Vermont Legislature SmartTranscripts:

[Sen. Alison Clarkson (Chair)]: Hi. Welcome, everybody. It is Friday, and it is the February 6, which is astonishing. And we it think that it's Friday, we're turning our heads to housing again. And this time, we're picking up a different angle to housing and an essential piece. This committee addresses barriers to housing and all the sort of low hanging fruit to how we can do more housing for less money, but we also need to be addressing actual money. It takes the money to build houses. So we are going to turn to f two thirty eight, which is a bill. Kirby, do you wanna just join us? And because you're gonna get going in a sec. Good morning, David. We're just starting. We're live. So this morning, we're turning to revenue for housing. We have our housing trust, our three of our finest housing rating trust members here to help us appreciate the need for additional revenue. But it has struck me, sorting in this committee since 2017, that and going through the pandemic and having spent and allocated $600,000,000 in new revenue, building thousands of units in this state of housing, that with the loss of all that money, with the loss of that revenue stream, we if we're gonna continue to build housing, and if we're gonna meet our goals, our goals are to build 7,500 units of new housing a year. I asked DHFA and the Brain Trust to calculate how many of those actually needed state funds, how much many of those needed state supported or enabled funds? And that figure came back at 4,000. 4,000 of those 7,500 units need financial support that is from from the state or enabled through tax credits. Given that and given that we are we are now building at best 3,000 a year, and that's with all that delicious arfamony, we are we're gonna be way behind the way behind the the wall here if we don't identify an additional source of revenue. Ted, there's a seat here, and you can just speak from it when we get when we get there. Great. So I work with with several stakeholders over the course of the summer and fall developing a proposal. It's a beginning of a proposal for us to look at how we might develop how we might build a housing revenue stream. For example, VHIP, a program we love and care enormously about, has no real funding source other than the general fund. VHCb and they will talk about what they fund and how they fund this. It it it is not enough to meet our need at the moment. Our need is enormous. We are in a housing crisis. And if we are in a housing crisis, we have to break all the tools to bear on solving it. And many of those are regulatory permitting zoning. We're addressing many of those. We also need to address financing. And the power of the person's status is substantial and can really and it enormous enable enormous things. But we need to put financial muscle behind solving this crisis. And so this bill begins to address it. It mean it's a starting point, and it is it is one we have discussed for a very long time in this building. It began on a dollar amount at $2 a night per lodging establishment when lodging establishments were just hotels and B and Bs, and they have formed in the as we know, something much more substantial. So it it has morphed to a 2%. We explored all sorts of numbers, but we've landed for an introduction at 2% on all lodging. This bill plows back the short term rental income out of the Ed Fund where there is almost no nexus between that and the Ed Fund. It and it proposes how to fill that gap and more for the Ed Fund through a sugar sweetened beverage tax, another tax that we've looked at for a long time. And as far as I know, serves nobody. And because as we learn, one of the first rules in ways it means that you learn is to pack the bag that incent the goods, and sugar sweetened beverages are a good bag to tax. I don't care what your income is. They're not great. And so with that, this proposal is really a beginning, hoping to launch the discussion of how do we look realistically at raising revenue for housing to meet the needs of our housing crisis that we're in. So with that, that is sort of my rough introduction as the lead sponsor of this bill. Any questions for me? I mean, we're gonna have the brain trust come and chat, and we're gonna have our blood council and JFO just high level walk us through,

[Sen. Randy Brock (Vice Chair)]: in the year, not start.

[Sen. Alison Clarkson (Chair)]: That we can discuss. And and but the challenge That's a critical question. That is a critical question, and I can't answer it because but it's a it's a good one. What is challenging right now is the pipeline is beginning to dry up with the lots of money. Yeah.

[Sen. Randy Brock (Vice Chair)]: At some point, is it possible

[Sen. David Weeks (Clerk)]: to build a matrix of how you get from here to 4,000 given, you know, notionally x number media, x number of tax credit, x number whatever the mechanisms are. And then kind of summarize with

[Sen. Alison Clarkson (Chair)]: what does that really mean? I think that's a good question and one I think we need to ask of the three that we're gonna have to Because when we

[Sen. David Weeks (Clerk)]: take it like, and we talk about one topic, another topic. Right. It it doesn't kind of gel into, well,

[Sen. Alison Clarkson (Chair)]: a whole. The whole picture of how do we get to 4,000? How do we get to building 3,000 a year or completing 4,000 new units that of of what are considered needing state and or state state funds in some advance. So with that, we're gonna do a high level look at this bill and high level look at the at what it generates and the other and in some ways, the other jurisdictions because many jurisdictions around the country, as you if you look at every hotel bill, there's a housing surcharge of some variety if you're in any major city. So we're gonna just briefly talk talk about that in this introduction, and I really wanna spend some time because we have Chris and Polly and Gus here to talk about the need to the painful picture of it. So, Craig, Kirby, without further ado, it'd be kind of just a high level walk us through two thirty eight.

