Vermont Legislature SmartTranscripts:

[Marc Mihaly (Chair)]: Welcome everyone to the General and Housing Committee of the House. And today is the May 22, and we are convening for the purpose of reviewing H. Seven fifty seven, which is an act relating to manufactured homes and limited equity cooperatives. We passed the bill, it went to the Senate, it went through several committees, the Senate, has their amendments, and it's passed the Senate a few hours ago, and is now back here. We have our counsel with us to review the amendments, and then the action before us as whether, how we want to react to the bill as a method.

[Cameron Wood (Office of Legislative Counsel)]: Yes sir, okay, for the record, Cameron Wood, Office of Legislative Counsel. Would it be helpful to run through the bill as it came out of the House one more time or is everybody?

[Marc Mihaly (Chair)]: Sure, refresh our memory. I think you can at a high level. If you say what the subject areas are

[Unidentified Committee Member]: No, think I kind of wanted them mind by word. Okay,

[Cameron Wood (Office of Legislative Counsel)]: so if you remember seven fifty seven as it came out of the house.

[Marc Mihaly (Chair)]: A little bigger, please. Yes sir.

[Cameron Wood (Office of Legislative Counsel)]: Thank you. Okay, section one made a lot of what I would say, back up, remember you all passed the bill, it went to the Ways and Means Committee. The Ways and Means Committee actually made some changes to how you all had structured the bill. And so what came out of the House was Section one, which made, I would say, modest changes to the sections governing the sale and transfer of a manufactured home. So if you remember in the definitions section, for example, you clarified that for definition of permanently cited, one or more of the following things need be met, not all of them. You move into the next section, and this is about when you're transferring a mobile home via a deed. So a, one is if it's financed as real estate from the dealer, it has to be transferred via a deed. B is if it's being financed or refinanced as real estate from another individual, It has to be transferred via a deed. You add in or will be so financed. These weren't really I wouldn't say these are capital S substantive changes. These are all very minor technical additions to the statute. Subsection C, making sure that it was clear that this section is related to a warranty deed. Then later on, the next section is related to a quick claim deed. So there were minor changes as it came out of the house in section section one related to transferring manufactured housing. Then you get to section two, which was about these next few sections were about the limited equity cooperatives that are manufactured home communities. And if you remember, we added in the definition of a mobile home park in section three.

[Marc Mihaly (Chair)]: Here on page eight is Everybody remember there's limited equity co ops exist in various forms, including buildings. This is just limited equity co ops that are multiple. Can you factor it out? Right, correct.

[Cameron Wood (Office of Legislative Counsel)]: And so if you remember in section eight, you added in that says you cannot sublease the units unless there's a hardship, unless you're subleasing the unit to someone of low or moderate income, keeping in mind that the limited equity cooperative is designed for people of low or moderate income. And then you could only sublease for the cost to the owner. Because if you remember, we got into that whole discussion about there's a limitation on how much you can charge when you're subleasing a unit for a limited equity cooperative, and that may not cover the cost when the individual member owns their own home. And so you made this change to say that you could charge here in Subdivision B here, you could for the mobile home limited equity cooperative, the individual could charge for costs, including the cost of the monthly payment of the unit, cost of mortgage, utilities passed on to the sub VC, etcetera. And then in B1 and B2, you added in language that says, for Mobile Home Park organized as a limited equity cooperative, they have to be treated for purposes of state funding and grants as if it were incorporated as a state nonprofit corporation for a public purpose and public benefit under the laws of the state. Nothing alters or changes the specific funding or grant requirements. And then in sub two, added in that nothing changes the tax treatment for these entities. That language isn't intended to change the tax treatment. And then if you all remember, was a lot of conversation about how these entities are assessed, their property value and how that's assessed, and the issues across the state where it appears that some of them are treated differently than others. That, I believe, was removed and put into another bill, that language from this bill.

[Marc Mihaly (Chair)]: So then you get into the report. Remember, we asked for, rather than, we came out of Ways and Means, rather than trying to tell the Department of Tax what they should do, we ask the Department of Tax to do a report on what are the different ways they're assessed and what would they recommend. The whole idea is to get to a point next session where we can have some uniformity.

[Cameron Wood (Office of Legislative Counsel)]: So then the next section, municipal zoning, this was adding in some clarifying language that the municipal bylaws cannot have the effect of excluding manufactured homes, modular housing, prefab housing from any district that allows year round residential development. This language has been in a few bills that are moving forward. It was in S-three 28, for example.

