Vermont Legislature SmartTranscripts:

[Emilie Kornheiser (Chair)]: Hello and continued good morning, ways and means. Thank you for coming back to committee so promptly. We are going to work on five eighty eight so we don't so we can be with Tim while we have him, and then 09:15, and then seven seventy five. And then if we still have time, we're gonna get back to a committee discussion on the yield bill. Tim, hello. Thanks for joining us.

[Cameron Wood (Office of Legislative Counsel)]: Thank you very much for having me.

[Emilie Kornheiser (Chair)]: I am very grateful to the Office of Professional Regulation and to Tim for, doing some fast work on an amendment that Tim is gonna share with us.

[James Masland (Member)]: Here we are.

[Tim Devlin (Legislative Counsel)]: Hey. For the record, my name is Tim Devlin, legislative counsel. And let me just adjust everything so

[Cameron Wood (Office of Legislative Counsel)]: we can see everything as light as possible. There you go.

[Tim Devlin (Legislative Counsel)]: So we have three instances of amendment in the Professional Regulation Bill five eighty eight being offered the committee amendment by this committee. The first two are more substantive, and the last one really just gets to effective dates. These amendments all occur in the realm of massage therapy. And the first one we have is, let's see, adding a new amendment to a section not yet amended, but it's on the books, and this is 26 BSA, five thousand four twenty five, and this has to do with fees in particular for massage therapists, body workers, touch professionals, etcetera, etcetera. Currently, it states applicants and persons regulated under this chapter shall pay those fees set forth in three VSA one twenty five b. And the committee may recall that's where we have the initial application fee for $90 and then there's renewal fees as well. We'll get to that statute. It's actually amended here as well. We'll get to that in a bit. We add sorry, not we. Committee is proposing to add to this amendment a new subdivision B, which will read an establishment where the practice of massage or the practice of bodywork is provided by only two massage therapists, bodywork and touch professionals shall pay reduced fees set forth in three VSA 125 B. Again, we'll get that to that in the second instance of the memo right here. So we'll add committee will add new section 18 a to the bill, which will pose amendment to three VSA 125, titled fees. And this is where we have the litany of fees for all or for many professionals. So B will now read Let me shrink this. There we go. Unless otherwise provided by law, the following fees shall apply to all professions regulated by the director in consultation with the advisor appointees under Title 26. Application for registration, dollars 100 except for, and we accept that. D, massage therapist, bodywork or touch professionals, dollars 90. And then E, massage establishment qualifying for reduced fee under 26. BSA section 54, 25b, dollars 50. One quick kind of more or less drafting note. The $90 fee is just being moved on statute. For whatever reason in the past, it was under application for licensure and certification. However, massage therapists are registered, not licensed or certified. This provides some good housekeeping cleanup to hopefully reduce some confusion by practitioners going forward. So the $90 is the same. What is new here is that massage establishments, which again are more than two people, will now have to pay the $50 I believe. Yeah, that's right. Just Language is new to me as well.

[Emilie Kornheiser (Chair)]: Is it Sorry, it's too

[Charles Kimbell (Ranking Member)]: Yes, I misspoke.

[Carolyn Branagan (Member)]: Okay.

[Tim Devlin (Legislative Counsel)]: So an establishment with practice of massage or practice bodywork is provided by only two therapists. She'll pay the reduced fee.

[Emilie Kornheiser (Chair)]: Can I try to summarize and you can

[Tim Devlin (Legislative Counsel)]: see if this

[Emilie Kornheiser (Chair)]: is what it actually says? Is that okay?

[James Masland (Member)]: Sorry, yeah, go ahead. Yeah.

[Emilie Kornheiser (Chair)]: Okay, so if there's one therapist that runs a

[Carolyn Branagan (Member)]: Soap person? Nope, is that the

[Emilie Kornheiser (Chair)]: word I'm looking for? Establishment on their own, they pay no fee. They're just registering as massage therapists. If two massage therapists run an establishment together, they both pay a fee to register as massage therapists, and then their establishment has a reduced fee of $50 And then if an establishment has three or more massage therapists, that establishment pays the regular new fee that was created.

[Carolyn Branagan (Member)]: Yes. Great. Thank you. Is

[Emilie Kornheiser (Chair)]: that what that says?

[Carolyn Branagan (Member)]: Yes. Great.

[Tim Devlin (Legislative Counsel)]: Let's see. Freezing up my way.

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

[Emilie Kornheiser (Chair)]: And then you move something to a better place, a better little home for it. Exactly. But didn't change anything.

[Tim Devlin (Legislative Counsel)]: And then we have, let's see, biannual renewal, $275,000,000 except for Saj establishment for reduced fee under two, which again is establishment of two people at $75 So, similar parallel reduction for renewal as we see in application. And then third has to do with the effective dates. And basically, this will just modify the underlying strike all amendments section where it has sections that will take effect on passage to include this language as well. Thank you. That's it. Any questions?

[Charles Kimbell (Ranking Member)]: Just Or just to make sure. So the first time the establishment registers this tour fewer, it's $50 and every two years is then $70 to renew the registration for that establishment.

[Tim Devlin (Legislative Counsel)]: 75, yes. 75, thank you. Off by $5.

[Emilie Kornheiser (Chair)]: And that's something that we started about four years ago, by calling it the early bird special or something.

[Charles Kimbell (Ranking Member)]: Bringing test. Bring people into compliance.

[Carolyn Branagan (Member)]: Indeed. Represent Branagan. Are we trying to discourage the larger massage?

[Emilie Kornheiser (Chair)]: No, I think that we're trying to address the concerns that the Massage Therapist Association brought to us yesterday, that a very small practice is essentially already paying individual fees and doesn't make sense for them to pay an establishment fee, since mostly the goal of the overarching work was to have larger establishments that aren't necessarily owned by massage therapists to be paying the fee. We can hear from OPR who helps draft that as helpful. They're right behind us. I'm going to ask them anyway. Do we have any other questions for Tim?

[Carolyn Branagan (Member)]: Great, thank you.

[Cameron Wood (Office of Legislative Counsel)]: Thank you.

[Carolyn Branagan (Member)]: Will you

[Emilie Kornheiser (Chair)]: hang out for five more minutes?

[John Gray (Office of Legislative Counsel)]: Yes. Cool, thanks.

[Emilie Kornheiser (Chair)]: Will you just join us for one second? Thank you. Since you're here.

[Jennifer Colon (Director, Office of Professional Regulation)]: Hello again, since I came today. Jennifer Colon, director of the Office of Professional Regulation. Thanks for having us back. So yes, we did kind of work on some draft bill language to address the concerns we heard yesterday. The massage therapy bodyworker touch professional profession is a very expensive profession for the Office of Professional Regulation to regulate. It's very expensive because of the enforcement costs. So we have kind of a disproportionate enforcement cost in this profession because we get a lot of complaints. And so one of the things that we were grappling with yesterday and trying to come up with an alternative or variance from the standard fee was essentially, we're kind of this program is likely already running at a deficit and we didn't want to, you know, kind of bet against ourselves with establishments of three or more because those are going to be the bigger, you know, those are going to be potentially resorts or, you know, establishments that aren't owned by a massage therapist. So we were trying to address the very specific concern of very small establishments of two people. Because like the chair said, if it's one person, they do not have to register the establishment. They are exempt.

[Emilie Kornheiser (Chair)]: And so this language that we're looking at matches what you offered and your office is Absolutely.

[Jennifer Colon (Director, Office of Professional Regulation)]: We support this. Thank you so much. Thank you very much. Okay. Any questions? No.

