Vermont Legislature SmartTranscripts:

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Which is a lot of Vermont. And so we thought, let's follow this up with a real bill that really addresses rural housing finance for Vermont. And seven seventy five, that's what seven seventy five is. That's been our goal, is to really improve access to funding and other housing incentives for rural Vermont. And it's a sort of a catch all bill with six different things in it. I'll give you an example of just one that's not before you, but it's still an example. Have you remember there's this program called VHIP, which finances, again, mostly small projects often in rural Vermont. The landlord or the owner of the building has to front the money, and VHIP pays it back. So this gives them discretion, seven seventy five, so that DACD can advance the money rather than having to the the owner having to front the money. That's just an example. Little things like that, but we think things will make difference. So we approach the treasurer, and treasurer's office really has worked with us, and there are three changes to the law in this bill that affect the treasurer and the treasurer's office. They have worked with us and, in fact, helped us draft these provisions. They are as follows. One, remember the 10% for Vermont program? This program has worked, I have to say, really well. The treasurer has a committee. The treasurer puts out request proposals using the 10% of what is nominally called the, you know, kind of current cash assets of the state. But the treasurer is actually conservative, although the cash assets of the state have increased substantially since COVID. But the treasurer does I think we have 1,500,000,000.0 or something like that. But the treasurer doesn't treat the 1.5 as all there. They make it 1.2. They kind of use 1.2. I'm getting nods here. 1.2 is the number. And so they've used this to build a lot of affordable housing, and they well, not to build, but to lend it out. And instead of 7%, they lend it out at one, two, or 3% depending on how long term it is or even four, and they use it through intermediaries to be safe. And this money is multiplied many times because for a they get, like, 4% on their money if they just park it. And so this gives them, like, one and a half on average. So for that differential, they are getting all of this private capital that comes in for housing. So, you know, when you don't have enough money, it's important to use other people's money. Really. And so this is a program that has a huge multiplier because for that little subsidy and interest, you're getting a private capital flowing in that wouldn't otherwise flow in. So, anyway, it's been working really well. The treasurer feels comfortable that we could increase the 10% to 12 and a half percent very safely. So that's item one. It's 12 and a half percent. We haven't renamed we haven't said 12 and a half percent for Vermont. That's not particularly sexy, but we just they can use up to 12.5%. Second of all, the interest they earn, which is currently kind of in the range of a million dollars, the year that interest right now dumps into the general fund. Under this bill, it would go into a housing fund, so it would flow back to housing. You know, appropriations will have to address that issue, how it feels about it. We felt like this is a housing program, the money should be available for us. The third one is really interesting. We're very interested in housing that is cheaper than current housing and looking for ways to build it. And one of them is what we call off-site off-site modular housing. You may have heard or read about like Huntington Homes. You know, they manufacture it in a factory where you can actually work in the winter without killing yourself. And everybody, they build these pieces and then they truck them out as as kind of pre built pieces and they assemble them on the site. Well, that housing is still not cheap, but it is if we could get larger orders, it would be cheaper. So the idea is having an agency, in this case, DHCD, aggregate many smaller orders into one big order. Okay? So, you have some developer in Rural Vermont saying, I'm building five units, order me five. Another one says, I'm good for three. Another one, I'm okay for 10. They're aggregated into one, and then the agency turns around to an entity like Huntington Homes and says, how about 40 homes? The problem remember who's gonna pay for that? Not the state. The developer pays for that. Even the three unit, they're not gonna get the units unless they pay for it. Okay? So it's not we're not it's not a revolving fund where we're asked to fund it all or anything like that. The problem is going to Huntington Homes and saying, guys, open up a new line, will you, for 40 homes? And they say, well, how do we know it's real? Oh, we have these 10 developers, 12 developers out here who are all saying, sure. That's not good enough. The treasurer is willing to use up to 1% of the 12 and a half percent to develop credit facilities to backstop the aggregated orders, to provide state guarantee that those orders are good. So and that will allow a Huntington Homes or somebody to expand their capacity and build these homes and give us a better price, which is what we're after after all. And what I like about that is it's very low risk because EACD isn't gonna aggregate a unit from some fly by night. It's gotta be a decent you know, as they'll probably demand evidence that they're credit worthy of a developer. They may even require guarantees from the developer, and the developer's gonna pay for it. So for a very low risk, the state's just saying, in the worst case, Huntington Homes, we're behind this. So if some developer flakes out I'm giving you the worst case. Mhmm. Some developer flakes out on four of the housing units, you can build them, and we'll get rid of them. That won't be hard. So I feel like everything that everything that is proposed by the treasurer is really a good idea and doesn't involve expense, significant expense for the state. Happy to answer questions.