[Marc Mihaly (Chair)]: It also was in S-seven 75, it was taken So it doesn't matter, it's in here. Okay,

[Cameron Wood (Office of Legislative Counsel)]: then we get to the sales and use tax exemption, and as you all know, isn't my area, this is John's area, but if you remember, the intent here and the effect of the language was to try to make it such that if you're purchasing a manufactured home and you're subject to sales tax, it would make the sales tax as near equivalent to what you would pay if you were paying the property transfer tax if it was being treated under the property transfer tax. That's what those sections do. Okay, so that's the bill as it came out of the House. What have my apologies, you have the Secretary of State, the business registration, the ability to update registration, then you have the section regarding forming revisions for us to go in and change mobile home to manufacture. Apologies for missing those too. What did the Senate do? So the Senate bill that's going to come back to you, there were two amendments, one from the Senate Economic Development Committee and then one amendment that was offered on the floor. The Senate Economic Development Committee recommended taking this language, the language that you put in this is for a mobile home park limited equity cooperative the language that you added in saying that for state funding and grant purposes, this shall be treated as if it's a nonprofit corporation. They put a sunset on that language. So they didn't take it out. It's still there. But they proposed to repeal it next July. So it would exist for a one year period and it would be sunset July 2027. Then I'm a little confused just form wise, help me out. It looks like a strikeout issue. Right, but so it's a new section, so it's a section 3A. So when you look at the bill that you all passed, that language is up here in section three. Right here, section three, you're changing the limited equity cooperative section where you're adding in, like I said earlier, that A-eight, you're adding in the limitation on the subleasing and the costs. And then you have the B-one. This is all in section three. What the Senate added was a new section 3A. It's an entirely new section, and they're striking that language, but they're putting an effective date of 07/01/2027. They're sunsetting that language.

[Marc Mihaly (Chair)]: Later until '27. You know what their thinking was?

[Cameron Wood (Office of Legislative Counsel)]: So, yes. At least I can tell you what was articulated in the committee. I don't know what their thinking is, but I can tell you what they said. Speech and science. Yes, yes, yes. Real quick though, the next piece they added in a section 8A. So towards the end, they added in a report and this is a report coming to you all 11/15/2026, Department of Housing and Community Development in consultation with AOA, Agency of Administration, Agency of Natural Resources and Agency of Transportation shall submit a written report identifying all state funding grant and loan programs available to mobile home parks for infrastructure improvements with an analysis on the eligibility of regulatory barriers prohibiting access to the funds for mobile home parks registered as a limited equity cooperative. Office of the state treasurer shall provide technical support to THCD in doing the report. So the issue was, as the committee was discussing it, what is B1 here for? What are you adding all of this language for? And the discussion was, as you all know, you have some of these limited equity cooperatives that the Secretary of State's office will tell you are not properly registered as nonprofits. This is what the Secretary of State's office has said. Corporate structure is not in my portfolio, so I'm doing the best I can to give you my just base knowledge here with what the Secretary of State's office is saying. These entities are not nonprofit corporations. In your statute, the statutory framework that the state of Vermont has, they are not nonprofit organizations. What are they? They are a cooperative housing organization. That is an entirely separate organization type. Some of them have been registered as if they are nonprofits with the Secretary of State. And the Secretary of State's office has come into this committee and the Senate committee and said that was an error on their part, and they should not be organized that way. One thing they advised you not to do was to just unilaterally change all of them to nonprofits because they're not

[Unidentified Committee Member]: That's not

[Marc Mihaly (Chair)]: a nonprofits.

