Vermont Legislature SmartTranscripts:

[Rep. Emilie Kornheiser (Chair)]: And here we are in ways and means. Good afternoon. It's Wednesday, March 11, 01:15. And we have all committee members here and accounted for. We are picking up H775. We an we we did a walk through on this last week and heard from a few folks and had a few witnesses that we were not able to get to. And then we have an amendment from Cam that we're going to fit in later in testimony when we get him from house judiciary. So if we could start with you, Samantha. Thank you.

[Samantha Sheehan (Vermont League of Cities and Towns)]: For the record, I'm Samantha Sheehan, the municipal policy and advocacy specialist for the Vermont League of Cities and Towns. And we are pleased to support H-seven 75 oh, what happened? And specifically, I would like to talk to you about the special assessment revenue bonds. That's what

[Rep. Emilie Kornheiser (Chair)]: we wanted to talk to you about. So

[Samantha Sheehan (Vermont League of Cities and Towns)]: I'm going to start by talking about special assessment districts,

[Rep. Emilie Kornheiser (Chair)]: which are That would be so appreciated.

[Samantha Sheehan (Vermont League of Cities and Towns)]: I'm also going to tip my gum out because I feel impatient. Special assessment districts are an existing authority of all municipalities if they choose to use them. One existing special assessment district in Vermont, we've definitely been to before. We're in it right now, the Montpelier Downtown Investment District. So that's a good example of how a municipality can use this tool. So a special assessment district functions to allow the municipal corporation to assess fees to a portion of the community in order to provide enhanced public service. And those public services could be sewer. So there might be parts of a town that receive sewer and parts that do not. And they may facilitate assessing those fees through an assessment district. Or it could be services like trash removal, enhanced snow removal, the economic development programming. There's a wide variety. The law does not prescribe what those would be. And this is a Title 24 authority. It's universal. You don't need a charter. You don't need a certain form of local government. It's just something that exists. They have to be created, however, by a townwide vote. So that would typically be done at town meeting day, at the annual meeting of the town. But it could be done by a special meeting or by Australian ballot. And as long as a simple majority of the voters approve with the creation of the district or every single parcel owner that would be assessed agrees in writing. Those are the two ways you can create an assessment district. And you can include or exclude certain property classes. So for Montpelier, it's a good example. When this was first created, I think, around 2014, they only assessed fees against commercial properties in the improvement district. I think a year or maybe two years ago, they also added a fee structure for residential properties. In both cases, in Montpelier, it's a fee assessed by square footage. That's a really common structure. But the way the fees are assessed follow the normal ways municipalities can assess fees. So it can be done through a vote at the town meeting as part of the budget setting process as a ballot question. It can be done by an action of the legislative body. And often, it's done through ordinance. The reason to do that is you can set a fee schedule in ordinance so the fee payers know every year the fee will increase by 3% or whatever. And the town doesn't have to reopen the question or reopen the ordinance on an annual basis in order to adjust the fees. So that's how special assessment districts work now. And they can be hard to pass because they require a vote of the whole municipality, a majority of the whole municipality, in order to assess, first a unique fee on some residents but not all, and to provide a service to some residents but not all. So we do sometimes see these assessment district votes fail, depending on the intent and purpose of them. So what H-seven 75 does is take two existing municipal authorities. One is revenue bonds. The other is special assessment districts. And it creates a new municipal finance authority, which is special assessment district revenue bonds. So what is changing there is that it would allow the municipality to use just the revenue it earns from the district that's already been created to bond and to service the debt of the bond without having to put up the whole full faith and credit of all the general fund, of the whole municipality, which could result in an increase in municipal property tax rates down the line. Whereas if it's just backed by the special assessment district, the thing that could increase over time is the fees paid by those district fee payers. And then here are some resources in the PDF version. You can look through those. I included the organizing article for the Montpelier one if you wanted to see what that looks like when the question goes to voters.

[Rep. Emilie Kornheiser (Chair)]: So in all your scenarios, both under what's happening now and what's changing, it's all infrastructure type things. I feel fairly sure that mine goes to pay for our downtown business organization.

[Samantha Sheehan (Vermont League of Cities and Towns)]: Yeah, that's a common so I wasn't totally mixed up in those two scenarios. Yeah, that's true. So it can be used for infrastructure investment, but they are commonly used especially in the downtown districts for other types of services like economic development, street activation, things like festivals and farmers markets. I worked in Burlington City Hall for three years, and I can tell you it was definitely the first place that was shoveled and sanded because there is a separate snow removal and street maintenance crew that works in the Church Street marketplace. And so they have an enhanced level of street maintenance services that are provided and are paid for by those special assessment fees. But it also pays for things like extra streetlights and repairs to the brick marketplace and hard infrastructure as well. But it can be used for either. So in the vision of H. Seven seventy five you may be thinking, great, what does this have to do with housing? Or why is this a pro housing measure for municipalities to use? And the special assessment bond it would be possible, but very unlikely and Michael can talk to this in probably a more specific way that the special assessment revenue bond would be used as a singular investment. Most types of public infrastructure investments that municipalities must make to enable more housing are going to be quite expensive and maybe not appropriate to socialize against a group of property owners as small as would be in an assessment district. But what those revenues could do is leverage additional money to be drawn down. So the assessment fee so say each parcel owner is paying $1,000 a year in assessment fees, that revenue can be brought to the bond, which captures a larger upfront investment. That bond could be used for grant match. It could be used in combination with SRF. It could be used in combination with other federal investment schemes for different types of infrastructure endeavors or housing projects. And so that's likely how this would be deployed. It would not be to use special assessment fees to bring in $20,000,000 for a wastewater plant. It would be to bring in the necessary grant match to complete the funding stack for the wastewater plant. And I think this is maybe not the intent of the committee that brought this forward, but we definitely see an immediate application for certain types of compliance projects. Notably, the three acre rule is something that municipalities have really struggled to support private homeowners in complying with. And this opens up, I think, an important opportunity for communities like Milton, Richmond, Morrisville, where you have a group of neighbors facing a significant cost of compliance to state regulation, and the municipality could help facilitate them through that with the new revenue bond authority without burdening the rest of the town. So that's all I had about that. And Representative Kimbell had also asked me to be prepared to answer.

