Vermont Legislature SmartTranscripts:

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: Sorry. It's a little glitchy. This is the beginning of his name is gonna jive.

[Sen. Alison Clarkson (Chair)]: Welcome back to economic Melbourne housing and general affairs. It is still the fifteenth. It's behind in January, so just beware and we welcome back Joan Goldstein to this committee in a very different capacity. We're excited to see you in this new capacity. Welcome as the new executive directors that you're I guess the title is actually CEO. CEO. The Vermont Economic Development Authority so it's wonderful to have you. Thank you very much.

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: Senator Clarkson? It's yours. And I just before I start I'd love to introduce the members of the team for the committee. Jennifer Emmons Butler is our Chief Legal Officer, Brad Richardson is our Chief Financial Officer, and Christine Hinquiliani is our Director of communications just so that you get a little bit familiarity with folks and they all have very important role to play as we proceed with our ask. I'm not sure how much I should do a review but I prepared a little review just so that you understand. I think

[Sen. Alison Clarkson (Chair)]: of a good review and a good understanding of how your partner in this committee and on housing and on economic development and what your ask is. Perfect. And you have until about one hundred and twenty at about half an hour. Good. I I do speak fast, so

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: slow me up if I'm speaking too fast. Yeah. So VITA is Vermont Economic Development Authority was created by the general assembly in 1974. The mission is to contribute to Vermont's vitality, providing a broader way of financing to businesses that create jobs, farms, nonprofits, forestry businesses, so quite a a wider array, quite a diverse portfolio. Since '74, we provided more than 2,800,000,000.0 in financing assistance to thousands of entrepreneurs, manufacturers, small businesses and agricultural enterprise. Where do we get our money? Other than specific appropriations. Yes.

[Sen. Alison Clarkson (Chair)]: There is a presentation

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: So we're not dependent upon appropriations having said that there are appropriations that come about from time to time for specific programs. Last year you might remember the disaster relief fund, loan fund, that was an appropriation, but other than that, we go out, we borrow money from banks, and also, issue commercial paper, and that's how we fund ourselves. There may be federal programs that we get funding from as well, but we're not to we're not here asking for an appropriation either. We borrow money and we lend it out to fulfill the mission. The information from our fiscal year twenty five report just shows a little bit about the activity during fiscal year twenty five. We had 61 and a half million dollars worth of loans. That's a 173 loans closed. 100 and sorry, 10.7 is water wastewater, 15,000,000 forestry and agriculture and 35,800,000.0 on the commercial side. The way it breaks down And that's a

[Sen. Alison Clarkson (Chair)]: whole range of businesses. Yes. Yeah, they're in that broken down.

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: Yeah, I have some of it broken down not everything. A little bit of travel and hospitality, manufacturing, technology, but agriculture makes up a good 30% of the portfolio. So agriculture is about 70,000,000 in the current loan portfolio, $2.10 on the commercial side for about $280,000,000. This was as of 06/30/2025. On the agricultural side we directly lend meaning we are the usually the only lender and therefore the senior lender. We occasionally fund projects alongside other financial institutions but we're generally the primary lender. It includes expansions, land purchase, building, equipment purchases, working capital, housing actually for farmers and farm workers,

[Sen. Alison Clarkson (Chair)]: so it's quite a few options. For agriculture. Yeah. On the

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: commercial side, we are generally with another bank. About 70% of our commercial loan portfolio is with one other lender, the other 30% primarily are the energy portfolio, the broadband portfolio, the RDC portfolio, we lend to RDC's for industrial development as well as some small business lending that we do directly, typically smaller loans. We participate with just about every bank in the in the, state. Generally, the community banks and credit unions are are more users of NEDA than the larger entities. And projects have a broad array, downtown redevelopment, multi use commercial properties that include some housing, but it can't be predominantly housing. Hotels, manufacturing, you know, there's a whole wide array of commercial lending. A couple of years back we expanded into venture capital by virtue of the state small business credit initiative. That's an example where a federal appropriation came to the state through ARPA and the state appointed VITA the implementing entity and VITA took half of it lent it out as they normally do in the commercial side and the other half went to venture capital firms because we really believe this money was meant to help fund entities that otherwise may not get venture capital funding because the smaller markets don't do as well as like San Francisco, Boston, New York. So we put that money to use, we appointed VITA to be the implementing entity. VITA didn't have experience on the equity side, so we selected five venture capital funds to invest the money. To date, 30 investments worth more than 4,500,000.0 have been deployed and there's already been two successful exits allowing reinvestment into the fund to help other businesses.