[Cameron Wood (Office of Legislative Counsel)]: They also said we don't recognize that you unilaterally do the opposite. Don't go in and just change all the ones that are nonprofits. You added this language in to try to signal what is the result of that? Some of them are listed as nonprofits and some of them are not. The problem, as I understood it, as that committee understood that you're trying to solve is that means that some of them have easier access to funding because they're listed as a nonprofit. They have a piece of paper from the Secretary of State saying, we're registered as a nonprofit so they can access certain funds that the other entities, where it doesn't say that, they can't access those funds, or it is more difficult for them to access those funds. And so you're signaling with this language to say that you should treat them as if they're nonprofit corporations for the purpose of accessing those funding and grant requirements. The Senate Economic Development Committee was saying, well, why don't we just amend the funding and grant programs themselves to make sure that manufactured home limited equity cooperatives are eligible for those funding opportunities. That's when they came to me and they said, what funding are we talking about? And I said, I don't know. I don't have a list of the overall fundings that we're talking about. And so they said, all right, this is what we're going to do. We're going to sunset this language, and then we're going to require a report to come back to tell us what the funding is. What are all of the funding this is intended to be comprehensive. All of the funding that's available to mobile home parks and include an analysis on what are the eligibility and regulatory barriers that may prohibit access to these funds for these entities, with the thought being that next year, you all, if it's more appropriate, you can either repeal the sunset, and so then the section just remains in effect if that's the easiest thing to do, or I should say if that's the best thing to do that you all feel is best. Or at that point, when you get the report back, you can go in and amend all of the funding programs directly to say that a mobile home part or a manufactured home community that is registered as a limited equity cooperative is eligible for those funding. And then you don't need to have this issue of, are you registered as a nonprofit or not? Are you a manufactured home community that's registered as a limited equity cooperative? You're eligible. Your organization status doesn't matter. That's why they did this. So that's the change from the Senate Economic Development Committee. The last thing I'll mention is there was an amendment offered on the floor to make the effective date of the sales and use tax changes effective 01/01/2028, not 2027. My understanding of that is because they're working through budget negotiations for the next fiscal year, and the changes that you're making could potentially reduce monies that are available to the state. It has a fiscal impact of reducing funds coming in, and so they didn't want that to impact what they were doing on budget negotiations, so they made it effective 01/01/2028. As opposed to mid-twenty seven, or what's it? January, middle of the fiscal year.

[Marc Mihaly (Chair)]: Right, middle of fiscal year. A comment to put some context on, not the last thing, but this whole thing about the nonprofit status and the court, there are really two separate problems that we face. The big problem is aging infrastructure in all these global home parts, manufactured home parts, and not enough money to deal with it, and not enough grants. And one of the reasons I like, though it may not have been the reason it was put in there, the reason I like this report is it's going to put a magnifying glass on, hey, where's the money coming from, what's out there, and it will help us in dealing with that, which we have to deal with. I mean, it's just a real problem. So I like that. The other problem, which I would call the smaller problem, because the infrastructure problem is a gigantic problem, so maybe I should say the less gigantic problem, is simply a problem that much of the time, when limited equity co ops, limited equity co ops are organized for a public purpose, they're low income housing, etcetera, but because they aren't, quote, unquote, nonprofits, some grantors say, you've got to show us, you have to make a demonstration to us that you are public purpose and you're really serving a public purpose, etcetera. And they do. It's not a question of their not being eligible. It's just a question of extra work that they have to do.

[Cameron Wood (Office of Legislative Counsel)]: The statute, the statutory section for limited equity cooperative at the very top, in subsection A, says they are for a public purpose and public good section. Whatever it says,

[Marc Mihaly (Chair)]: still is make work that they have to do that's not necessary for nonprofits, where they just accept the nonprofit status as a surrogate mover of this, of a purpose. So this original section, which now stays in effect for a year, was designed just to make it easier, so that when they apply, they make it easier, and it's still there. Somehow, I think my impression is that between the Secretary of State's office and the Senate, they didn't quite get this whole picture, but I don't think it's fatal. I think that we're just going to have to meet with them all next year and straighten this out a little, but I do like the report, because I think the report is gonna come up with some really interesting information. That's my take. So I just wanna be sure, the way that it is right now, it stays status quo as far as that list. If grants were being,

[Unidentified Committee Member]: somebody was trying to get the grant, it's the ones that say nonprofit, it stays that way till the January 2020?

[Cameron Wood (Office of Legislative Counsel)]: This bill will not change their status at all. The ones that are registered as nonprofits, it will not change their status.

[Marc Mihaly (Chair)]: What they could do,

[Cameron Wood (Office of Legislative Counsel)]: they could go ask the Secretary of State to change their status, but I don't think that they're going to. So it doesn't do anything with that. This has nothing to do with

[Marc Mihaly (Chair)]: the issue, which we did talk about, of how these entities are registered. We sort of dabbled with the idea of getting the Secretary of State to change everything, and we just decided, no, let it be. That's not what this was about. The amendment here, which is going to last for a year, was just designed to make it easier. Okay.