[Rep. Emilie Kornheiser (Chair)]: Before we move to the next thing. Yeah.

[Rep. Woodman Page]: Can you explain the three rule for

[Samantha Sheehan (Vermont League of Cities and Towns)]: The three acre rule is a stormwater regulation that was adopted several years ago by the state of Vermont. It applies to already developed lands. In some cases, these include homes. And it basically says, if you have more acres of impervious surface, you must comply. And so there are some situations where you have neighborhoods where some or all or just a few of the houses in the neighborhood are subject to the regulations, but it's not the whole town or the whole neighborhood. And so there are few to no options to pay for that together.

[Rep. James Masland]: Yeah, thank you. Proposal you're outlining, what is I see it, expanded potential source for paying off the bond and therefore it may be able to pay the bond off more rapidly. Yes.

[Rep. Emilie Kornheiser (Chair)]: Possibly. Yeah.

[Rep. James Masland]: Which would be beneficial all in all for education fund and stuff like that. Thank you.

[Samantha Sheehan (Vermont League of Cities and Towns)]: Yeah. And this is not a it's not a tax. So it's no diversion of regular revenue sources available to either Yeah. The municipality or the What was the other thing I was speaking of?

[Rep. Woodman Page]: Small

[Samantha Sheehan (Vermont League of Cities and Towns)]: town minimums for grandma's maintenance.

[Rep. Emilie Kornheiser (Chair)]: Oh, woah. Really, shifting gears for moments. Okay, cool. Let's do it. Okay. So just to make sure I imagine everyone's tracking. Maybe people at home aren't tracking. I'll just say, this is totally about a different bill that we needed to hear from you all on. So this is about a regional assessment district. Yeah.

[Samantha Sheehan (Vermont League of Cities and Towns)]: And thank you for letting me slip in a two in one during crossover weeks. Thank you for asking, Bridget. So last we spoke about the Regional Assessment District bill before crossover. I had testified in favor of creating a small town minimum payment of something in the range of $7,500 to $10,000 for the annual brandless maintenance. So this is for the regular daily, weekly work of listers and boards of listers that happens outside of mass reappraisal or through the future regional assessment process. And I think what's in the newest draft of the bill is $8.5 per parcel without the equalization payment, which is currently $1 per parcel. And what we know is every town manages and pays for this in a different way. And so there's no one rule of what is the annual expense per parcel or per town. But we do have from VLCT's annual salary and benefit surveys some information about the average cost of listers and assessors. And VALA had provided us an estimate of the amount of time or hours per week would be necessary for small town grand lists. And what they said basically is there's a four hour per week practical minimum. So if you have a grant list that's 200 to 1,000 parcels, that's about four hours per week year round in order to maintain the grant list effectively, whether you have an elected lister or an appointed assessor that's contracted. And then looking at average costs for the CAMA, for the computers, for tax mapping services, etcetera, we would put that at a range of 4,000 to $8,000 for the fixed non personnel costs. And then actually, while I was waiting to testify just before the break, I was sitting in my home office with my Hancock annual town report for town meeting day. And we are actually about to go into townwide reappraisal this August for the first time since 2008. And we are a super small town. We have two twenty spans and 147 residential units of housing on our green list. So I thought this might be a fun example so you can see how this plays out in real life. Handcuff And I think this is

[Rep. Emilie Kornheiser (Chair)]: a really helpful exercise. I just want to name that the $850 and the minimum we were talking about was actually just for grand less maintenance, not to save up for the reappraisal. Right. Okay, great. Obviously, reappraisal is more expensive if grand less maintenance doesn't happen. Exactly.

[Samantha Sheehan (Vermont League of Cities and Towns)]: So And in Hancock, we have not paid for reappraisal since 2008. So all the annual payments have gone into the reappraisal fund, which, as of the end of the last fiscal year, was $33,000 So you can see that it takes quite a long time to raise up that money. So in Hancock, we have an appointed assessor. And I looked back at several years of costs, and that ranged basically 5,000 to $8,000 is what the town paid annually for annual grand less maintenance from professional assessor, again, for two twenty spans. I think Hancock's the eleventh smallest town. So it was encroaching on 8,000 for this fiscal year. And then we went out to bid, and we expect this and I asked at town meeting, and the select board confirmed that the contract we got for the new reappraisal is with our current contracted assessor, and it will be less than the $33,000 in the reserve fund.

[Rep. Charles Kimbell (Ranking Member)]: So your annual cost, 57,000 to $88,000 does that include the Canvas

[Samantha Sheehan (Vermont League of Cities and Towns)]: software? So we don't

[Rep. Charles Kimbell (Ranking Member)]: Because the assessor got the money out, contracted out, so they have their own software.

[Samantha Sheehan (Vermont League of Cities and Towns)]: Yeah. So we do pay for tax mapping and then bulk payment I don't know an all inclusive payment to the assessor. So we pay for tax mapping and the assessor cost, and the range is 5,000 to $8,000 per year. And then, again, if we had 400,800 thousand dollars you could reasonably double that. So it would be more in the 10 to $16,000 range. But then, Dallas says that then there's a leveling off when you get above 1,000 parcels in the hours per

[Rep. James Masland]: yeah. Just the last time.

[Rep. Carolyn Branagan]: Thank you so much. You.

[Rep. Emilie Kornheiser (Chair)]: Did anyone have any questions about the first step? Great. Thank you.