[Sen. Alison Clarkson (Chair)]: And what does that mean? We hope they haven't exited Vermont. No, no, they

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: the they sold the company yeah, or Yeah. No. It it's definitely it's always a concern. It's one of nonetheless, it's a healthy sign of an ecosystem where start ups grow and then are able to exit and and then those founders may find another business to start and and history has shown that that is indeed true in Vermont. And is that

[Sen. Randy Brock (Vice Chair)]: condition of the loan that they stay in Vermont? Well,

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: the VC is not a loan. It's an equity position. It's a condition of the

[Sen. Alison Clarkson (Chair)]: investment that they pay? No. Conduct fund their own business in Vermont. They have to

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: be a business in Vermont. And 90% of the VC portfolio has to be for businesses in Vermont. That is clear, you know, yeah. Okay, so some recent commercial investments don't know if I meant to you.

[Sen. Alison Clarkson (Chair)]: Oh, you were some notable Not wasted. Are

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: those porta It's the porta potties and they recycle even waste into fertilizer and you know it's very interesting they also do the VIP sort of solutions I also saw they're getting into more where they have public restrooms in almost like a building so that's a very interesting one. Praxis is a medical software company for pharmacies. Brightwater tools is also a type of waste recycling company.

[Sen. Alison Clarkson (Chair)]: Yeah, these are great

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: solutions to add to the whole circular economy so that we're utilizing this to better you know not free chocolates it goes without saying and Green Sea Systems very interesting company in Richmond they do underwater robotics to diffuse mines and amongst other things but so that's just a sampling of what would be

[Sen. Alison Clarkson (Chair)]: an important area. I love the fact that

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: we're not using just green. Yes. What is it there? Oh a small, I think it's miniature. Voltage. Voltage. Yeah, small color solution. Right. Yeah and some of these came out of UBM, some not, you know, so it's a good array, it's great for us to get involved in that. Some of the recent Vita commercial investments were in the AC Hotel in Burlington, we're in the Bennington High redevelopment, Farmer and La Belle Cafe in Woodstock, Virgin's Animal Hospital, Land Grove Inn, Essex Resort, and there are a number of different reasons and developments. I think Land Grove was a change of, you know a purchase, a change of ownership and at Essex it was a solar project and of course the relocation expansion of a child

[Sen. Alison Clarkson (Chair)]: care center. And of course in Woodstock, farmer in the bell, two vast crawlers in the state so this is a must visit. Yes,

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: so that's just a sampling. So why do we want to lend to commercial housing projects and we'll put that in as commercial because we're not talking about individual homes or single family homes, we're talking about five plus family unit housing and so I said we participate with commercial banks and usually commercial banks use the commercial real estate portfolio is where these multi unit housing developments fall. It's not in the residential side of the business. So we're able to lend and participate with those commercial banks except expressly stated in statute except for housing. So what we want to do is change that. Why do we want to change that? Well there's a serious supply shortage, right, across the entire income spectrum, not just on income restricted housing, but there are doctors that need to be hired and nurses and engineers for data. They're not going to qualify for most of the income restricted housing that is getting developed. We're an economic development authority. We're created to help the economy and the economy right now, kind of both in this job and in my prior job, that's all business owners would talk about, is the need for housing and how that was a hampering effect on the workforce recruitment.

[Sen. Alison Clarkson (Chair)]: Yeah. Thomas,

[Sen. Thomas Chittenden (Member)]: VHFA does this, yes?

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: So VHFA does it, I think that they do, they are worried about that if you fund some of these higher income things that somehow the rents will all get higher. That is their stance is that they usually keep control over the rents that a developer can charge and more I'm sure will be in to tell you more about this, so our role is sort of like well that's fine, but what if a developer doesn't want to work with BHFA? Maybe they could work

[Sen. Alison Clarkson (Chair)]: with

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: VIDA. What if a development isn't even including BHFA because income restriction is the last thing on their mind, you know more may not participate in it. So the language that we proposed would give deference in cases where VHFA and Vita could be the lender that if VHFA doesn't want to play in that role, you know, that we could then participate. We have similar language for the senior housing like we did a wake robin the last expansion because VHFA didn't want to play in that market. So we're giving deference and sort of kind of right of first refusal but the idea would be if the deal didn't get done that's units that won't get developed and so this is just to continue to add to

[Sen. Alison Clarkson (Chair)]: the supply. So before Thomas asks his next question this is more, this is commercial and more market rate housing not necessarily affordable housing.