[Emilie Kornheiser (Chair)]: Anyone else have anything they need?

[Charles Kimbell (Ranking Member)]: So I would move that we amend FFH588 according to draft 1.2 as presented.

[Emilie Kornheiser (Chair)]: Thank you. To second that. Thank you so much, Representative Masland. Representative Kimbell moves that we amend H5-eighty eight. Representative Masland seconded. Any discussion of the amendment? Representative Masland.

[James Masland (Member)]: Just I appreciate, pledge counsel's explanation for why we're doing what we're doing. Great. It all makes good sense.

[Carolyn Branagan (Member)]: Thank you. It's a

[Charles Kimbell (Ranking Member)]: nice catch to catch in registration versus licensure. So that was

[Cameron Wood (Office of Legislative Counsel)]: really a great catch. Mhmm.

[Emilie Kornheiser (Chair)]: I love when there's a little bit of housekeeping mixed into an amendment. Always feels like we I don't know. We're doing a public service. Okay. Seeing no other discussion, the court please call the roll. Representative Branagan is. Yes.

[Bridget Burkhardt (Clerk)]: Vote yes as representative Burkhardt. Representative Higley is absent. Representative Holcombe? Yes. Representative Kimbell?

[Cameron Wood (Office of Legislative Counsel)]: Yes.

[Bridget Burkhardt (Clerk)]: Representative Masland? Representative Ode is absent. Representative Page?

[Woodman Page (Member)]: Yes.

[Bridget Burkhardt (Clerk)]: Representative Waszazak? Yes. Representative Canfield? Yes. And Representative Kornheiser?

[Emilie Kornheiser (Chair)]: Yes. Thank

[Bridget Burkhardt (Clerk)]: you. We have voted the amendment favorable, nine-zero-two.

[Charles Kimbell (Ranking Member)]: Madam Chair, I would move that we find Five-eight-eight as amended favorable.

[Carolyn Branagan (Member)]: Thank you.

[Emilie Kornheiser (Chair)]: Second. Representative Kimbell finds that we find 588 favorable as amended. Representative Waszazak seconded, though I think Representative Branagan wanted to.

[Carolyn Branagan (Member)]: Any discussion? Like ten more seconds.

[Emilie Kornheiser (Chair)]: Any further discussion? Seeing none, if the clerk could please call the roll.

[Bridget Burkhardt (Clerk)]: Representative Branagan? Yes. I'll vote yes. Is Representative Burkhardt? Representative Higley is absent. Representative Holcombe? Yes. Representative Kimbell? Yes. Representative Masland?

[Cameron Wood (Office of Legislative Counsel)]: Yes.

[Bridget Burkhardt (Clerk)]: Representative Ode is absent. Representative Page?

[Charles Kimbell (Ranking Member)]: Yes.

[Bridget Burkhardt (Clerk)]: Representative Waszazak? Yes. Representative Canfield? Yes. Representative Kornheiser? Yes. And we have voted the bill favorable as amended, nine zero two.

[Emilie Kornheiser (Chair)]: Thank you, everyone. Represent Branagan, do have a report?

[Carolyn Branagan (Member)]: Okay. I'd love

[Rebecca Holcombe (Member)]: to hear Thanks.

[Cameron Wood (Office of Legislative Counsel)]: Thank you.

[Carolyn Branagan (Member)]: Do we know where this is going now?

[Emilie Kornheiser (Chair)]: I believe it's going to appropriations.

[Carolyn Branagan (Member)]: It won't be on the floor the other day. That sound

[Emilie Kornheiser (Chair)]: right to you? Oh, appropriations night? Yes? There must be an appropriation in there somewhere, right?

[John Gray (Office of Legislative Counsel)]: I think it was more.

[Rebecca Holcombe (Member)]: We'll figure

[Emilie Kornheiser (Chair)]: it out in a minute, representative Branagan. Sorry about that.

[Carolyn Branagan (Member)]: I just want to know if that Of course, in case Yes.

[James Masland (Member)]: It will be hard work anyway.

[Emilie Kornheiser (Chair)]: I thank

[Carolyn Branagan (Member)]: you everyone.

[Tim Devlin (Legislative Counsel)]: So the

[Emilie Kornheiser (Chair)]: we're still going. Now that yep. We have trigger bills. Question. Now that since Cam is here, I wonder if we could jump to seven seventy five and then do H915 at 11:50. Does that sound Okay to the committee? It does. Great. He doesn't

[Cameron Wood (Office of Legislative Counsel)]: He has the section.

[Emilie Kornheiser (Chair)]: Oh, great. Thanks.

[Rebecca Holcombe (Member)]: Can you tell Mark 11:15?

[Carolyn Branagan (Member)]: Yeah.

[Cameron Wood (Office of Legislative Counsel)]: Good morning. For the record, Wood.

[Emilie Kornheiser (Chair)]: So sorry, Cameron. Was the reporter from the committee expecting to introduce the bill?

[Tim Devlin (Legislative Counsel)]: Not necessarily at this section. Our Holland section is probably

[Cameron Wood (Office of Legislative Counsel)]: Okay. To answer your question.

[Emilie Kornheiser (Chair)]: Okay. Great. So we're just We might not need you, and I'm so glad you're here in case we do. Thank you. Okay.

[Cameron Wood (Office of Legislative Counsel)]: All right. Good morning. Cameron Wood, Office of Legislative Counsel. That piece of technology doesn't want to work right now, so I apologize. I'm going to walk through this bill with you.

[Emilie Kornheiser (Chair)]: Would you like Sorsha to share her screen?

[Cameron Wood (Office of Legislative Counsel)]: If you can, and would like to. I'm not sure this committee. This is twice in a row where I sit down in a chair and I have issues.

[Tim Devlin (Legislative Counsel)]: Yeah, sure. If you have it,

[Cameron Wood (Office of Legislative Counsel)]: I want to figure out.

[John Gray (Office of Legislative Counsel)]: Need to hop in the queue.

[Emilie Kornheiser (Chair)]: You have twenty minutes if you want them. Sorry. One fifteen.