[Samantha Sheehan (Vermont League of Cities and Towns)]: Oh, wait. Sorry. Can I say one more thing? I actually went to Valid's meeting today and discussed it or discussed lots of things. But they pointed out so on my slide that I just had up, it showed that the annual interest we reserve annual interest that Hancock earns on the grand list reserve fund, reappraisal reserve fund, is about 400 to $500 So the state makes the per parcel payment. It goes into the reserve fund. It earns interest in the bank account. That's more And we're currently earning more annually in interest than we're getting in the equalization payments by two. So Vala has pointed out that under the proposed reappraisal reimbursement. That would happen after the contract is signed and PVR has your scheduled reappraisal under the six year timeline. So without having annual payments, towns are basically losing that annual interest that they're currently accruing in between mass reappraisal. Just

[Rep. Emilie Kornheiser (Chair)]: wanted They might be to point that accruing to some degree because of mass reappraisal aren't happening as often as. So even if they keep the money and we go to every six year, probably they'll have less interest? Correct.

[Rep. James Masland]: Okay, great. Thank you. Some

[Rep. Charles Kimbell (Ranking Member)]: talents might not be banking it totally

[Rep. Emilie Kornheiser (Chair)]: separately. Many are not.

[Samantha Sheehan (Vermont League of Cities and Towns)]: Many are not. Yeah. And because many are paying it's a regular expense of the general fund, which is why they don't do that.

[Rep. Carolyn Branagan]: Thank you.

[Rep. Emilie Kornheiser (Chair)]: Okay. We're going to put our heads back into $7.75. Michael, do you wanna join us?

[Rep. James Masland]: I'll be taking that.

[Rep. Emilie Kornheiser (Chair)]: Okay, thank you.

[Rep. Carolyn Branagan]: Whatever works for you.

[Michael Gaughan (Executive Director, Vermont Bond Bank)]: Michael Gaughan, Executive Director of Ronn Bodbeck. Nice to see everyone in person, doubleheader today, so I thought I'd show up in person.

[Rep. Carolyn Branagan]: Thank you for that. Nice to see you.

[Rep. James Masland]: Yeah. Would

[Michael Gaughan (Executive Director, Vermont Bond Bank)]: you like me to just give

[Rep. Emilie Kornheiser (Chair)]: perspective Yeah, anything. On Absolutely.

[Michael Gaughan (Executive Director, Vermont Bond Bank)]: I thought it might be worthwhile to start at the beginning of how we even, I think, were responsible for a lot of this bill and where it really came from. If you remember back in time when we had more money than we knew what to do with just a few years ago and had some really great ambitions, specifically with village wastewater systems. We watched that firsthand as the fiscal or the financial administrator of the SRF fund and those loans are in our name. We watched several of those despite large amounts of subsidy not be able to move forward because the local community couldn't leverage that. That's the small amount of capital that needed to be sponsored by the municipality. It became clear to us that the nature of, and in those instances, a lot of the purpose was to support housing and some density and the townwide vote in some instances, not all became sort of like a backdoor form of not in my backyard. And so could we look at, take a national perspective and think about other municipal finance tools that are out there and very commonly used that could be applied to this Vermont situation? So that was really the genesis of this idea a while ago. We sort of had it in the back of our heads. Then as we did a lot of work on or we, I mean, the state has done a lot of work over housing past couple of years became, I think to me, to provide another tool in the toolbox that won't necessarily be the end all be all, but will be very helpful. So there are 39 states and this is the one pager that I sent. It just shows basically special assessment revenue bonds or tax allocation bonds, which are very similar nationally public deals. 39 states have issued those over the last five years, including peer communities like New Hampshire, West Virginia, other small states as well. It's a very, very common tool. The idea is that those that are going to benefit from infrastructure should be those that are on the hook to pay for the debt that is taken out for that infrastructure. And so, the way in which we see this occurring, you'll see what we don't want as a steward of local debt in the state is we don't want a bunch of junk bonds floating around the state and speculative banking on land secured finance. You see some guardrails that we requested be added, where it can be the bond bank, you have to have what is one notch above the lowest investment grade rating, or you have to have obviously, we don't want to exclude the local banking community and credit union community, or you have to have a commitment from them knowing that they're regulated entities and have some underwriting standards. There's some guardrails when and how the debt can be issued. We hope that a lot of it would come through the bond bank. The housing revolving loan fund that we have after last session is a place that we would intend to host some of this debt if this is successful in going forward. It can be used for all sorts of purposes under the special assessment language, but we do see it having a really clear nexus to housing development. So that is where we came from this and why we think it's important.

[Rep. James Masland]: So we want to have this tool, put

[Michael Gaughan (Executive Director, Vermont Bond Bank)]: some guardrails around it so it doesn't get abused, and be good stewards.

[Rep. Emilie Kornheiser (Chair)]: And the guardrails that are in the bill work for you? Yes. Anyone have any questions here?

[Rep. Charles Kimbell (Ranking Member)]: Just the borrower as the municipality?

[Rep. James Masland]: As

[Michael Gaughan (Executive Director, Vermont Bond Bank)]: a special lien, there's some states in which a special district is used. We don't want to create more entities, more units of government in the state. A fire district effectively operates very similarly to this, but we need less units of government, not more. So that's why we want it to be a special lien within the host municipality. And if for some reason, the members of the Special Assessment District don't pay, is it an obligation of the municipality? No. Yeah, your only recourse would be to the special assessments.

[Rep. Charles Kimbell (Ranking Member)]: It's a collection process, like any loan obligations, it's not secured by the real estate under

[Michael Gaughan (Executive Director, Vermont Bond Bank)]: It's a uniform tax bill, so it's on the same nonpayment would be subject to the same abilities of the municipality to have tax lien sales and that kind of thing. So that's very helpful as opposed to say a mortgage, which is like a real estate mortgage. It's second in priority to your tax payment, so it's above that. But there's no obligation of the municipality other than those revenues for repayment. You still have the ability to go back and get your tax money that's due, and so that's why it's such an effective tool. It's like I mean, especially it's under statute, user fees and water systems effectively are like taxes in terms of the powers the municipality has to collect them. So, I mean, what is what is a tax? Know? Thank

[Rep. Carolyn Branagan]: you so much, Michael. Great.