[Cameron Wood (Office of Legislative Counsel)]: It's not going to change any of their status currently, not going to change any of their eligibility. Everything that you did in this committee would stay intact. I would say, if anything, what the Senate amendment is going to do is it's going to hopefully give you more information with that report that they included. And then it's going to force the body, whoever's in this room, to come back to the issue next year.

[Marc Mihaly (Chair)]: They'll have to take

[Cameron Wood (Office of Legislative Counsel)]: that information. And we're just going

[Marc Mihaly (Chair)]: to have to sit down with the Secretary of State Department and we will have the information we need to do that. So I think it's actually a minor improvement. The delaying the tax cuts is not wonderful, I don't love that. But I don't think it's so horrible that we can't, my view is we can't occur. Yes. Fiscal year, July to June? Yes. Is there a reason they didn't choose July 1? I do not know

[Cameron Wood (Office of Legislative Counsel)]: the answer, I was not part of the conversation. That's a

[Marc Mihaly (Chair)]: good question. Why was it mid year, it was mid year before, it's mid fiscal year before, it's mid fiscal year now. I damn define them.

[Cameron Wood (Office of Legislative Counsel)]: Again, I think it was just I think the primary driver was don't impact the current budget discussion, which makes sense as for why they get then in the middle of next as opposed to effective July 1. But I guess you'd have to push it out even further.

[Marc Mihaly (Chair)]: No, I think maybe you're No, an answer to her question, it may I'm guessing, okay? I'm guessing that by saying January 1, they're making sure that it's done by the time the legislature comes in and starts thinking about the budget for the next fiscal year. It's just The line on July of 'twenty seven, which would be the next fiscal year? I don't know. I don't have a I have a guess. It gives if they're gonna change how this funding happens, they're doing it at the time of year when construction's not underway. So they're still doing some planning and applications so that they know what's going on by the time they get to This

[Cameron Wood (Office of Legislative Counsel)]: is the this is we're talking about. It's the the sales tax treatment. We're talking about the sales tax, not the sell the home. Oh, know you're yep.

[Marc Mihaly (Chair)]: So that's Here I'll pull it up. Decades went. Oh okay.

[Cameron Wood (Office of Legislative Counsel)]: January 6. Here it's under five. Yep, on this page it's the Nicholas Tax Agreement that put out the January 28.

[Marc Mihaly (Chair)]: Oh wow, good thing. I love people buying. You're doing it, I mean where are going to put them in January?

[Cameron Wood (Office of Legislative Counsel)]: If you're buying existing money. Existing Yeah.

[Marc Mihaly (Chair)]: Sing a blessing over to Brad. All right, Marc?

[Unidentified Committee Member]: Yes. So that's because of the implication of the 600,000, before it was 400,000 with the sales, with the difference with sales and use tax versus the PTT. Alright, so that makes sense.

[Marc Mihaly (Chair)]: Is there any other thought, comment by any member of the committee before I ask Professor Rutland? No. I'm okay. Are you okay? Yeah. I'm okay.

[Unidentified Committee Member]: My only concern was if anything was changing with that list, but if we have a year and next year we look at it, then I'm fine. Would all those in favor of conferring with the Senate proposal amendment, please raise your hands.

[Marc Mihaly (Chair)]: Wow. What's up? Okay, so we are 12345678902. Good job. Great job. Thank goodness. And God, breathe a sigh of relief for now.

[Unidentified Committee Member]: There's so much work to do out, let me start.

[Marc Mihaly (Chair)]: Get ready for her brief note. I

[Unidentified Committee Member]: don't know. Gonna ask if you send me back my wish list. Other items on it, then it was sort of light of day.

[Marc Mihaly (Chair)]: Well, thank you. I want to take this opportunity to thank you for all your help on this bill. It really, it belonged, it was actually not easy, because it's a very technical area, remember, we had to get into property.

[Unidentified Committee Member]: So this is certainly the million area. A lot of people just don't have a lot enough, a lot more do now.

[Marc Mihaly (Chair)]: It's an area where we had to get into the difference between, say, transfer from real estate versus personal property transfers, taxes, modular homes, all that stuff, we had to get into a lot, and I congratulate the committee on becoming experts in all of those areas, and our council for helping us. Thank you, sweetheart. Thank you. And of course our committee assistants for tolerating us guiding with everyone. All right.