[Cameron Wood (Office of Legislative Counsel)]: Yeah. Let me I'll

[Emilie Kornheiser (Chair)]: come up with you if

[John Gray (Office of Legislative Counsel)]: you want All ready to

[Rebecca Holcombe (Member)]: come. Okay. Yep. While

[Cameron Wood (Office of Legislative Counsel)]: this is eventually coming up. Okay, so we're looking at $7.75, an act related to creating tools for housing production. This is the recommended amendment coming out of the House General and Housing Committee, which was a strike all amendment. The first section is related to special assessment bonds, and I'm not gonna walk through that because that would be the section that should be covered by my colleague, John Gray. So I'll I'll leave him the pleasure of walking through that. I'm going to start with section two, which is the reader assistance heading is listing this as the Vermont Housing Special Fund. Because what this is doing is it's amending the statutory section related to giving the treasurer the statutory authority to create a credit facility of up to 10% of the state's average cash on hand. That's current statute. So the state has average cash on hand. The state treasurer's office can take up to 10 of that amount and then invest it in things that the state treasurer deems prudent to invest those monies in, subject to the statutory Uniform Prudent Investor Act. Other than that, there's no limitation really on what the treasurer's office can invest it in. So it doesn't that those monies do not solely have to be invested in housing, for example. It can be invested in other economic development investments. In statute, the only thing it does say is that the treasurer may invest those monies in infrastructure projects for mobile home parks. Actually, it's the only thing called out in statute specifically. Thank you, sir. Okay. Laptops. Here we go. Okay. So this is the section I was just referring to. So notwithstanding the 32 b s a four thirty three a, which has a few limitations limitations on on what what the the state treasurer can invest the state monies in and consistent with the Uniform Prudent Investor Act. Like I mentioned, the state treasurer has the authority. This first that first piece is just cleanup. You can see I'm striking some language here on line four through six, and we're just moving it up into the top of this so it applies to all of these subdivisions. So that's more of just statutory construction change. What's the substance here? The this credit facility currently exists. As I said, treasurer can use up to 10% of the state's cash balance. The proposal here is to increase that amount to 12 and a half percent. So going from 10 to 12. And from there, in the sub b, it also authorizes the state treasurer to create a separate credit facility of up to 1% of the state's average cash balance. And then in the sub two, it states that those funds may only, starting on lines 12 here, only use to facilitate housing development through the bulk purchasing of off-site constructed housing or to aid in the purchase of off-site constructed housing units. So the 12 and a half percent isn't limited. It's not even limited to just housing. This new 1% that is gonna be here in the sub b is limited solely to old purchasing of off-site construction or aid in the purchase of off-site constructed housing units. And if the treasurer creates this 1% credit facility or up to 1% credit facility, they have to equally deduct the same amount from the 12%.

[Emilie Kornheiser (Chair)]: Oh, so it's not 13%?

[Rebecca Holcombe (Member)]: Yes, ma'am.

[Cameron Wood (Office of Legislative Counsel)]: The goal was not to go to 13.5%. It was to remain at 12.5%. Anything that's created into one equally deducted from the 12.5%.

[Emilie Kornheiser (Chair)]: But it's just a may and not a shall? Can we create the second one?

[Cameron Wood (Office of Legislative Counsel)]: It is the

[Emilie Kornheiser (Chair)]: It's giving them the authority, but not them.

[Cameron Wood (Office of Legislative Counsel)]: It's the state treasurer had shall have the authority the authority. They're not required to they're not required to use the authority if they choose not to. They the individual. And then as I said, the credit facility is created here in the b, but then you see the reduction here on this line in ten and twelve nine and ten. Excuse me. They shall be reduced by an equal amount to the amount established there. Okay? Then in sub three, financial losses of the credit facilities established in that subdivision. Sir.

[Charles Kimbell (Ranking Member)]: So the

[Cameron Wood (Office of Legislative Counsel)]: two is saying that Yeah. It's with a subdivision. So the 12 and a half is not limited on what this treasurer can use, and what the two is intended to be there is to say for that 1%, you can only use it for this purpose. And so then the three is financial losses of that 1% credit facility shall be repaid from the Vermont Housing Special Fund, which established in a new section 12. You may be saying, what is the Vermont Housing Special Fund?

[Emilie Kornheiser (Chair)]: We're gonna

[Rebecca Holcombe (Member)]: have to wait

[Emilie Kornheiser (Chair)]: until section 12 to find out.

[Cameron Wood (Office of Legislative Counsel)]: You're gonna have to wait until a few pages down to find out. Okay. Okay. So the the rest of this is somewhat clean up. The sub d, the sub c. I will just pause on subsection c for your awareness. Separate and apart from what we were just talking about, the treasurer already has a statutory authority to create, it's on lines five here moving from five to six, create a credit facility of two and a half percent of the state's average cash, or go to lines ten and eleven, financing for climate infrastructure and resilience projects. You have the 10%, and you have a two and a half percent. Those are the things that currently exist. And two and

[Emilie Kornheiser (Chair)]: a half percent is part of the 10%?

[Cameron Wood (Office of Legislative Counsel)]: No, ma'am. Separate.

[Emilie Kornheiser (Chair)]: And a half percent.

[Cameron Wood (Office of Legislative Counsel)]: Currently, the total amount is 12 and a half. They're adding another two and a half. So if this were to pass as it's drafted, the total amount would go to 15.

[Emilie Kornheiser (Chair)]: Thank you.

[Cameron Wood (Office of Legislative Counsel)]: This in subsea is limited to these climate resilient projects.

[Carolyn Branagan (Member)]: Thanks.

[Cameron Wood (Office of Legislative Counsel)]: Excuse me, climate infrastructure and resilience projects. That's important because we get to page five, this new subsection E.

[Emilie Kornheiser (Chair)]: We didn't have to wait that long after all.

[Cameron Wood (Office of Legislative Counsel)]: Subsection E, which says that the loans that the state treasurer says that interest on the loans that the state treasurer receives from these credit facilities, all of them, so including the 10%, including the proposed new 1% for off-site housing, and including interest for those climate projects, All of the interest on the loans goes into this Vermont Housing Special Fund.

[Emilie Kornheiser (Chair)]: That currently goes to the general fund?

[Cameron Wood (Office of Legislative Counsel)]: That currently goes to the general fund. Yes, ma'am. So that's the

[John Gray (Office of Legislative Counsel)]: I can't find it now.

[James Masland (Member)]: The part about the climate resilience. Yes, sir. That already exists. Right? That's Yes, sir.

[John Gray (Office of Legislative Counsel)]: Testing law. Yes, sir.

[Cameron Wood (Office of Legislative Counsel)]: And so what this e is doing is exactly, madam chair, what you said, interest on all of these loans currently goes to the general fund. Sub e is saying we're gonna capture that and put it in this new Vermont Housing Special Fund. Most of the language in this new section 12 for this special fund is boilerplate. The fund consists of monies appropriated, monies transferred, interest paid, etcetera. The key provision to hone in on starts with this c one on line 15, which says that the treasurer shall use funds under this section, so the interest, to provide capital for housing projects in Vermont that, in the treasurer's discretion, are necessary to promote the increased availability of housing, including the bulk purchasing of off-site constructive housing. So the interest is only available for provide capital for housing projects. It doesn't have to be off-site constructive housing projects, but it can include that.

[Emilie Kornheiser (Chair)]: And this is not that the fund would be used to purchase the houses, the off-site constructed houses, but that the fund would be used to lend to a private something who would buy the off-site houses? Or is the treasurer buying the off-site It

[Cameron Wood (Office of Legislative Counsel)]: says that the treasurer could be the one doing the bulk purchasing.

[Rebecca Holcombe (Member)]: Okay. And

[Charles Kimbell (Ranking Member)]: in that last sentence, including in the form of grants, industry loans, or investment of equity stakes in housing projects. Yes, sir. So the state would be owning an interest in

[Cameron Wood (Office of Legislative Counsel)]: those housing projects. Great. Yes, sir.

[Carolyn Branagan (Member)]: One. President Holcombe? And this

[Rebecca Holcombe (Member)]: is kind of refigured on an annual basis based on current year's cash balance?

[Cameron Wood (Office of Legislative Counsel)]: I believe so. Yes, ma'am. I would I would direct that question to the treasurer's office as far as how they do some sort of rolling calculation of of what that balance is and the cash that they're the amounts that they're able

[Emilie Kornheiser (Chair)]: And they are inside the computer.

[Cameron Wood (Office of Legislative Counsel)]: Last comment I'll make here before I move to the next page or I guess really quickly, I'll just say that on the next page, the treasurer can use these interest cost to pay for the administrative costs supporting the credit facilities. That would be new language. One additional point to highlight, these interest dollars are not similarly the the application of the uniform investments I wanna make sure I'm getting the language right here. Yes. There we go. The Uniform Prudent Investor Act does not apply to these interest funds. So the treasurer would have more authority leeway to be less, or kind of, more speculative, if you will, with the interest dollars.