[Rep. Emilie Kornheiser (Chair)]: Thanks, Chittenden. Thank you. We are now gonna move to Cam with the amendment. John, not quite sure why you're here, but I'm glad to see you. Excited. Okay, cool. And then we'll hear from the treasurer's office after that. Let me know if you want to participate. Okay.

[Rep. Woodman Page]: For the record, the Office

[Cameron "Cam" Wood (Office of Legislative Counsel)]: of the Consulate of Counsel. Gonna walk through a proposed amendment to seven seventy five. Last name.

[Rep. Charles Kimbell (Ranking Member)]: Sure. As Cam is presenting, a couple of different things. One is, after looking at the bill and the concern that we had about the interest being reallocated from the local investment advisory committee, the payments on those loans that were made in there that currently go into the general fund, that would be foregone revenue to the general fund. And then so that was a concern that we had, so this amendment will actually take that out. And also the creation of a special fund that is often objected to as creating yet another special fund, so that is not in this as well, so the amendment takes that out. At the same time, the vice chair of House General had some wording regarding the municipal plan for housing and some changes to that section of this particular bill that they would like to see us make after further testimony and input. So that's really the changes we're looking at.

[Rep. Emilie Kornheiser (Chair)]: So one is a ways and means amendment, and the other is we're doing a favor to the other committee so there isn't a floor amendment just because it's a confusing time of year, and it's nice to have fighting back at this.

[Rep. James Masland]: This is a dumb question, but for the record, we're not going put the money in the general fund. It'll go and how will we keep track of

[Rep. Charles Kimbell (Ranking Member)]: it then? So the money does go on the general fund. So the existing path for any revenues that are generated from the local are already going into the general fund. And in conversations with the appropriations committee, they're trying to squeeze the lemon as hard as they can to find money to fund the other areas of government. So it doesn't preclude the appropriation of money from the

[Rep. James Masland]: general fund towards this type of project. Misspoken your explanation is straightforward. Thank you. Sure. Okay.

[Cameron "Cam" Wood (Office of Legislative Counsel)]: As you can see here, we have a proposed amendment to the report of the Committee on General and Housing. There are four instances of amendment. The first three, as was mentioned, are to remove in the bill where the treasurer's office would maintain interest on these loans and then put those into a specific special fund. I can pull the language back up from the bill if you would like, but I won't unless you ask me to. Just, as a quick recollection from the bill, the treasurer's office has the authority currently to take 10% of state's average cash on hand and invest those dollars. They can be invested in housing. Lately, they've been invested in housing. There is a proposal in the underlying report from the general committee to raise that from 10% to 12 and a half percent to then authorize a 1% credit facility. So 1% of the state's average cash on hand to invest in off-site or or purchase purchasing of off-site constructed housing. If they utilize that 1%, it equally reduces the 12.5%. So we're not going to 13.5%, still at 12.5%. All of that's remaining. There was separate language that allowed the treasurer's office to keep the interest on all of the loans from these credit facilities that they have statutory authorization to issue. They would keep all of that interest and put it into a special fund. And then that special fund could be used to I wanna make sure I get the wording right. Promote the increase availability of housing, including the bulk purchasing of off-site constructed housing, could be in the form of grants, interest free loans, equity stakes in housing projects, etcetera. That's what the special fund was for. And so what this proposal is doing is it's just striking each of those individual instances in the sections about the interest. So the treasurer's office will no longer keep the interest. It will go to the general fund, which is where it's currently going now, as was mentioned. So that's the first, second, and third instance of amendment, removing those provisions. And then the fourth instance of amendment, as was mentioned, there is this section seven. So further down in the bill, there are changes to municipal plans. And it requires in the housing elements of a municipal plan for the municipality to identify more information about whether or not municipality can meet its regional housing targets. And the amendment here is a bit of cleanup. Didn't say cleanup, but it is in sub one here, has to include an identification, line 17, identification and analysis of existing and projected housing needs of the jurisdiction. It had originally said the projected housing needs for the population of the jurisdiction. So it's simply removing what one could argue is a bit of just unnecessary language. And then when you get to the next page, there was language in here that said the housing element of the municipal plan had to provide regulations that allow for the improvement of housing to meet those housing targets. There was some concern about you really shouldn't be regulating within the housing element of the municipal plan, and that should be handled through bylaws, etcetera. So that was removed. And then lastly, if the municipality this is in the sub two if the municipality cannot meet its regional housing targets, the municipality has to provide to DHCD, top page two here, an analysis of the constraints preventing them from meeting those targets, that all remains the same. But when you look into the sub A and there previous was sub B, that analysis has to include quantification of the existing and projected housing types. And the language as it initially came out said, including location, age, condition, occupancy, etcetera. So a lot more information. And so the amendment would remove some of that burden from the municipality in the municipal plan. So they would still have to provide a quantification of the housing types. They just don't need to go to that extra step of providing, again, the location, the age, the condition, a lot more of that detail at that point. So that's the proposed amendment in the fourth instance here. And that's it. I just want

[Rep. Charles Kimbell (Ranking Member)]: to add a couple of things. One is we had talked about the level of the 10% versus 12.5%. And I spoke with the treasurer's office about, is that too much? And they really feel comfortable by going up to the 12.5%. And then the question was, well, do you have the staff to do underwriting of loans? And again, they have conduits through whom they make loans into different entities or may contract out for someone to do underwriting. So it's not like they're staffing up an incredible amount of people to be a bank. So that made me feel more comfortable, and I think is a real prudent way to go. So the 12.5% and what they said was the most important to them in this particular element,

[Rep. Emilie Kornheiser (Chair)]: just to add that little context. Can you turn your puppets to that as well? Representative Masland?

[Rep. James Masland]: Yeah, I think, Carolyn, it also represented I'd also endorse support the simplification of the housing plan. Municipalities have a lot to do, and it seems to me what is being removed is stuff that they probably should do anyway. Thank you.