[Rep. Matthew Birong (Chair)]: I mean, get I with my experience with within the housing conversation, being in the committee in my previous bienniums and following it, I I am totally following along, and thank you for the work on this. This is incredibly logical for how you presented it. So first and foremost, thank you for the work. And with that, I'll open it up to the table for questions from folks who are usually exposed to this statutes. Robert Hooper, Burlington. Are we talking only manufactured

[Rep. Robert Hooper (Member, Burlington)]: stick built homes that are assembled, or are we talking about homes that get put together? Both.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: The credit facility could support it could support pure manufactured housing. Okay. Are we competitive enough with regional production facilities to how far do we

[Rep. Robert Hooper (Member, Burlington)]: have to reach contract price?

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Right now, there is no there was a Vermont. K. Let me clarify. Most of what we're talking about is what what we call off there's a terminology problem. It's off-site Mhmm. Modular housing. That's stick built. K? There is another kind of housing, which we call manufactured housing. And a classic example of manufactured housing is a single wide or a double wide, what we used to call, but my hand gets slapped every time I say mobile home. Because they're not mobile. They're planted. Okay. And we have another bill which is trying to clean up that area for mobile homes, but they are inexpensive. They are manufactured elsewhere. They are not they're manufactured in Pennsylvania in factories that produce a thousand of them. But the bill is drafted so that the if we can find a way to facilitate large purchases of that, could be used for as a credit backstop for that. But I think that intention is first to first effort is on the modular off-site modular.

[Rep. Robert Hooper (Member, Burlington)]: I've been to the Pennsylvania manufacturer. Yeah?

[Rep. Philip Jay Hooper (Member, Rutland)]: Yeah. Their

[Rep. Robert Hooper (Member, Burlington)]: annual show in Harrisburg. Makes a great committee trip.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: It would. They produced enormous numbers.

[Rep. Robert Hooper (Member, Burlington)]: And you're it's amazed at what they do story you never tell.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Yeah. Also, we did take a trip to Fecto Homes here in Montpelier, and, man, walking into a double wide, nice you know, with wallboard and insulated. And Can be amazing. It's pretty amazing. Now it's not like ever since HUD in, I think, '86 or '87. It's like, right. Yeah. HUD Put together as standards, they're much better, weatherproof, and you can get they're really it's really something and relatively inexpensive. Could this could be used to facilitate that. I think its primary purpose is the off-site modular. Yeah. They get

[Rep. Robert Hooper (Member, Burlington)]: it into triple wide. You're really

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Yeah. Well, it goes there as all kinds of yeah. There's there's a word for that. I can't Alright. Yes, sir.

[Rep. Matthew Birong (Chair)]: Any other questions for the chair before we move over to council councils? No? Thank you very much, sir. We're gonna start off with mister Gray and then shift to mister Woods. I think a reservoir dog.

[John Gray (Office of Legislative Counsel)]: Morning, everyone. John Gray, office of the legislative council. I think it is still morning, I hope.

[Rep. Matthew Birong (Chair)]: At least in our minds.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Yes. Been a morning world.