[Emilie Kornheiser (Chair)]: Is that a purposeful drafting trace?

[Cameron Wood (Office of Legislative Counsel)]: Yes. It was.

[Bridget Burkhardt (Clerk)]: Sorry. Go ahead.

[Cameron Wood (Office of Legislative Counsel)]: I was just gonna say not purposeful on my part.

[Carolyn Branagan (Member)]: Yeah. Yeah.

[Cameron Wood (Office of Legislative Counsel)]: It was intended to do Yes, ma'am.

[Bridget Burkhardt (Clerk)]: And the same thing, and

[Rebecca Holcombe (Member)]: I know this isn't your legislation, but is the intent to make cost or is the intent to make cost inflation in this given year? I mean, understand how the financing to the revolving fund works, and I think this is a great idea, but I'm just wondering what this does to get funding fiscal middle of the Okay.

[Emilie Kornheiser (Chair)]: And then we will also we have the treasurer here to answer questions. It's treasurer's office here to

[John Gray (Office of Legislative Counsel)]: answer questions. Representative Page. Yes. Could you explain more about bulk purchasing, what that

[Cameron Wood (Office of Legislative Counsel)]: really entails? Is that the first time that our state government has been involved in something of that nature? I will defer that question to treasurer's office. I don't know to what extent they have investigated the possibility of doing this previously. But, you know, I think the the broadest sense of the concept is you have certain manufacturers who manufacture homes. And the thought here is to try to leverage these funds to be able to both purchase those off-site manufactured housing to try to get better rates for developers in Vermont then be able to utilize those and help drive down the cost of housing. Whether the state has gone through this previously or investigated use of funds like this, I'm not sure.

[Emilie Kornheiser (Chair)]: There's a message. I

[James Masland (Member)]: may be saying what you're saying, and somebody correct me, but I think, you know, when we buy things in bulk, it's always less expensive than trying to buy one of these units one at a time.

[Cameron Wood (Office of Legislative Counsel)]: It can be, yes, sir.

[Carolyn Branagan (Member)]: Thank you.

[Cameron Wood (Office of Legislative Counsel)]: Just wanna clarify, how is this as opposed with paper and pens and things

[James Masland (Member)]: like that?

[Emilie Kornheiser (Chair)]: And I think the treasurer can answer these treasurer's office can try to answer these questions.

[Carolyn Branagan (Member)]: Would encourage you to ask

[Rebecca Holcombe (Member)]: Canfield for the report on this, because I think I think it's their sort of pre purchasing, the state, I think it only takes that 10% total cost upfront and then they transfer ownership before they actually own homes. It's about stabilizing the market.

[John Gray (Office of Legislative Counsel)]: Reperturbation is familiar.

[Emilie Kornheiser (Chair)]: I'm going to also encourage us to hold that and just make sure we get through all the language of the basics of the bill. I'm not thinking we're voting on this one today. Do you?

[Cameron Wood (Office of Legislative Counsel)]: So I'm going to bring you back to page six, section four, moving away from the treasurers and the credit facilities into a pilot program. So this is an off-site construction accelerator pilot. This would be administered by the agency of commerce community development in collaboration with the Department of Buildings and General Services. We develop a pilot demonstration project and study that explores the possibilities of reducing housing development costs through modular construction. That's in the sub a. The pilot focuses on these following elements, bulk purchasing of single development or aggregation of multiple a bulk purchasing for a single development or an aggregation of multiple developments of housing, streamlining regulatory processes and creating modular designs, creating a loan loss reserve, section subdivision 4 here, off-site construction, including panelized or volumetric modular construction, statewide procurement consortium, local permitting and state alignments, and creation and adoption of off-site building codes.

[Emilie Kornheiser (Chair)]: President Masland.

[James Masland (Member)]: Yeah, thank you. I don't recall seeing loan loss reserves in front of us before, but it may just say and countered it, but is it something we often do in the trades through the treasurer's office?

[Cameron Wood (Office of Legislative Counsel)]: I would defer that question to the treasurer. Okay. Thank you. Yes, sir. So as part of this pilot project, the agency of commerce has to work with the state treasurer to identify the feasibility of providing this guarantee or other device to facilitate bulk purchasing. So my understanding of how this works is you're giving the treasurer the authority under these credit facilities to do this bulk purchasing, and then this is intended to be a pilot program to then see how that actually carries out in reality. Prior to distributing funds for gold purchasing, the treasurer has to consult with DHCD, Vermont State Housing Authority, BHFA, and the Vermont Housing Conservation Board. The treasurer already does consult with the local investment advisory committee when they're determining what to use those credit facility funds for. So this would be an additional consultation with just this pilot program. Pilots shall occur in one or more municipalities willing to participate in the regulatory reforms necessary to implement. The municipalities would be eligible for a municipal planning grant under sub e. And then sub f has a report due in 02/15/2028, written report to certain committees in the legislature about outcomes of the pilot. And then the report shall include information on whether to enact a statewide building code or codes for off-site construction. Next section is VHIP. I could be, pretty pretty quick on this section. You all know what the VHIP program is. What this would do is it would, allow the Department of Housing Community Development or the entities that distribute the BHIP funds to provide those loans or grants up front prior to the work on the project for rehabilitation. Currently, the landlord has to provide those funds up front, and then they get money throughout the life cycles of the project. So this would allow them to upfront those costs. Next section, section six is for my economic development authority. What this is doing pardon the scroll. It is amending the definition of an eligible facility or an eligible project. So Vida can use its money, its funds, to fund eligible facilities and projects. And within that definition, it's adding after consultation with and with deference to the Vermont Housing Finance Agency, BETA could fund, beginning here, multiunit housing developments of five or more units when requested by and jointly financed with a financing lender, except that the authority, the Vermont Economic Development Authority, shall not finance housing developments that utilize funding issued by the Vermont Housing Finance Agency.

[Emilie Kornheiser (Chair)]: Do you know why or should I wait on that?

[Cameron Wood (Office of Legislative Counsel)]: Why this is being included? Yeah. It was a discussion in the House Commerce Committee last year at a point My understanding is Vida is primarily there providing funding for economic development initiatives, of the sister entity to the Vermont Housing Finance Agency. You all did add in a few years ago the ability for Vida to finance long term care facilities. And my understanding is this has been a request of the Economic Development Authority to add additional finance capacity for development of housing.

[Emilie Kornheiser (Chair)]: Oh, I'm sorry. That part makes sense. I'm wondering why it can't be a

[Cameron Wood (Office of Legislative Counsel)]: project that is also being Financed by Yes. The My Owns Your Finance Agency. My apologies. I didn't have my question. That was specifically requested by DHFA. So I've heard of them as to why they have a concern there. Next section seven is about municipal plans. So within municipal plans, there are certain housing elements within those municipal plans. And what this section is saying is a municipality shall include within the housing element of the municipal plan and identification along lines 20 and and moving forward, an identification and analysis of existing and projected housing needs for the projected population, including housing needs for individuals with disability, and provide regulations that allow for the rehabilitation improvement or development of the number of housing units needed as identified in the land use plan. So if you have a municipal plan, your housing element needs to do that identification and analysis. Or sub two, if the municipality cannot meet the regional housing targets that are developed in the statewide housing needs assessment that's published by the Department of Housing and Community Development, then the municipality shall, starting here, provide to the Department of Housing and Community Development an analysis of regulatory and physical constraints preventing them from developing sufficient housing to meet those housing targets. So you're either going to provide more information in your municipal plan about how you're gonna meet those housing targets. And if you can't meet those housing targets, you're going to provide DHCD and analysis of what are the barriers that are preventing you from doing so. There's a lot of, you know, additional information that would have to be included in that information. So a quantification of your existing and projected needed housing types, an inventory of sites that are available, an analysis of any constraints to housing development, detailed description of what actions the jurisdiction is going to take. There's quite a lot there that a municipal a municipality would have to do if they're not going to include the information on how they're gonna meet their housing targets in their housing element of their municipal plan.