[Rep. Carolyn Branagan]: Thanks.

[Rep. Emilie Kornheiser (Chair)]: Would one of you like to

[Rep. Carolyn Branagan]: Peter, where is yours?

[Peter Trombley (Vermont State Treasurer’s Office)]: Thank you, Madam Chair. For the record, Peter Trombley, state treasurer's office. Would it be most helpful for me to focus on simply answering questions the committee has, seeing as you've seen this bill before?

[Rep. Emilie Kornheiser (Chair)]: I guess the first question I would have is, are our amendments okay with you?

[Rep. James Masland]: Yes.

[Peter Trombley (Vermont State Treasurer’s Office)]: Obviously, we prefer to plug the interest in to our existing program, but I think if we were to move the 10% to 12.5%, that will create about $30,000,000 in new lending that we can do to move housing projects forward. To date, we've helped create or save over 1,700 units of housing. We've also created over a 140 permanent jobs with this program, and we've done it entirely within our existing budget. Happy to be able to do more.

[Rep. Emilie Kornheiser (Chair)]: Awesome. Can you talk a little bit more about sort of the risk calculus that you make?

[Peter Trombley (Vermont State Treasurer’s Office)]: Absolutely. You know, we look at the state's cash as really an investment portfolio. And when you're looking at an investment portfolio with high cash flow needs like the state, I think the absolute maximum we'd be comfortable putting into an illiquid asset would be 20%. If you look at a portfolio like this, 10 to 20% is typically what you see. There are a few parallels elsewhere in state governments. The Illinois Treasurer has a fund that state agencies and local governments can opt into to invest their budgeting cash in between them being appropriated out of funds and them needing to use it. So, that's a fund that is highly liquid funds coming in and out regularly as agencies and government bodies need them, and they only maintain about 50 liquidity. So, under this bill, as you all have amended it, the state would be maintaining 85% liquidity, which we feel is very reasonable.

[Rep. Emilie Kornheiser (Chair)]: Anyone else have any questions? Anything else from the post?

[Peter Trombley (Vermont State Treasurer’s Office)]: I can speak a little bit more to how we do the underwriting, if that would be helpful for members of the committee, but Is

[Rep. Emilie Kornheiser (Chair)]: anyone interested in that other than Representative Kimbell? Okay, great. Yes, please. Thank you.

[Peter Trombley (Vermont State Treasurer’s Office)]: I'll say the Representative Kimbell's explanation is quite correct. So, we do all of our loans through intermediaries. The largest we've partnered with to date is DHFA, doing a lot of housing loans through them. Sometimes those partners are local banks and credit unions as well, and we like doing business with them. We underwrite the loan to that entity, and then they underwrite the loan to the developer, which, as you can imagine, is a much more complicated process. We, of course, look at the underlying financials of the projects that the investment is going to end up in, but we do rely on the underwriting capacity of the intermediary. And often, it's actually the intermediary, the bank or the credit union or the HFA, that's applying to us directly and not the developer. In the few cases where we have needed to do our own underwriting that's beyond our staff's capacity, where we've needed more expertise in housing financing, we've been able to contract with an underwriter and absorb that within our existing contracts budget.

[Rep. Emilie Kornheiser (Chair)]: Was that Masland?

[Rep. James Masland]: It should be a simple question, but when you work with intermediaries and the transaction goes one pile of paper to another, basically, there a cost to that, or is that absorbed within your budget?

[Peter Trombley (Vermont State Treasurer’s Office)]: Cost of us doing the work to underwrite those loans, we simply work that into our existing staff capacity and our operations department.

[Rep. James Masland]: That's the essential answer. Ed, thank you.

[Peter Trombley (Vermont State Treasurer’s Office)]: Absolutely. And those intermediaries, of course, as I think you're all familiar, guarantee us repayment 100%, even if the underlying project fails, which is the other way in which we protect the state's cash.

[Rep. James Masland]: Very good and stuff. Thank you.

[Rep. Emilie Kornheiser (Chair)]: Thank you very much for your time. Really

[Peter Trombley (Vermont State Treasurer’s Office)]: appreciate I'll be hanging around to the conversation later.

[Rep. Emilie Kornheiser (Chair)]: Do folks need anything else on this? Anyone need any more testimony or time?

[Rep. Carolyn Branagan]: Yes? So I don't see where this is the job of the treasurer's office.

[Rep. Emilie Kornheiser (Chair)]: That seems like a good question for the treasurer's office, should they come back and put your? Okay. I just don't want to be

[Rep. James Masland]: the one who answers it.

[Rep. Carolyn Branagan]: I'm really Peter.

[Peter Trombley (Vermont State Treasurer’s Office)]: Great to be back here. Mr. Tromboli? 10 BSA 10, some time ago, established, and I can send you the link as well, established within the treasurer's office the authority to lend at that time up to 10% the state's cash balances, and it said no further restrictions to lend them. And that's what, you know, we do through the traditional LIAC loan program. We lend those funds There are no further restrictions beyond that we follow prudent investor guidelines. We, within that program, have a local investment advisory committee. It's made up of individuals like Michael Gan, the BHFA, VIDA, VSAC, and Efficiency of Vermont, well as the Bond Bank. And together, we craft an investment policy that guides how we make those investments, but there are no further statutory limitations on how we make those investments.

[Rep. Carolyn Branagan]: Where do I get the idea it's 10,000,000?

[Peter Trombley (Vermont State Treasurer’s Office)]: It was 10% originally. When the program was created, I think the state would have had, I'm going to hazard a guess, around 200,000,000 in cash on hand in a typical year. The program was much smaller before the pandemic and the subsequent increase in the state's cash balances. Right now, we're hovering around 1.5. To be conservative, we set our limit at the program to assume the state has $1,200,000,000 in cash. We do that for a couple of reasons. One, that's where we think we'll trend over the long term. Two, that's where we're at if we remove reserves and other restricted forms of cash. So the program has grown substantially, as to say its cash balance has grown substantially. Originally, it was much smaller in scope.