[John Gray (Office of Legislative Counsel)]: Okay. Just gonna share one quick piece from age seven seventy five with you. And this is related to special assessments. The thing I just wanna note is this doesn't disrupt anything about the way that that assessments are dealt with, under title 24 currently. This is just providing a new financing tool. So don't think of this as disrupting anything about special assessments. It's just latching onto that existing process. And so the problem, as I would characterize it, that this section is trying to solve is that generally you're going out for general obligation bonding. You're trying to bond for a particular project, And so that requires a vote, the municipality as a whole to take on a general obligation bond. The reason being that a general obligation bond, whole faith and credit, could compel a tax levy for the for those purposes. And so if you think about special assessments, which are assessments, this is an existing law, assessments exist, they're levered on particular properties within a municipality that benefits from a particular improvement that you're making in a limited area, and then you portion that benefit across the beneficiaries of that improvement. If you think about that, it's not the town as a whole that's getting the improvement right. I mean, municipality is getting the improvement, but it's those folks that are receiving that benefit. And so if you just contrast the process for general obligation bonding, which requires vote of the whole, I guess the benefits for an assessment, which is just for a subset of folks, there's a bit of a mismatch. So what this bill does is it creates a bonding tool that changes essentially what the vote would be required for something along these lines would be. So these are special assessment bonds. So you're seeing in subsection a upon approval of the legislative body, so not both of the municipality as a whole, just approval of the legislative body and subject to subsection c, which I'll come to, a municipality may issue revenue bonds for the purpose of financing that public benefit, that public improvement for just that limited area. And then we have standard disclaimer language here. A revenue bond is issued for an essential and governmental purpose, so you have tax benefits under that. Subsection b is just clarifying that this is not a general obligation bond. It is only backed by the revenues of the special assessment. All those procedures continue to exist. All the votes that are required for special assessments continue to exist. But to actually issue these revenue bonds, you just need the legislative body to approve and then it's backed exclusively by those revenues. No one could compel none of the holders could compel a tax levy like you could for a general obligation bond. That's what subsection b is saying. Revenue bonds payable solely and exclusively from the special assessments, levied on those properties and shall not constitute general indebtedness in the municipality. No holder shall have the right to compel any excess taxing power. Subsection c, the last piece, this is really a marketability concern about the revenue bonds to attempt to address the fact that you could have weak bonds entering the market. This was suggested by the Vermont Bond Bank, but this is just language that says if you're issuing a revenue bond, you have to meet these particular marketability concerns. You either need a commitment letter from one of these reputable bodies, Vermont Bond Bank, a bank regulated by one of the major national regulators or credit union regulated by the National Credit Union, or if you didn't have a commitment letter backing those, if you'd received a minimum credit rating, of BBB, which is what's considered investment grade from one of the major national statistical organizations. I've said lots of words, but this is to back up the ability to finance limited improvements within a municipality using revenue bonds that wouldn't require a vote of the municipality as a whole, and it includes some marketability concerns. I'm happy to talk more if you guys have specific questions, but I know you're covering a

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: lot there. So Questions for mister Gray?

[Rep. Matthew Birong (Chair)]: I

[John Gray (Office of Legislative Counsel)]: like no questions.

[Rep. Philip Jay Hooper (Member, Rutland)]: That's what I said, not my new boss. Okay.

[John Gray (Office of Legislative Counsel)]: And like I said, it doesn't disrupt anything about the special assessments process. It's just a new on that you could use back by those revenues. Understood. Perfect. Awesome. Thank you, sir. Thank you. Mister Wood.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Good afternoon. Morning. Still ish. Ten

[John Gray (Office of Legislative Counsel)]: more minutes. Yeah. It's a jump call.