[Carolyn Branagan (Member)]: This is is this just for folks trying to participate in any of the above programs, or is

[Cameron Wood (Office of Legislative Counsel)]: this just the blanket requirement? This would be a blanket requirement of a municipality if a municipality has a municipal plan.

[Emilie Kornheiser (Chair)]: Have The municipality has a municipal plan.

[Cameron Wood (Office of Legislative Counsel)]: My understanding is not every municipality has a municipal plan.

[Emilie Kornheiser (Chair)]: They don't have to have a municipal plan. Correct.

[Cameron Wood (Office of Legislative Counsel)]: That is my understanding.

[Emilie Kornheiser (Chair)]: Thank you.

[Rebecca Holcombe (Member)]: Can I ask a question presumably committee?

[Emilie Kornheiser (Chair)]: No, let's wait for that. But you can write it down because they're all good questions to ask.

[Cameron Wood (Office of Legislative Counsel)]: BMSC is just saying that the housing element of the plan can incorporate other information and policies that have been identified by other plans adopted by the governing body or by the statewide housing needs assessment. So if there's some work that's already been done, you can kind of incorporate that by reference. And then the amount and detail provided doesn't prohibit the legislative body from going above and beyond what is required in the language here as an associate. And then there's two new positions within the Board of Housing and Community Development. The entire act takes effect 07/01/2026. And I will remind you, we skipped section one. Some of us were not here on town.

[Emilie Kornheiser (Chair)]: That

[Rebecca Holcombe (Member)]: was fun.

[Emilie Kornheiser (Chair)]: We did rearrange the agenda. Don't know. We actually only started early because you were here at camp.

[Cameron Wood (Office of Legislative Counsel)]: That is true.

[Tim Devlin (Legislative Counsel)]: That is true. That is absolutely nuts.

[Emilie Kornheiser (Chair)]: Don, would you like to share your character with us?

[Tim Devlin (Legislative Counsel)]: I would

[John Gray (Office of Legislative Counsel)]: love to.

[Emilie Kornheiser (Chair)]: You can do it from there while you can see it.

[Cameron Wood (Office of Legislative Counsel)]: Is this good shooter? I can't give you my hand.

[Emilie Kornheiser (Chair)]: I think Ted's having a nice little break over there.

[John Gray (Office of Legislative Counsel)]: Great. Office of Legislative Counsel. I even forgot my Snoopy walking up the camera. You guys have me all sorts of upset. Happy Friday. You too. Special assessment bonds. This is pretty simple stuff. This doesn't disrupt anything about the existing special assessments that already exist in Title 24. Right? So that's a way of apportioning assessments across properties within a municipality and when they're benefited by within this limited area, you assess to essentially fund that public improvement of limited benefit to that area. So this does nothing to disrupt those authorizing statutes that exist. This is solely a financing tool that is meant to make it simpler to do long term financing for those kinds of limited improvements. And the way that it does it, you can think about the problem being, well, we can assess the member properties of that special assessment district. But if they go out to bond and do something like a general obligation bond, they're going to require a vote of the municipality as a whole, which is, of course, larger than just the set of folks who would be receiving that particular benefit. And so this is a tool to simplify the process for bonding that would be backed exclusively by the assessments within that district. And so what you see here is a newly created special assessment bonds, and the key solution to this problem is in the first clause of A. So upon approval of the legislative body of municipality, subject to subsection c, a municipality may issue revant bonds for the purpose of financing a public improvement for the benefit of the limited area to be served by the improvement. So not requiring a vote of the municipality as a whole, it's just approval of the legislative body, so mayors select for the like. Again, just gonna reiterate all the processes that already exist for the special assessments to be imposed in the first place, which may be done by majority vote of the municipality, or if you have universal consent in writing from the member properties, those would still exist. That still has to happen for this bond to be issued. But for the special assessment bonds themselves, you would only need the approval of the legislative body. We'll come to the next section, which speaks to, I think, the big questions everyone's gonna have, which is who is on the hook for this? So, upon approval of the legislative body, muni may issue those revenue bonds. It's issued for an essential and governmental purpose. Subsection b, a revenue bond issued pursuant to this section shall be payable solely and exclusively from the special assessments levied on the properties to be served and shall not constitute general indebtedness of the municipality. No holder of the bond issued under this section shall have the right to compel any exercise of the taxing power of the municipality to pay on the bond. So it's not like a general obligation bond. The only thing backing these bonds is the assessments that are already independently imposed. That's why there isn't the same risk in having just the approval of the legislative body. These kinds of bonds, the holders of these bonds wouldn't be able to propel a tax levy to pay on them. They're solely backed by the assessments.

[Emilie Kornheiser (Chair)]: Fully backed by the special assessments levied Exactly. On these What's the difference between an assessment levied on a property and a tax?

[John Gray (Office of Legislative Counsel)]: In this case, it's just literally the funding that you're doing for this particular improvement, and you're portioning it differently among those member properties, so not a general tax across the full muni. It's just what is assessed for this A

[Emilie Kornheiser (Chair)]: globalized tax.

[John Gray (Office of Legislative Counsel)]: Yes. Yes. I like

[Tim Devlin (Legislative Counsel)]: that. Great.

[Carolyn Branagan (Member)]: Thank you.

[John Gray (Office of Legislative Counsel)]: And there is a last piece to this section. This is really just about marketability. This is not a required piece if you're simply trying to authorize the ability to do this. Like I said, the section just intended to increase the amount of financing tools available, but this was suggested by the Vermont Bond Bank

[James Masland (Member)]: to I

[John Gray (Office of Legislative Counsel)]: think in an attempt to protect public markets. And so they introduced this condition or suggested this condition that the muni may issue a revenue bond only if one or more foreign conditions are met, and there are two alternate conditions. So one is that you receive the municipality receives a commitment letter, so backing the issuance from one of these reputable organizations. So bond bank, a bank that's regulated by one of the major national regulators, so FDIC, commonwealth of the currency, or the Federal Reserve, or if it's a credit union regulated by the National Credit Union Administration. So essentially, getting a commitment letter from a reputable organization is the way to think about this first condition. And then two is, alternatively, maybe you haven't received that commitment letter, if you received a credit rating, but this is at least BBB, which is what's considered investment grade, from one of the nationally recognized statistical ratings organizations. They have an active US public finance practice. Just to spell out what that is, there's actually a list of these kinds of organizations on the SEC's website. So you can think of it as like FISH, Standard and Poor, Moody's, those sorts of things. And if you're wondering about the US public finance practice, the credit ratings agencies have different sectors that they rate. I think it's like five different kinds of sectors or something like this. One of them is municipal public practice. So this is getting the most directly related credit rating that you can get. So these are both protections for the public market. If you can get a commitment letter that backs up the issuance from one of these organizations or if you have a minimum investment grade credit rating from one of the national credit rating agencies. John, you did say it was the municipality.

[Charles Kimbell (Ranking Member)]: So the municipality is still issuing with revenue bond, even though there's a special assessment district that is responsible for the repayment.