[Rep. Carolyn Branagan]: Can somebody talk to the governor about this?

[Peter Trombley (Vermont State Treasurer’s Office)]: The governor's office is aware of the program. There have been a number of conversations between ourselves and ACCD and DHCD about partnering in terms of where we apply resources. This 1% sub credit facility for off-site construction is really a product of those conversations of the Governor's administration.

[Rep. Carolyn Branagan]: Product of his administration.

[Peter Trombley (Vermont State Treasurer’s Office)]: A product of our conversations with members of his administration, where they have been doing some great work to advance off-site construction, and we have the lending capacities to support that work.

[Rep. Carolyn Branagan]: And you emailed to me, can you tell me their names? Sure.

[Rep. Emilie Kornheiser (Chair)]: Absolutely. I think Charlie had some offline conversations with CH.

[Rep. Charles Kimbell (Ranking Member)]: Yeah, I did, with the Department of Housing. And they are very much in support of this, especially the increase of 12.5% with Commissioner Alex Farrell. So he's probably a very good person to talk to about it.

[Rep. Carolyn Branagan]: Oh, I just want to remind everybody around the table, this is not free money we're talking about. This money belongs somehow to Vermont taxpayers. You need to be careful with what we're doing here. So I'm really reluctant to support this.

[Rep. Emilie Kornheiser (Chair)]: Representative Kimbell has been voicing some private concerns I'm now making public, awkwardly, without checking with him. And so I've also been thinking a lot about protecting the risk of the state. And what I've learned is that this is actually the interest that we're earning on this is bringing in new revenue, and the Treasurer's Office is very careful of that. But the questions that I asked about risk were about being really careful about, at what point would it be too much to lend out that it would be a risk to taxpayers' dollars? And it seems like we're pretty far from that point.

[Rep. Carolyn Branagan]: So it would be more than 12 and a half?

[Rep. Emilie Kornheiser (Chair)]: Yep. You have a point where you'd be like, You wild legislators, no way are we lending out that much.

[Peter Trombley (Vermont State Treasurer’s Office)]: I think if the legislature were to try to give us authority to go above 20%, we would likely not support that growth in our authority.

[Rep. Emilie Kornheiser (Chair)]: And so we are pretty far from that.

[Peter Trombley (Vermont State Treasurer’s Office)]: I think so. Between the climate facility, between this expansion of the credit facility, we're going up to 15. That means 85% of our cash is liquid at any given moment, and we feel that's more than enough for the state to meet its obligations.

[Rep. Emilie Kornheiser (Chair)]: Representative Nelson.

[Rep. James Masland]: Yes, thank you. I appreciate that the questions have been asked about protecting the revenues of the state and that your thought process analysis, I think, has been pretty succinct, I mean, pretty straightforward. And the fact that we're ending up with more revenues from the state and also potentially more money well, actually, more money going out for housing, I think it's adamant. So on balance and without much renovation, I'd say this

[Peter Trombley (Vermont State Treasurer’s Office)]: is good. Appreciate that. And you're quite right, Representative Branagan. This is the taxpayer's money and it is needed for other purposes down the line. That's where our intermediary policy works well, where these intermediaries that we lend through are always guaranteeing us repayment. So, the underlying financial institution would have to fail for the state to ever risk non repayment.

[Rep. Carolyn Branagan]: It will? I mean, can we get it back when we say we want it back this afternoon?

[Peter Trombley (Vermont State Treasurer’s Office)]: We can't call in the loan that I'm aware of at will. But VHFA, for example, pledges their own balance sheet of assets in repayment. So if the underlying, if the project were to fail and the loan were to not be repaid to VHFA, VHFA would still be obliged to repay us using whatever assets they have at their disposal.

[Rep. Emilie Kornheiser (Chair)]: And we do not have an updated fiscal note, so we're actually not going to vote on the bill now. So anyone who wants to do some homework has time to do that. Good. Representative, will you to do that?

[Rep. Carolyn Branagan]: I'll ask that question. Okay.

[Rep. Emilie Kornheiser (Chair)]: You're welcome to ask.

[Rep. Carolyn Branagan]: I'm just curious, because does the Charter have to Some of the people you mentioned in your advisory board are also the people who are doing the lending. Is that correct? Do you have people on your advisory board who aren't the people doing the lending?

[Peter Trombley (Vermont State Treasurer’s Office)]: Yes, we do. As a general practice, I want to say that those on the advisory board, if they are already to one of the loans, they recuse themselves from those particular votes.

[Rep. Carolyn Branagan]: What's the balance of members on the advisory board?

[Peter Trombley (Vermont State Treasurer’s Office)]: So we have, in this credit facility, two members of the advisory board have their organizations have also served as an intermediary. Those would be Vita and VHFA. In the climate credit facility, the bond bank has served as the intermediary.

[Samantha Sheehan (Vermont League of Cities and Towns)]: Sorry, one second. Is Samantha still in the room?

[Rep. Emilie Kornheiser (Chair)]: No. I think she's confused about

[Rep. Carolyn Branagan]: the one she used about this.

[Rep. Emilie Kornheiser (Chair)]: Samantha, if you're somehow in Ways and Means, can you stop sharing your screen? I think you're in a different committee. I'll stop sharing.

[Rep. Carolyn Branagan]: Okay, I don't

[Michael Gaughan (Executive Director, Vermont Bond Bank)]: think she is.

[Peter Trombley (Vermont State Treasurer’s Office)]: We have five members of the LIAC committee with the treasurer then as chair, so six total. Those members are VSAC, VHFA, VIDA, the Bond Bank, and Efficiency Vermont. In our housing loans, VIDA and VHFA have served as intermediaries in the past. And in our municipal loans, the Bond Bank has served as the intermediary.