[Cameron Wood (Office of Legislative Counsel)]: The record, Cameron Wood, Office of Legislative Counsel. I'm going to walk through sections two and three of the report from the General and Housing Committee. So my colleague, John, just walked through section one related to bonds. Section two and section three deal with the Vermont state treasurer and the creation of a Vermont housing special fund. So as was mentioned in the introduction, currently, the state treasurer has the authority to create the credit facility of up to 10% state's average cash on hand to then invest those monies in accordance with their own guidelines and the Vermont's Uniform Prudent Investor Act. So what you have here, beginning on the bottom of page two and top of page three, just a little bit of reorganization of the section. I think the key pieces to focus in on are going to be the sub A. It's increasing that credit facility authorization from 10% to 12.5%. Then you get into this subsection B here, which authorizes a credit facility of up to 1%. That 1% can only this is in the sub two here, beginning line 12 can only be used to facilitate housing development through the bulk purchasing of off-site constructed housing and to aid in the purchase of off-site constructed housing. Also, in addition, the credit facility, this is on line eight, the credit facility established under this subsection reduces an equal amount the 12.5%, if you were to approve the increase of 12.5%. The concept here is we want to authorize a credit facility of up to 1%, but we don't want the total amount to go to 13.5%. We want to keep it at 12.5%. So any amount that's created under this one facility for the purchase of off-site housing equally reduces the authority of the credit facility that currently exists. Then we get to sub three here. It states that any financial losses of that 1% credit facility have to be covered by this new Vermont Housing Special Fund. So then we're going to get to the bottom of that section, which is going to be all the way down to page five. There's a few technical cleanup amendments in some of those subsections, nothing that's substantive. You get to a new section e. What is the Vermont Housing Special Fund and what funds are going in there? All of the interest from these credit facilities that the treasurer has the authority to create, those interest monies that come in from the loans that the treasurer issues out currently go into the general fund. This proposal is to take the interest from those loans and put it in this Vermont Housing Special Fund. And so that's what you see on the sub e here. Treasurer retains interest paid on the loans, puts it in this created housing special fund. And then beginning in the section three, there's a lot of standard kind of boilerplate language to create the special fund. I'm going to bring you to sub e here beginning on line 15. The treasurer can use these monies, so just the interest, on line 17 to promote the increased availability of housing, including the bulk purchasing of all site constructed housing as authorized in that new 1% credit facility. So the interest in this special fund that's being created can only be used to promote increased availability of housing. It doesn't have to be for off-site. Could be for other housing, but it can be for off-site. The 1% credit facility above, limited to off-site construction. Interest in the new special funds, housing in general. And then the top of page six, the only other point I would make is the treasurer can use the interest to cover the administrative costs of the credit facility. Anything interest gets credited to the funds, other than just

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: kind of boilerplate language there.

[Cameron Wood (Office of Legislative Counsel)]: So at the end of the day, it's just changing those credit facilities, authorizing the 1% credit facility, capturing the interest, putting it in a special fund, and then designating what the 1% and the interest can then be used for. The rest of the bill or sections, Mr. Chair, I'd be happy to mention, but I don't know that they are their housing fee. Yeah, don't think that's necessarily

[Rep. Matthew Birong (Chair)]: relevant to our focus right now. So I wanted to stick to what was jurisdictional in our wheelhouse to have situational awareness on.

[Cameron Wood (Office of Legislative Counsel)]: Understand. Happy happy to answer any questions.

[Rep. Matthew Birong (Chair)]: Alright. Questions from the committee on this? I thought that was a very clean tee up from the chair and to counsel and to counsel for

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: the information

[Rep. Matthew Birong (Chair)]: loop. Again, I want to open it up to the table. I've had my head in this policy for a long time now, so I got it. Just wanted to see if there were questions from folks, because I do know that when are you looking to vote this out, mister chair?

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Well, this Or is it out already? It's out, but it has to go to appropriate it has to go it's in ways it means. Okay. It will have to go to appropriation. Understood. Okay. It's this committee I apologize for that, frankly. Did I scan again? Yeah. If you'd like First of all, I apologize. I did not clear you got a good explanation of the credit of the change with the assessment districts from council. I didn't mention it. I should have. But, yes, we we had to act because this has to go to so many committees. But it should this committee have some suggestion, we'll make sure that it's transmitted to one of the other committees.

[Rep. Matthew Birong (Chair)]: No. Thank you for that. So I guess I'll open it back up to the table right now to see if anybody has any questions or concerns.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Representative.