[John Gray (Office of Legislative Counsel)]: Yes. But it's only backed by the special assessment. So no one could compel a tax levy on the members of the municipality, like the general public of the municipality.

[Charles Kimbell (Ranking Member)]: That special assessment district had to set up its collection processes in order to qualify for that bond rating? Because at least with the taxing authority, you've got some kind of remedy if somebody doesn't pay the assessment or the tax.

[John Gray (Office of Legislative Counsel)]: I think part of what you're raising is the basic question, who is gonna wanna buy the bonds in the absence of some measure like that? What sort of protection does the bondholder have? They're gonna know that this is in fact by a tax levy. It's gonna be entirely dependent on that stream. So it may be that to enhance or make more attractive to investors, might need to do something. Yep.

[Charles Kimbell (Ranking Member)]: Was there, during the development of the legislation, reference to other states that have this type of setup? Yes.

[John Gray (Office of Legislative Counsel)]: I think it'd be helpful to get the Vermont Bond Bank on this, but definitely reported that there are many states that allow revenue bonds backed by special assessments called special assessment bonds. So maybe worth thinking about if they do other things to increase marketability. I mean, was one of the concerns from the get go is, will people want to buy these? And worst case, they don't, but the tool exists and at least have the authority, and if someone could create a sufficiently attractive issuance, they'd have the authority to do it.

[Emilie Kornheiser (Chair)]: Just wanna make sure I understand the mechanics. The town itself decides it to bond, It goes out, gets whatever one of these verifications are, that they are bondable based on the value and the project

[Cameron Wood (Office of Legislative Counsel)]: for the Special

[Emilie Kornheiser (Chair)]: Assessment District. The legislative body itself, whether it's a council or select board, approves it. Bond goes through and it's paid back through an increase in the levy in the Special Assessment District.

[John Gray (Office of Legislative Counsel)]: It doesn't have to be an increase in the levy, it's just the levy that's done each year to pay for the improvements as would typically be done even in the absence

[Emilie Kornheiser (Chair)]: of the bond. Okay, thank you.

[John Gray (Office of Legislative Counsel)]: But the one thing I would I think generally you described it correctly. The one thing I would note that I've noticed previously is just the timing. If you think about what this is saying, subsection C is a condition for the issuance, and it requires that you have commitment letter for the issuance or an actual credit rating for the issuance itself. The reason I raise this is it just means you're pretty far along at the point that you would know you meet the conditions to issue it. So just to say, you would have to go through a process, it may be a relatively simple process, I don't know, but you have to go through essentially the whole process of producing what would be the bond before you will know that you've met the conditions here to actually issue it. So I think it's essentially the way you described it, but just know that you're not gonna know this final piece in C until far along. Thank you.

[Rebecca Holcombe (Member)]: Is that your whole section?

[John Gray (Office of Legislative Counsel)]: That is my whole section.

[Carolyn Branagan (Member)]: Thank you for being here, Thank you, guys.

[Emilie Kornheiser (Chair)]: Is it okay with books? Could we run into the lunch hour a bit? I'm thinking we'll no?

[Carolyn Branagan (Member)]: Do have idea to do?

[Emilie Kornheiser (Chair)]: Well, we have to decide. We're gonna we need to vote on 09:15, which we could take we could pivot to for three minutes. But who knows how long is what will take? We just spent a long time voting on one bill on the floor. So don't want to predict that. And then, hypothetically, we could hear from the treasurer's office, the League of Cities and Towns, the reporter of the bill, and JFO. That seems like a lot. I feel like maybe that won't fit. So I think what's the best idea is that we vote on the bill, and then we hear from Ted, and then when we get back, we hear from all of the many witnesses that are here.

[Carolyn Branagan (Member)]: -Get back from

[Emilie Kornheiser (Chair)]: the bridge. Lunch break? No, I think we get back from like a whole big break, whole big break.

[Carolyn Branagan (Member)]: So do 09:15 and then finish this after break?

[Emilie Kornheiser (Chair)]: You're from 09:15, Ted, and then finish this after break. I mean, I'm gonna be 09:15 now, and

[Rebecca Holcombe (Member)]: then we're gonna have lunch, because I don't need it. So I need to just know if I

[Tim Devlin (Legislative Counsel)]: need to get

[Emilie Kornheiser (Chair)]: We are going to vote at 09:15, and then we're gonna hear from Ted, and then we will adjourn until two weeks from now, a week from now, at whatever, however you do that mess.

[Rebecca Holcombe (Member)]: I will probably be for Teddy. Okay.

[James Masland (Member)]: We will hear from Teddy on seven seventy five.

[Emilie Kornheiser (Chair)]: That, indeed, yeah. Yes, okay.

[Cameron Wood (Office of Legislative Counsel)]: Up 09:15.

[Rebecca Holcombe (Member)]: Okay,

[Emilie Kornheiser (Chair)]: so. On the topic of 09:15.

[Cameron Wood (Office of Legislative Counsel)]: Madam Chittenden.

[Emilie Kornheiser (Chair)]: Yes. Representative Waszazak.

[Edward "Teddy" Waszazak (Member)]: I moved nine fifteen as favorable?

[Carolyn Branagan (Member)]: Indeed.

[Edward "Teddy" Waszazak (Member)]: Deferring to the ranking member, but he seemed to hesitate.

[Emilie Kornheiser (Chair)]: It's nice to mix it up sometimes. Then I go after Sachin. Thank you. Representative Waszazak, moves that we find, page nine fifteen favorable. Present. Representative Branagan seconds. Any discussion? Seeing none, the court could please file the roll.

[Bridget Burkhardt (Clerk)]: Representative Branagan? Yes. I'll vote yes as Representative Burkhardt. Representative Higley? Yes. Representative Holcombe? Yes. Representative Kimbell?

[Charles Kimbell (Ranking Member)]: Yes.

[Bridget Burkhardt (Clerk)]: Representative Masland? Yes. I see. Representative Ode is absent. Representative Page? No. Representative Waszazak? Yes. Representative Canfield?

[William Canfield (Vice Chair)]: Yes.

[Bridget Burkhardt (Clerk)]: And Representative Kornheiser? Yes. We have voted the bill favorable of nine-one-one. Yep, that math works. Yeah, I

[Emilie Kornheiser (Chair)]: did the math. Good math, yes, thank you. Okay, yep. Ted, can you turn this? Correct. Thank you.

[Deb Barnett (Joint Fiscal Office)]: Deb Barnett, joint fiscal office. Good news is that I will be quite short, recognizing that I am in between y'all and lunch and town meeting week. I was also It's too bad John and Cam left. I was gonna throw shade for being here on time and having a working computer. Okay, great. So I will share my screen. Again, too many windows, but primary impacts on the bill, as you all heard, was through the provision that would allow the treasurer to retain interest on investments in both existing and expanded under the bill credit facilities. In fiscal year twenty seven, this would be reflective primarily of the or almost exclusively of the loans that are currently on the treasurer's books or would be drawn down under the existing facility. But that amount of foregone interest revenue is estimated at 1,200,000 since the year '27. If you all were if this bill were to be enacted, there would be would continue to draw down additional funding through their existing facilities. And they would also be able to make about $30,000,000 in additional loans available to folks. And that $30,000,000, if it is lent out, would no longer be able to be invested on the short term market and earn, the treasurer indicated, about 3.5% in interest. So collectively, the theoretical maximum impact, and this is a few fiscal years in the future, is about $3,000,000 from retaining the existing interest if the credit facilities were to expand at full capacity. That's the maximum impact. I will note that the treasurer emphasized that, a, this would take a few fiscal years for, great, you would have to in the new facility, you would have to identify awardees. They would have to have projects ready to actually draw down loans that are made available to them. So it'd be a few fiscal years. And because of the way they manage money, it's unlikely for all of that capacity to be out at one time. Folks would pay some money back in and it's lent out and they reevaluate the portfolio periodically. That I would say that 3,000,000 is kind of a theoretical maximum. It would be less than that, but we always like to provide you all worst case scenarios in terms of foregone interest income. I will.