[Rep. Woodman Page]: The banking association, what do they feel about this? You're kind of it appears that you're in competition with banks, but maybe I'm trying to do the same work that you're I

[Peter Trombley (Vermont State Treasurer’s Office)]: appreciate that. I spoke to Chris Delia this morning. He's in support of this change. I mean, there are two ways in which this program has been really beneficial for banks and credit unions. One is when those entities are serving as the direct intermediary. So the treasurer will be announcing the details tomorrow of a loan we're providing to the Bank of Bennington, where they will then be able to turn around and lend out that money to housing projects in their community, and they get to earn a markup on those loans for the costs of underwriting those loans out to individuals and for the that they're taking on and guaranteeing us repayment. So that's directly creating business for example, the Bank of Bennington in that scenario. The other way in which we indirectly create a lot of business for banks and credit unions is typically projects are only coming to us when they have maxed out the level of commercial debt that they can afford to take on at 6%, 78%, whatever that entity is charging. They need more debt in order to move forward with the project. They can't afford to take any more from the bank, so they're able to take it from us. And when they move forward with the project, they're able to actually execute on those loan agreements they had made with the banks. So that's business that the banks would not ever be able to execute and earn a profit on if it were not for our intervention allowing those projects to go forward. So, in both those ways, our local banks and credit unions have been really excellent partners in this project, and I think that it's been very mutually beneficial for those entities.

[Rep. Woodman Page]: Would you or would you be directing these monies, these these loans, or loans, to specific areas in Vermont? Or That's probably

[Peter Trombley (Vermont State Treasurer’s Office)]: We could. We do our best to maintain a geographic balance throughout the state. The biggest limit to us in doing so is where do we see applications coming from. To date, we've invested in 12 out of 14 counties in the state. The two counties we have not been able to make an investment in are Lamoille and Essex. And I am certain with Essex and I'm reasonably certain with Lamoille, simply have not received an application from either of those two counties. So if anyone is listening from either of those two counties, we'd very much like to receive an application.

[Rep. Woodman Page]: I have another question, but I'll be sure

[Rep. Emilie Kornheiser (Chair)]: to We're actually going to represent Masland next.

[Rep. James Masland]: The more we learn, the more sophisticated this arrangement seems to be, and I appreciate it. Often in what manner is all this reported to the legislature, the appropriate committees, that sort of stuff.

[Peter Trombley (Vermont State Treasurer’s Office)]: Appreciate that. We report annually on the activities of the LIAC program, including our loan structure and agreements. So I'm happy to send you our most recent loan. Before they get it anyway,

[Rep. James Masland]: I just have the credit. But thank you. Appreciate it.

[Rep. Charles Kimbell (Ranking Member)]: Looking at it right now. It's 11/15/2025. I'll circulate it to the committee and that source will post it.

[Peter Trombley (Vermont State Treasurer’s Office)]: Much appreciated. Thank you. Thank

[Rep. James Masland]: you, Gerald.

[Rep. Emilie Kornheiser (Chair)]: Representative Page and then, buddy?

[Rep. Woodman Page]: I'm curious on the loans. Are you looking to assist this particular group of individuals? Is this low income, middle income, or are all monetary groups. Our

[Peter Trombley (Vermont State Treasurer’s Office)]: investment policy allows us to invest in housing from affordable to market rate. It has no particular restrictions there. I'd say we have a preference for affordable housing. The vast majority of our portfolio has been entirely or in part affordable housing. We do see a lot of mixed developments where there's everything from market rate to affordable apartments all in one building or in one neighborhood. So, our investments span the gamut from types of housing, although they are skewed towards more affordable housing. We also have had a growing, I'd say, interest in senior housing, which we think is a growing need in the state. One investment we're very proud of is the Virgin's Grand assisted living facility, which recently opened up in Downtown Virgin's. Those are, I think, great investments. For us, it's more affordable to create 40 units of senior housing that open up 44 bedroom homes than to create 44 bedroom homes. They also create permanent jobs through caretakers in those communities as well.

[Rep. Emilie Kornheiser (Chair)]: I love it. Keep on going.

[Rep. Woodman Page]: There seems to be a lot of money, state money out there for housing. Are we flooding the market with maybe too much money out there?

[Peter Trombley (Vermont State Treasurer’s Office)]: Good question. Our most recent round of funding, we thought we would be able to do $20,000,000 We ended up being able to do, I think, little over 30,000,000 because we restructured some existing loans. Want to say we received north of $80,000,000 in applications for that $20,000,000 initial funding request, so from our perspective, we're continuing to see substantial need, and we're not able to fund every project that comes to us with an application.

[Rep. Emilie Kornheiser (Chair)]: So, if

[Rep. Carolyn Branagan]: you look at geographic distribution, is there any other criteria to use?

[Peter Trombley (Vermont State Treasurer’s Office)]: Yeah, we look at the economic development impact that we see within the communities. We look at access transportation and those developments. I'm wondering, do you know of other criteria off the top of your head in our investment policy? We can say it around policy.

[Rep. Charles Kimbell (Ranking Member)]: Certainly, the investment policy too, so you now have the investment policy in your report.

[Peter Trombley (Vermont State Treasurer’s Office)]: Thank you. Thanks so much. Appreciate it, representative. There are a number of criteria we look at. We also look at the cost per unit and also the cost per unit in terms of what they're requesting from us to try to make our dollars go as far as possible. And we try to maintain a spectrum in our portfolio of market rates of affordable housing.

[Rep. Carolyn Branagan]: Are you seeing overall trends in cost for you?

[Rep. James Masland]: They're going up.

[Peter Trombley (Vermont State Treasurer’s Office)]: Particularly for affordable housing. We've only been operating the program for a couple of years, but it's not unsurprising these days to see certain particular affordable housing developments be over half 1,000,000 per unit, sometimes in their cost.

[Rep. Carolyn Branagan]: Are you done? Yeah. I'll share with you some of that, because I think the manufactured housing revolving fund is an effort to address some of the labor shortages that are driving that higher unit price.