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: It's not necessarily affordable housing. I do think that that's covered very well. So there's some examples, like we went to the LIAC meeting of Treasurer PECHECH and there were three transactions that I don't believe HFA is currently playing and one is the Ryder bike development at Hula, the other is Winston Prouty in, Brattleboro and the other is the Rutland, Hotel project. And I think it's predominantly the hotel project has market rate housing and I don't think they want to buy So this so

[Sen. Thomas Chittenden (Member)]: they don't want to, it's not that they can't, it's just they It's not

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: that they can't, they're primarily focused on the affordable side but I know that they're trying to get into the middle income and they do, it's just really there are we've heard from some developers that they're not working with the HFA so it's like all right well it's probably still a gap you know

[Sen. Alison Clarkson (Chair)]: like here's a gap so we are we all know that we have our target of 7,500 new housing units a year, I asked the Housing Brain Trust this summer, I said so you know as we look at state dollars how many of those 7,500 units probably need to be affordable housing units? How many of them are going to need state money and investment and non profit investment and came back with, from BHFA, 4,000 of those 7,500 units are probably appropriately supported by state the state dollars and state incentives. And so that's their market cap. There's three five hundred homes a year that we need to be building with their market rate or commercial rate, whatever. And so you're proposing that there's really an additional lender to help get some of that to go.

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: Exactly right, and it's just really expanding on the capability that we have on the commercial real estate portfolios of the banks, and then also the way we worded it was we're not going after these individually, this is only if the bank wants us in, the same way we work with all the other commercial transactions. We don't we're not competing with the banks, you know, the banks may need us in for whatever reason, there might be concentration limits or what have you. If they ask us in, we'd like the opportunity to be able to participate.

[Sen. Thomas Chittenden (Member)]: What would you say to anybody that from the outside would ask why we have two sub quasi state funded or associated entities performing the same service?

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: Well I mean I think if you looked at the portfolio of the HFA, I'm not sure they're doing that many market rate. I would argue and say It's

[Sen. Alison Clarkson (Chair)]: same service.

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: It's you know it's taking care of the low to moderate income, some middle market, but there is this upper end that is not being tended to. So I would say, and we won't duplicate, it's just only if they don't want to do the deal. If they could do the deal, if they could do every deal, great, but there's no harm in having the capability so that we're not restricted from doing it so that we continue to this feeling of abundance that there are more lenders rather than

[Sen. Randy Brock (Vice Chair)]: less. We're in

[Sen. Alison Clarkson (Chair)]: an all day crisis. In no harm, we can add more entities that are able to lend, particularly the different projects. Okay. Well, I guess you

[Sen. Randy Brock (Vice Chair)]: would always raise the question, every additional lender you have, a particular group of lenders who are aiming to some extent at the same market, that's duplication. And there's overhead costs, isn't it? There's lot of lenders in the market, but yeah. That would do everything. You don't need two, three or four CFOs or CEOs and so on, which is what we have. We have this drip effect of, you know, we could create yet another entity, sort of like we do a school system.

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: Yeah, we don't need to create another entity. I guess from the way we're viewing it, it's just expansion of the commercial real estate lending. Which they already do. Yeah. So it's not encroaching on anyone's particular territory, we're not competing with banks, we're not competing with the HFA, if they weren't in, we're not needed, great, we're not needed. Same way that we're doing on the senior housing and the assisted living.

[Sen. Randy Brock (Vice Chair)]: Okay. Exactly. Want to know the prices can

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: go down. Well there's that. There's nothing wrong with competition. I mean, yeah, I mean there are many banks in this market as well so. So I think I reviewed in banking world multifamily five plus are commercial projects, We are commercial lenders. We already have the necessary staff and expertise and we're in a very strong balance sheet situation. By virtue of the fact that we did get some of the federal money and we've been able to rotate that and revolve that. So, yeah, so I think that we're well positioned to do it. It doesn't result in automatic loan approval. I did hear some testimony saying, well, know, the only loans that we do, that we turn down are loans that are not pencil penciling out. We're not going to just automatically approve loans just to fill a gap. We still have to underwrite, we would bet each proposal and determine the viability of the project. We have capital of our own and yeah The other thing that's on the horizon is this CHIP related commercial housing infrastructure. So as an example, if that spurs more developed development as intended and those are majority housing projects, we would not be able to play in that. So that seems like a shame, right? Again, if the HFA could do all of it, great. How about it? But let's be there so that we could make sure that projects that are not going to get funded through the HFA, at least we could figure out whether or not it makes sense for us to learn. Yeah, so the thought is, look, if housing is economic development and we're not able to lend to this piece of the commercial real estate market, we're not doing all that we can to help. Everywhere I went this summer when I came on board, we toured all the, you know, banks and they just kept asking why can't you lend, you know, why can't you lend because they're working on a number of commercial real estate projects. It doesn't force anybody to work with us either. It's like it's just like in the in this market right now, when we fund industrial development or other commercial development, the bank uses us at their discretion. You know, we're not in there saying, oh, yeah, you've gotta work with us. It's the bank asks us in. Muskogemah, Community National, all of these banks will ask us in. If they don't need us, they won't ask us in. They could fund it all themselves. Great. So the language that we propose is really after consultation with in deference to the Vermont Housing Finance Agency on applications that are eligible for financing from both the authority and the agency, financing for multi unit five plus housing developments jointly financed with another lender or lenders when requested by said lender. So it's really just to have that capability to participate. This is the addition that you're on. This is what we have asked of us to put