[David Scherr (Deputy State Treasurer)]: Two

[Deb Barnett (Joint Fiscal Office)]: tiny pieces. The Off-site Construction Accelerator pilot specifies that municipal planning grant shall be available. For me reading the bill, it wasn't clear the funding sorts for those grants.

[Emilie Kornheiser (Chair)]: Those already exist somewhere.

[Deb Barnett (Joint Fiscal Office)]: They do in the property transfer tax. Tax. So, if it did come out at the amount so I don't know if it would happen through the folks would apply to ACCD, so they may be using existing resources. I don't know if the intention was to make more resources available.

[Emilie Kornheiser (Chair)]: Were the municipal planning grants different than the municipal planning grant? I didn't see it described as a new kind of municipal planning grant.

[Deb Barnett (Joint Fiscal Office)]: Right. I would say, yes, if it is municipal planning grant, I think it wasn't entirely clear that the PTT existing planning grants were the source. And if they are the source, you would have more folks competing for the same pot of resources.

[Cameron Wood (Office of Legislative Counsel)]: Okay. And

[Deb Barnett (Joint Fiscal Office)]: then, yes, there are two positions created, but the build is

[Tim Devlin (Legislative Counsel)]: not included on those two positions.

[Carolyn Branagan (Member)]: Okay, any questions? Yep. So, is this something that a bank can't do? Why is the treasurer doing it? To The treasurer

[Deb Barnett (Joint Fiscal Office)]: and they may have additional context. The treasurer is making very low interest loans compared to existing like, what you would be able to you were to borrow on the commercial market, those interest rates are much higher than what the treasurer is offering. Let's see. Put it somewhere here. Yes. The interest rates through the existing 10% for Vermont program range from 1% to two and a half percent. It's much lower than commercial rates. And it depends on the longer of the loan term or amortization period. So, if the loan period is less than five years, they're paying an interest rate of 1%. And sometimes this funding is kind of used as bridge capital. There's a lot of different uses for it. So the average loan term is about, when thinking through the modeling, 1.5%. So the interest rates are quite low.

[Carolyn Branagan (Member)]: So I feel like putting an exclamation point against my question after my question of, we are undercutting the banks. And so what is the government doing in this work?

[Emilie Kornheiser (Chair)]: I think this is a good question for David Scherer and not for Chittenden. I mean it's a good question.

[Carolyn Branagan (Member)]: Any other questions for Ted? Can I do the $1,200,000 loss? So the sentence says, Retaining the interest for the Vermont Housing Special Fund would result in an estimated 1,200,000.0 loss to the general fund. Do we mean the general fund that we know and love? Or is this another general fund?

[Deb Barnett (Joint Fiscal Office)]: Is indefinite article general fund? Yes. Yep, and it's because under current law, interest income from the treasurer's investments flows to the general fund. And so if the treasurer were to retain that interest, it would be forgone interest income that's available for the general fund. Will, yes.

[Emilie Kornheiser (Chair)]: Same bill they're going to spend some time

[Rebecca Holcombe (Member)]: on. Absolutely.

[Cameron Wood (Office of Legislative Counsel)]: Yep. Chittenden, I'm trying to

[Charles Kimbell (Ranking Member)]: figure out the, I don't know if it was discussed in our committee what the average amortization would be on, because some of it is equity, some of it is loans, right? In the mix that was presented in

[Deb Barnett (Joint Fiscal Office)]: the bill, so any idea of the part that is a credit facility? So in talking with the treasurer, they in running the modeling for this, they were looking at 1.5. For twenty years? So that is reflective of an amortization period of five to ten years. Then 2% is ten to fifteen years, and then fifteen to twenty years and beyond is 2.5%. So, it scales in that way depending on the period. But yes, understanding that when the trader looks at their portfolio using an average rate of 1.5% to be best reflective of the portfolio. That's where they suggested.

[Charles Kimbell (Ranking Member)]: I was just wondering about the use So then, if you're using the funds to purchase a manufactured home, Essentially that's the largest part of the mortgage balance or the repayment of it. So usually that's a twenty five to thirty year repayment. So I don't know how five to ten years works anyway.

[Emilie Kornheiser (Chair)]: I think those are questions for David.

[Deb Barnett (Joint Fiscal Office)]: And I will just definitely, and the one piece of commentary I know that the General and Housing Committee was intending, not necessarily for this money to be out long term to purchase modular housing, it was there to be a backstop and provide Huntington Homes as assurance that they would have, that someone would be responsible for these modular housing. So, yeah, I don't know if it was necessarily intended for the treasurer to hold on to these things long term. But I would defer to the treasurer.

[Rebecca Holcombe (Member)]: Should be for itself. I think it's a principle. It's an interesting concept because this is why we should always think of reduced revenue as a tax expenditure, because we are making appropriations to such a treasury office.

[Emilie Kornheiser (Chair)]: Any other questions for Ted? Can folks hang out for a few more minutes while we ask David some

[Tim Devlin (Legislative Counsel)]: questions? Okay.

[Emilie Kornheiser (Chair)]: And then Samantha is available to talk about special assessment districts, but I feel like we are then pushing too far into lunch and we're gonna pick back up with Samantha either personally one on one over break or when we get back here on Tuesday. Thank you for being there in the Zoom, Samantha. Sorry about that. David, floor doors. Hello.

[David Scherr (Deputy State Treasurer)]: Hi there. Good afternoon. David Shearer, deputy treasurer for the record. I heard a number of different questions. I think it might be most helpful. I don't want, you know, the legislative council and joint fiscal office did a good overview of the bill. I certainly don't wanna redo their good work. I think maybe it's most helpful to answer questions that the committee has, if that makes sense to the chair.

[Emilie Kornheiser (Chair)]: My first question is, do you want to do the things in this does the office want to do the things in this bill and why?

[David Scherr (Deputy State Treasurer)]: Absolutely. We wanna do the things in this bill. We think that these are all good ideas that will help build housing in Vermont, which is a core need and interest of the state treasurer in assisting the 2.5% additional loan capacity under the LIAC statute would allow for, as the Joint Fiscal Office mentioned, about 30,000,000 additional dollars in loan capacity that we'd be able to send out the current LIAC loans. The 10% chunk has gone to support or and will go in the coming year or so to support about 1,700 units of housing. So there's really been significant leverage that's been gained from that loan capacity. And we think that some additional loan capacity will add to that number quite significantly and ways that are meaningful for Vermonters. The additional piece around the like modular construction special fund piece as well as the entrance retention. Again, it gives more tools to get housing out into the community that we think will be valuable. And especially with the housing special fund piece, it will allow for some potentially innovative ways to help finance that market in particular that we identified in the committee on housing and identified as potential opportunities to build housing at very reasonable rates, which is one of the challenges that we face. So that's a very, very brief high level overview, but happy to answer more questions about it.

[Charles Kimbell (Ranking Member)]: David, can you talk about I'm concerned about too much of the fund balance being committed in terms of the prudent principle and looking at how much cash you need to keep on hand? We've had a lot of conversation about reserves for school districts. So by what is your rule of thumb for how much of your cash balance you need to keep on hand that is not otherwise obligated?

