yeah. It's like we made it much easier for landlords, but at the same time, we said tell us about everybody regardless of their income.

[Jake Taubman (Vermont Department of Taxes)]: And then on the back end, we match the credit claims to what the landlords told us. I've got another question.

[Elizabeth Burrows (Member)]: Is a boarding home simply a boarding home or is it the number of tenants who rent a room in a home? It also surprises me that there's only 157 when we've got home sharing from what? No.

[Leonora Dodge (Member)]: They're a little different because they pay so little rent. Their rent is capped very low, so they may not qualify for a rebate. They may

[Marc Mihaly (Chair)]: not be a boarding home.

[Gayle Pezzo (Member)]: That's what I was wondering.

[Elizabeth Burrows (Member)]: It's still a big gap, you know.

[Marc Mihaly (Chair)]: Do you have any sense as to what you're missing here?

[Kathy Magnus (Vermont Department of Taxes)]: We're definitely missing granularity on the unit count level. It's just not something we can verify. I do think you're getting a really good idea of the number of renters in the state and the location. I think the percentages here are pretty helpful to see where it's distributed around the state. Is a nursing home the same

[Elizabeth Burrows (Member)]: as a SNF skilled nursing facility?

[Kathy Magnus (Vermont Department of Taxes)]: I don't know the technical. Again, this is a checkbox on the certificate, so it's up to the landlord, I think, to determine.

[Marc Mihaly (Chair)]: Yeah, it's interesting. Almost half is half the renters in the state live in Chittenden County. It's not surprising, but

[Jake Taubman (Vermont Department of Taxes)]: I mean, we know that there's around 15,000 units unaccounted for. So that's significant. That's 20% roughly. But again, we only chase the data to the extent that we need to give somebody their credit, we're not trying to account for months of population of apartheid.

[Gayle Pezzo (Member)]: Yes? Could it be 20% that are not applying for the credit? No,

[Marc Mihaly (Chair)]: landlords who have an obligation, and they're just not doing.

[Jake Taubman (Vermont Department of Taxes)]: Right, but yes, landlords who have an obligation are not doing it right. But we would never know, like if you had one unit, and your renter made 100,000 a year,

[Gayle Pezzo (Member)]: And you didn't file

[Jake Taubman (Vermont Department of Taxes)]: it, we would never know. It's totally off our radar.

[Marc Mihaly (Chair)]: Do you have any sense as to the 15% about unaccounted for? Like, why? Why? Yeah, who are they and why? I

[Jake Taubman (Vermont Department of Taxes)]: can give a guess at it. Well, guess it's all you've got.

[Leonora Dodge (Member)]: 15% of what?

[Jake Taubman (Vermont Department of Taxes)]: Every day.

[Marc Mihaly (Chair)]: What they're saying is that 60,000 number well, I don't know. The total isn't on there. The total is

[Leonora Dodge (Member)]: It was 75,000.

[Gayle Pezzo (Member)]: 75,000. Renting 60,000.

[Marc Mihaly (Chair)]: They think that's incomplete. Yes. And they think it's incomplete by maybe 15%. The 20%. 20%. And so my question is, why do you think that? And do you have any guess as to

[Jake Taubman (Vermont Department of Taxes)]: why? It's landlords not knowing their obligation. And my guess is also it's smaller landlords, who just have one or two units. I think the bigger ones do know what they need to do. And I know that the operators of subsidized apartments are well represented and they, I think, know what they need to do. Anecdotally, what I've heard is smaller landlords, They're not smaller landlords, like small people, but landlords of smaller Number of units. Number of

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

[Leonora Dodge (Member)]: And you know that there's an undercount because the census count gives you whatever, 20% more than those 75,000 pet census.

[Jake Taubman (Vermont Department of Taxes)]: Then the 60,000 units, I think there's around 75,000 renting households, so there's probably around 75,000 units.

[Leonora Dodge (Member)]: You Does this data Have you seen any important patterns, like any increases or like people taking renter credit getting taken up more and more as people, you know, I don't know how long it's been around. Know about it at least four years ago, but, because the census is only done every ten years, like this is our only sort of annual check-in of, like, what's going on with the rental market. Right? A little bit. But it's such a small slice of whatever's going on in the rental market because it's

[Jake Taubman (Vermont Department of Taxes)]: Yeah. I mean, I think there's better better Your next witnesses might know better ways of measuring. The census is done every ten years, but there's also in between censuses. And I don't know the methodology, but they're updating their numbers all the time. So I wouldn't consider this a great source on that. On your earlier question, renter credit uptake has been improving a lot. Renner rebate had fixed income limits that had never really been changed, and the amount the state was spending on it was going down and down and down. Renner credit stopped that and then grew it. And then last year, we expanded income eligibility. So it went we went from spending, like, 7,000,000 a few years ago to about 11 point something this year. So and we're sending it to many more renters.

[Elizabeth Burrows (Member)]: Anything else? Sorry. When did that come up so far?

[Jake Taubman (Vermont Department of Taxes)]: '2 2021. The run of credit. Alright. Thank you.

[Marc Mihaly (Chair)]: Anything else? Question? Well, first of all, have you guys done? I mean, I don't wanna truck okay. Go ahead. Yeah.

[Gayle Pezzo (Member)]: Understand. So the landlord gets the application first and lists the tenants, and then the tenant gets their individual one?

[Jake Taubman (Vermont Department of Taxes)]: The landlord fills out their party and sends it to tax, and the tenant is going doing their income tax return and may send in their credit claim to tax and then we match them. The landlord

[Marc Mihaly (Chair)]: obligation is a freestanding obligation. It has nothing to do with the landlord's tax return. It's an obligation to file this. Okay. The tenants is only a tax thing. If they don't file any tax return, they don't do anything. If they file a tax return,

[Gayle Pezzo (Member)]: they have the option of claiming a renter credit. Didn't at one time everyone get that was a renter get that certificate that was a homestead credit before, like just before COVID.

[Jake Taubman (Vermont Department of Taxes)]: It used to be that a renter had to ask their landlord, please fill this out for Where'd they get it from? Their landlord.

[John Gray (Office of Legislative Counsel)]: They'll say, please fill out this thing for

[Jake Taubman (Vermont Department of Taxes)]: me and I'll send it into the tax boardman with my written rebate form. Stop that. And I have to get going.

[Marc Mihaly (Chair)]: Okay, We know that. Hey, thank you. Really, this is actually really interesting. And thank you for providing the data.

[Emilie Krasnow (Ranking Member)]: Our pleasure. Yeah.

[Marc Mihaly (Chair)]: I'm going

[Leonora Dodge (Member)]: to just ask you a question, you don't have to answer it now, but it was a bit of a pain switching to, like it used to, it felt easier when you just had to ask your landlord to do it. Now you have to, but I don't know.

[Jake Taubman (Vermont Department of Taxes)]: We could come back and talk about why on the rent.

[Leonora Dodge (Member)]: Yeah, that

[Gayle Pezzo (Member)]: would be great.

[Marc Mihaly (Chair)]: Okay, let's see, we've got next housing development, and we're particularly interested in housing targets, among other things. We've got Maura with us. He's on Is he have Nate yet? He's what?

[Kathy Magnus (Vermont Department of Taxes)]: He's on today.

[Marc Mihaly (Chair)]: Okay. You know what, Maura, can you We're going to take a two minute stretch break.

[Kathy Magnus (Vermont Department of Taxes)]: People may,

[Marc Mihaly (Chair)]: if they so desire, and I do take their jacket off, as it's getting hot and it's getting