[Rep. Emilie Kornheiser (Chair)]: Representative Branagan?

[Rep. Carolyn Branagan]: Madam Chair, I'd like to request that we have

[Rep. Emilie Kornheiser (Chair)]: We're waiting on a fiscal note regardless, so

[Rep. James Masland]: we won't be voting on this until tomorrow.

[Rep. Emilie Kornheiser (Chair)]: We went the earliest. To

[Rep. Carolyn Branagan]: banker. Kristelia. Kristelia. Can we have him in here to testify? Because I also spoke with him this morning, and he enthused.

[Rep. James Masland]: So it was a

[Rep. Carolyn Branagan]: competition against them that he didn't need, and I think we need to have him in here on record. Okay. Thanks. We have different stories, and that makes me even more Yeah. Do we?

[Rep. Emilie Kornheiser (Chair)]: I am. Okay. Thank you. Call. We can talk to Alex Farrell either offline or in testimony as well.

[Rep. Carolyn Branagan]: Alex Farrell would be excellent. Think that you're a non member. And I don't honestly know what he will say. But I can say myself that I absolutely agree understand how desperate we'd offer housing in this state and in Franklin County where I represent. But the thing I don't like is that it's the treasurer's office. I don't see that as the job of the treasurer's office. This is taxpayer money. And that's not the purpose of the office. I don't see anywhere in the description that that's investment, that's not investment in housing, it's investment.

[Rep. Emilie Kornheiser (Chair)]: I guess I hear your concerns from my perspective. If the money has to be invested, which it should be, right? We want to invest the money that's sitting there for the taxpayers. I would rather it be I want it to be invested so that we get a good return. I also want it to be invested in places that are going to benefit Vermonters. And so that seems like That's why, to me, it's part of the job of the treasurer. Do we have any more questions for the treasurer's office? I just have one. Yes, they're for the treasurer? Yeah, go for it.

[Rep. Woodman Page]: Right now we're in a river, if things go south, we're in the war for a longer period of time, do you have any thoughts about what that might have on the market or building houses or economic development within Vermont in, let's just say, next year?

[Peter Trombley (Vermont State Treasurer’s Office)]: It's a big question, but I'm not sure I have an answer to you in my head. I'll say, risk is risk. And so, when we are constructing these loans, the existence of the intermediaries is the ultimate backstop for the state against that risk. Or if there is a downturn in the housing market and it leads to defaulting on a number of housing loans out in the community, that won't come back to us because of these intermediaries that are absorbing that risk and guaranteeing repayment. So we do our best to insulate ourselves against trends in the housing market. I'll just make

[Rep. Woodman Page]: one other point. Your office has done some good work pharmaceuticals, reducing costs for healthcare, I'm just wondering whether there are other areas that might be more suitable than spending it on housing right now.

[Peter Trombley (Vermont State Treasurer’s Office)]: It's a good question. I think when the treasurer came into office in 2023, it was clear to him in that moment that housing was our greatest challenge we're facing as a state. I think, in my opinion, healthcare is rising to be an equal challenge for the state. I'd have to put more thought into where loans could be helpful in that industry and bringing down costs for Montrose there. We would have to think more about that. But the investment policy is open and flexible. It can be amended by the LIAC committee. The LIAC committee has membership that extends beyond housing experts, And so the flexibility that's baked into the program is such that over time, future years with future challenges and needs for the state, it can change in terms of its investment portfolio.

[Rep. Emilie Kornheiser (Chair)]: Representative Russell? Yeah. Two brief comments.

[Rep. James Masland]: One is I appreciate the respect of representative Branagan with regards to this stuff because it's not I wasn't thinking about these particular things till you bought them. And I think now that we're all aware of what the concerns might be, looking into leg work, that kind of stuff is not very much what we should be doing. And I would acknowledge that the treasurer's office is doing a whole lot of stuff that wasn't, or at least from my perspective, that wasn't typical wildlife. But I could also say, and this is where it may get a little Pollyanna y, a little silly. When I was much younger, bankers hours were described as, like, 9AM to 3PM or something, and then they I don't know what they did, you know, count small change or something like that, but the doors were closed in in the town. Go up in another bank. So I'm acknowledging that banks and treasurer's offices are doing a whole lot of things that just were were not talked about or probably not done at all a number of decades ago, and I think we need to acknowledge that they need to go there. So, that's enough. You get the point. Thank you.

[Rep. Charles Kimbell (Ranking Member)]: I encourage the committee to read the investment policy and the annual report before we meet again, because it really does spell out how the treasurer's office came out with a pretty comprehensive policy about where to invest, how long the loans are for, the amortization, everything else. It's very informative, for geeks like us, it's exciting reading.

[Rep. Emilie Kornheiser (Chair)]: Thank you so much. I really appreciate it.

[Peter Trombley (Vermont State Treasurer’s Office)]: Of course.

[Rep. Emilie Kornheiser (Chair)]: So we'll find time in the agenda later this week to look at the fiscal note update and schedule a vote and hear from any more witnesses that we need to hear from. I don't know when that will be, because the agenda is something of an ever changing puzzle. Would love if we could take a moment to vote on 07:57. That was the mobile home one that we started the day with. Or didn't start the day. We did at some point. We talked about it at some point. Was that yesterday?

[Peter Trombley (Vermont State Treasurer’s Office)]: Was today.

[Rep. Emilie Kornheiser (Chair)]: Did I know it today? Great. It did start.

[Rep. Carolyn Branagan]: It did look like yesterday.

[Rep. James Masland]: Madam chair, would you place a vote I mean, a proposed motion on that?

[Rep. Emilie Kornheiser (Chair)]: I don't even remember what the bill number is. So

[Rep. James Masland]: Do we find it favorable as we've worked on it?

[Rep. Emilie Kornheiser (Chair)]: So you're moving that we amend it? As we've discussed, it should be. But if folks rather have a break and we come back in ten minutes and do a send, great. Let's do that. And see. Oh, Oh, Oh,