[Rep. Philip Jay Hooper (Member, Rutland)]: Are there other, manufacturing facilities in Vermont other than Huntington Home?

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: You should identify yourself as

[Unidentified witness (manufactured/modular housing industry)]: non trial run the record. There are are Huntington Homes, there is monofoam laminates, Starksboro, and there's studies and actual work being done on reopening a plant in Fairhaven.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: We'd like to see effect of the store. They don't film the Effect

[Unidentified witness (manufactured/modular housing industry)]: of the in Vermont. Oh. They but they do sell them.

[Unidentified committee member]: So this has potential of increasing labor, depending on how many towns get on board or how many houses are needed.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Lot. Right. Yeah. Go

[Rep. Robert Hooper (Member, Burlington)]: on. And just for clarity for me because I may have missed it. So this can also be used to build on-site as well as the, where you said the 1%? The the 12 and a

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: half percent can be used for any affordable or they they for any housing. They they it's broadly defined in their own, guidelines. Yeah.

[Rep. Robert Hooper (Member, Burlington)]: Okay. I just wanna make sure it could be used for the manufactured housing. Could be used for manufactured housing.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: It could used for off-site housing. The 12 and a half percent can be used for senior facilities, for, housing generally.

[Rep. Robert Hooper (Member, Burlington)]: Okay. Thank you. That cleared it up for me.

[Rep. Matthew Birong (Chair)]: Rutland?

[Rep. Philip Jay Hooper (Member, Rutland)]: I am assuming that those municipalities that will take advantage of this are ones that are already mapped and are have significant areas of land that are Act two fifty exempt.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: There is no reference in this legislation that would limit its use to any tier. If Act two fifty is not mentioned, it's not tier specific, a lot of the state is not in tier one. Right. And tier two, this is that's a lot of rural Vermont is tier two.

[Rep. Philip Jay Hooper (Member, Rutland)]: This sounds like a great program, but we don't know what's going to happen with tier two and these developments cannot happen in tier three currently. So that's all I have, but we're going to hear from the league, right?

[Rep. Matthew Birong (Chair)]: Yes, we have the league up next. Other questions for the chair? Nope, thank you for your time, sir. And that is a good segue.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Hello, League. Hello. It's been a little while.

[Samantha Chea (Vermont League of Cities and Towns, Municipal Policy & Advocacy Specialist)]: It's been a while.

[John Gray (Office of Legislative Counsel)]: Frequency burning.

[Samantha Chea (Vermont League of Cities and Towns, Municipal Policy & Advocacy Specialist)]: I've been downstairs. Sorry, I can't see my tabs. There we go.

[Rep. Matthew Birong (Chair)]: So, committee, we have a committee discussion at 01:00. That's kind of a flexible thing for us. We don't have anything firm till two. So, what I would suggest to the table right now is push through this a little bit, and then we'll just extend our lunch a little longer.

[John Gray (Office of Legislative Counsel)]: See how

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: it plays out. Remember? All right.