[Sen. Alison Clarkson (Chair)]: into our housing. Yes,

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: the more capital from an ED lender could help create more housing. Our competitive rates right now they're pretty competitive, easier for multi family commercial projects. We all know these projects are way expensive, having another lender could help fill gaps. Yes, yes, sir.

[Sen. Alison Clarkson (Chair)]: So that is, that is simply

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: the ask. Don't know yeah, we've heard a variety of claims about it, about how we would be into the market somehow makes the housing more expensive. I would argue not doing a project makes housing more expensive because of the that the VITA, you know, we borrow money and some of that money that we borrow is backed by the moral obligation of the state, but it's not for all of the money that we borrow, so we're again, we are in a very strong position. We've heard others say, well, you'd have to increase your moral up. No, not necessarily. And, you know, we're not going to just say, okay, we're going to do a 100,000,000. We're going to monitor this because we need to balance housing with all the other requests for our capital.

[Sen. Thomas Chittenden (Member)]: So you don't see yourself as taking projects away from DHFA, you see this as grabbing or offering more opportunities for all housing projects across the spectrum to have access to capital? Correct. Additive. Don't see this as additive?

[Sen. Randy Brock (Vice Chair)]: Okay. Yes, additive, not such.

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: Not zero sum, just additive. Here's another lender that could participate in a multi unit housing development.

[Sen. Alison Clarkson (Chair)]: Right, and as I said the 7,500 housing units, new housing units, need to be developing here at least from GHFA's calculation 3,500 of them in the market rate or you know commercial market rate housing that this would be appropriate for and the 4,000 are still needed to be affordable and would be the answer to any appropriate.

[Sen. Randy Brock (Vice Chair)]: David, do have a question? How

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: does this sound to you?

[Sen. Alison Clarkson (Chair)]: I think it's something for us to consider as we put together our committee, our housing bill. We'll probably use the efficacious bill once it gets introduced. We're gonna be looking at that next week and we will be using it as sort of our probably our cases for our committee bill. Okay. Okay good.

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: The presentation had all of this in it so there's a copy and I'm happy to Yeah, before I can bring

[Sen. Alison Clarkson (Chair)]: you a copy of it. Right any other questions?

[Sen. Randy Brock (Vice Chair)]: This was terrific and

[Sen. Alison Clarkson (Chair)]: what are some of your priorities for me to independent of this I understand but what else as you have taken over the years what else are

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: So immediately we hired Christine and Kouyani to do more outreach and communication because we can't assume that everyone knows about VITA even though we have a pretty good referral system in place and people seem to hear about us. More about promotion of our services. The other is of course being able to lend to housing and then we're going to investigate the possibility of lending to some of the VC backed entities.

[Sen. Randy Brock (Vice Chair)]: Some of

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: these VC backed entities aren't sorry venture capital backed entities aren't quite ready for the banking market. It's a different risk profile, much higher risk. We're looking into how we could participate in those so that we could grow the balance sheet but also really take a role in some of these scalable opportunities, right? Like these businesses may grow into, you know, the next beta, right, or hiring hundreds of employees and that could change that. That would be such a so it's like we would wanna be in early to do that. So those are some of the things that we the other thing we're asking for at the legislature is more of an administrative thing. We were just at Senate ad up there to merge the Vermont Agricultural Credit Corp into VITA. Right now we have a separate entity. So it's just administrative work and not very much value add. So we're still committed to our agricultural portfolio just that we want it all to be one entity, part of BETA, just another sub chapter of our BETA statute.

[Sen. Randy Brock (Vice Chair)]: Great. Any other questions? No.

[Joan Goldstein, CEO, Vermont Economic Development Authority (VEDA)]: Think I'm good. This is a a good and a bad. I'm not wrong. Thank you.

[Sen. Alison Clarkson (Chair)]: Welcome to meet Jennifer and everybody. Okay. Christine. Lovely to meet you and welcome aboard. Great. Thank you so much. Thank you. Any questions, happy to we will we will be back in touch as we continue our work on that on that bill. Thank you. And so, we have Tom Chittenden coming I would