[David Scherr (Deputy State Treasurer)]: Yeah, so this obviously the proposal here is to go from 12.5% of the state's average daily cash balance to 15% of the average daily cash balance. We do believe that is still a very prudent and relatively low risk percentage. Although we do project that the total daily cash balance won't be as high as it was a couple of years ago. There is no reason to believe it's going back down to where it was say in the early teens. And we do believe that this is a prudent amount or a prudent percentage amount and that it does not create any significant risk in terms of being able to cover the state's costs on a daily basis, which is fundamentally what that amount of, you know, what that is for, what the daily cash balance is for. So we feel like this is still prudent and safe. You know, if there were to be a proposal to do more than that, that would certainly be another conversation and would require us to do some more thinking, but we still believe, we believe that this amount remains within a prudent and reasonable calculation of risk.

[Charles Kimbell (Ranking Member)]: Well, in the event that the federal government stops sending us the money that they obligated to, which has happened in the past, do you have a contingency for how much money you should have on hand at that point?

[David Scherr (Deputy State Treasurer)]: I mean, we feel that the, you know, this is 15% of the daily cash balance, which is, it could be as much as 150,000,000 is the 15% of 1,500,000,000.0. We still think that the amounts that would remain are well within a safe margin and the additional two and a half percent are not going to create a risk that would cause problems for the state meeting its daily expenditures. It, of course, you know, there there is additional risk in general to the state being able to cover some of its expenses with respect to federal risk. And, you know, that is going to be true regardless of whether this additional two and a half percent is added. We don't believe that this adds risk unreasonably.

[Charles Kimbell (Ranking Member)]: The part of the bill that talks about use potentially equity investment for the treasurer's office. Is that something that you feel is do you do that in any other program right now?

[David Scherr (Deputy State Treasurer)]: The equity investment piece would be specific to that interest retention fund that would the Vermont Housing Special Fund. So that would potentially be a new concept that we would be working on, at least within the LIAC portfolio or sorry, that wouldn't actually really be within the LIAC portfolio. That would be a new function that we'd be permitted to do. And so that would be worked on in conjunction with the housing department. And that is something that would, if we do go down that road, it's not guaranteed that we would, it does obviously give us that option. That would be something that would be a new function for us. It's not guaranteed that that's what the decision we would make. There is some flexibility there in terms of perhaps setting up a loan loss reserve or other or perhaps buying down the total amount of the borrowing costs for a developer. So there's other options that we that are available to us there. But the part of the idea and concept behind that 1% and the, or it's not, sorry, not the 1%, the interest retention piece is to allow for a bit more flexibility that such that we don't have to be thinking as much about the prudent investor rule in the way that we do with the LIAC money, which is of course the state's daily cash balance. This is more of a straightforward appropriation type of expenditure.

[Charles Kimbell (Ranking Member)]: And I guess the only other the question I had was on the underwriting of the special assessment districts and looking at that because how involved do you expect the treasurer's office to be in looking at the ability of special assessment districts to pay back any kind of revenue bonds taken out?

[David Scherr (Deputy State Treasurer)]: So that is a piece, and I apologize, I'll have to get back to you on that. It is not my sense that that was gonna be a big function of our office, But before I give that definitive answer, I think I would like to check-in the office and make sure that I'm not misunderstanding that piece of it.

[John Gray (Office of Legislative Counsel)]: All right.

[Emilie Kornheiser (Chair)]: Thank you. And we'll talk to the bond bank about that in the league as well. David, I am hesitant to ask this because I think states make a variety of decisions, some of them not best practice and some of them best practice. Often, they're saying, What are other states doing? It's not necessarily always a path to understanding the best way to do something. But I am curious about what norms are around the country for how much of a what percentage of funds on hand are invested in this way? Is this something other states are doing?

[David Scherr (Deputy State Treasurer)]: I do believe that we're not the Well, I'm confident we're not the only state with this in statute. I don't believe we're a outlier on that or we're not unique in that. But I don't have at ready at hand what the percent, what common percentages are around the country. So, I'd have to get back to you on that. My apologies.

[Carolyn Branagan (Member)]: Okay. Thank you. Any other questions for

[Emilie Kornheiser (Chair)]: the treasurer's office? Yep. Represent Brennan.

[Carolyn Branagan (Member)]: It's the main question. Oh yeah. Why are we doing this at all? What are banks doing?

[David Scherr (Deputy State Treasurer)]: We're doing this because we can lend at much lower rates and that makes a real concrete difference the financing calculation. It can be the difference between these projects being developed or not being developed. Difference between like a whatever it might be, 5%, 6%, 7% and the one and a half to two and a half percent that we're doing can equal depending on how big the project is, could be thousands of dollars per month on the loan, you know, obligations that they have. And that can be the difference between a project getting built and not getting built. And so that is why we're doing it. We think it's a very, it's a valuable and there's not zero cost to the state, of course, but a relatively low cost way of leveraging the state's money in order to promote housing. And it has a lot of value in terms of creating units.

[Carolyn Branagan (Member)]: Well, there's no doubt we need housing units. The idea of getting a break on the interest you have to pay is attractive, but why is the state doing it? This is public money we're using. Why is it valuable for us to do that? Why not a real lender or a banker?

[David Scherr (Deputy State Treasurer)]: Yeah, I mean, the lenders just aren't able to match the rates that we can provide and the rates that we can provide allow this housing to be built when it otherwise might not be. And so given the extraordinary need for housing that we face in this state, the treasurer has determined that this is an important way to utilize the statutory authority that we have to make these loans. And so it's it's a cost effective way to promote housing that we believe otherwise may not be able to be built without our office float floating these loans.

[Emilie Kornheiser (Chair)]: Guess what I would often represent, Branagan, is I've heard a lot of people describe the situation in housing in Vermont right now as a market failure. And when there's a market failure, there's ways we can change the market with regulation. There's also ways we can change the market with changing the financing. It seems like right now we're trying to do all the things to step in to fix the market failure, and this is one of them.

[Carolyn Branagan (Member)]: I have a lot to say, but I

[Emilie Kornheiser (Chair)]: won't speak slightly. Totally heard. Any other questions for? Comment for Okay. Let's let David finish, then we will all have that conversation. Okay. Thank you so much for joining us. Really appreciate it.

[David Scherr (Deputy State Treasurer)]: You're very welcome. And we'll be happy to be back in the future when the committee discusses it again. Thank you.

[Emilie Kornheiser (Chair)]: Thank you. I think follow-up from this, we're gonna need to hear from the leagues of cities and towns, especially about the assessment districts next time we are here together. I also want to hear from There are a number of downtown organizations that are funded out of their special assessment districts, and I want to make sure that they would be comfortable with sort of this new use for that authority. We have the bond bank questions. Who else needs hearing from?

[Charles Kimbell (Ranking Member)]: Know, housing, the Department of Housing, because they have their eight zero two Homes project, which

[Emilie Kornheiser (Chair)]: Yes, thank you, is very similar.

[Carolyn Branagan (Member)]: Very similar. Okay.

[Cameron Wood (Office of Legislative Counsel)]: Do you need to get it from Regional Poiling Commission?

[Emilie Kornheiser (Chair)]: I don't know. Oh, for those mutual planning grants? Maybe, yeah.

[Carolyn Branagan (Member)]: What? The HFA maybe, I don't feel the need to hear from them.

[Emilie Kornheiser (Chair)]: Think I was the one who was curious. I'll send it to Okay, thank you everyone. Keep me in touch over break if you can and.