[Samantha Chea (Vermont League of Cities and Towns, Municipal Policy & Advocacy Specialist)]: I only have two slides, so maybe we'll make it to lunch on time. So for the record, my name is Samantha Chea, municipal policy and advocacy specialist for the Vermont League of Cities and Towns. We are happy to support H-seven 75 and have testified and participated in discussions in House General on this and many other housing bills. Housing is our top policy priority. It's been the top reported concern of municipal officials since 2021 when we survey them annually. There is an urgent need in every Vermont community for more housing, in particular, the availability of affordable housing. So basically, we support seven seventy five at a high level because it's more tools in the municipal toolkit. And in particular, this one in section one expands on really two existing municipal authorities, revenue authorities. One is special assessment districts, and the other is revenue bonding. So we think this is a smart innovation and expansion to municipal finance authority that's in line with the existing law. So a special assessment bond can be leveraged for much more substantial investment. We foresee that that is the way this would most commonly be used. So within a special assessment district, you're assessing each property owner a relatively small fee. And then that small fee, all of those fees together can service the debt on the special assessment bond. But the total bond amount itself can be used to draw down much larger public investment opportunities, such as SRF, the Modern Revolving Loan Fund. This could be paired with CHIP that was passed last year. This can be used for large grant investments, like many federal transportation programs or northern border programs could require a quarter or a third grant match. And so this is an additional tool that will help smaller and more low capacity communities find a new revenue source to make those types of programs work. And this is in a housing bill, and we anticipate will be used expand housing opportunities. As we said, it's a top priority of Vermont municipalities. But it can be used for other types of regulatory compliance, such as the three acre rule, which can affect some but not all parcels and properties in a part of a municipality, but not the whole. And there are not very many financing tools that help the municipality support compliance for those property owners. So this is another one that could be considered by the legislative body. Or this is one that could be considered. And I just wanted to say a little bit as well about the off-site construction accelerator pilot that might be helpful to you given the jurisdiction of this committee. So it's optional for participating municipalities. It's not imposition on local zoning or local programs to finance housing. It does include a provision to match a municipal planning grant for participating in the pilot, because it's likely that they would need some zoning and bylaw updating in order to really leverage the opportunity of the off-site construction housing type. But those changes, those tweaks to help the community leverage the off-site construction housing type would still go through the normal Title 24 processes of adoption through the Citizen Planning Commission and the legislative body with public hearings and all that. So it doesn't upset the normal systems for planning to use new or different type of housing in a community. And that's it.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Yep. Questions for the week?

[John Gray (Office of Legislative Counsel)]: Thank you.

[Rep. Matthew Birong (Chair)]: So, this is a straw poll for us. So, I'll just open it up to this meeting for discussion. Repaygo?

[Rep. Philip Jay Hooper (Member, Rutland)]: Although I'm concerned about where this development can happen, it's a great tool. I'm really glad we're gonna have another tool to encourage the growth of new housing. So I'm definitely in favor of this.

[Rep. Robert Hooper (Member, Burlington)]: Any other folks feeling uncomfortable before I call a favorable rep? I'm very comfortable with this. I'm a little uncomfortable with the juxtaposition of the groups that are buying up farmland to preserve them and cutting out basically the opportunity for development of communities in areas where we need them. That's outside of the scope of what we're discussing here. Yes. That is something I think ND Act two fifty possible implications addressed at some point. This is a good idea. Totally hear your point. Finite focus. Oh, I I like this as a tool. I'm worried that we have hamstrung it by regulators we have in place right now. Actually, they won't. We can always fix that.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Mhmm.

[Rep. Robert Hooper (Member, Burlington)]: But as far as this goes, having it on the books, if we can fix the others to make it useful, is

[Rep. Matthew Birong (Chair)]: what we need to do. Yes. Hopefully, this is dovetailing to something impactful. So Okay. Hearing consensus of support from the table, I will call for favorable thumbs on the, language presented. Alright. That is favorable thumbs. Alright. Thank you, committee. I appreciate it. That was a very yes. We saw the digital thumb representative too.

[John Gray (Office of Legislative Counsel)]: Thumb has been recorded.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: I have redundant now.

[Unidentified committee member]: I can

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: Rep Hooper.

[Rep. Robert Hooper (Member, Burlington)]: Persons that have more of an interest in this could go to modularhome.org and see some surprisingly interesting houses that come on track.

[Rep. Matthew Birong (Chair)]: Oh, this is very nice.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: So beautiful communities built by that.

[Rep. Matthew Birong (Chair)]: So what I, what I do wanna do is I was kinda picking up on this. We did lead over a little bit, but I think I wanna call this, break time till 01:30 so that we can have that committee discussion at 01:30 to 02:00 before our next order of business, which is miscellaneous alcohol. So everybody has no shortage of things to do and people to talk to. So I wanted to provide extra time during the lunch hour for that.

[Rep. Tom Stevens (Chair, House Committee on General & Housing)]: And with that