[Kirby (Legislative Counsel)]: Okay. So Kirby Dean, let us go to counsel. We're gonna do a quick walk through of test two thirty eight. The first section is the findings. My understanding is that we have wonderful witnesses this morning to talk about housing needs, so we'll skip over those findings for now. But, of course, you can just read them for yourself. So we'll start with section two starting on line 15 of page three. This is the composition of a rooms tax housing surcharge. Pretty straightforward. It is a 2% surcharge on top of the bills and rooms tax. The tax base for this would be the same tax base as the rooms and the meals and rooms tax. So that is going to be hotels, bed and breakfast, short term rentals, everything that the rooms tax applies to would be applied to in this case. And the revenue from this would be dedicated to housing, and we'll get to the fund created in a moment on that. Section three, page four, is the creation of a sugar sweet and beverage tax. On a very high level, this is a tax of 1¢ per ounce.

[Sen. Alison Clarkson (Chair)]: This is the What bill is this?

[Kirby (Legislative Counsel)]: The science two thirty eight.

[Sen. Alison Clarkson (Chair)]: Two thirty eight. This is this is the piece that so this also cost back the structural rental tax for housing and then replaces the what is lost in the Ed Fund with the sugar sweetened beverage. Right. And this is, again, as I said, the beginning start of this discussion. Well, obviously, goes to finance. They may find that this actually raises more money for the Ed fund than the STRs. Mhmm.

[Kirby (Legislative Counsel)]: And, yeah, Ted will

[Sen. Randy Brock (Vice Chair)]: be able to share

[Kirby (Legislative Counsel)]: a little info on that. Okay. So getting into just a real quick version of an explanation of the sugar state tax, It apply it's 1¢ per ounce for sugar sweetened beverages, the liquids, but also powders and syrups that are used to make beverages with liquids. It's imposed on the distributor. The distributor would have a license and pay the tax or omit the tax to the department's. And we have, of course, many definitions for different components of that, And we have the appeals process, penalties, interest, the things that are that are typical with new tax type. And with that, unless you have more questions, we can just say that I that's what's here. This is based off of the last the language that I used here was from the last time this was introduced in 2017, except that we changed the the tax amount to 1¢ per ounce, which is less than that's the slower rate that was proposed.

[Sen. Alison Clarkson (Chair)]: And this money would go to the Exxon to replace what the short term rentals are breaking out, and and then some get asked.

[Kirby (Legislative Counsel)]: So we'll be talking about this. There's a housing new housing special fund being created here. The room tax surcharge and the what the existing short term rental surcharge that exists would be in revenue sources for that housing fund. The sugar sweetened beverage tax exists here to replace money to the Ed Fund that's being directed over the housing from the short term rental surcharge. Good. Okay. So the next section we have is section four at the bottom of page 11. This is the part where we're taking that short term rental surcharge revenue out of the Ed Fund and moving the Sugar Speaks diversifies into it. Section five is the housing investment special fund that I just mentioned. It's a new special fund that's created with the revenue sources that I just mentioned, short term rental surcharge and the room tax surcharge. And the way that this fund would work is that, basically, the general assembly would be appropriating out of it each year for specific housing purposes. So it's it's not a type of fund where, you know, some agency just has access to that money. The general assembly will be making the decision appropriate out of that for specific housing, and there and and it does list in the statutory language some of the intended purposes for this funding, such as to support housing development projects, include the development of affordable housing units, permanently affordable housing units, service supported housing units, and transition housing. Then section six at the end here is just making that fiscal year twenty seventh appropriation out of the fund for its first year, So $5,000,000 is appropriated for the Department of Housing and Community Development for use for VHIF, and then the remainder of the estimated revenue from this, if it is appropriated to support housing development projects through the Vermont Housing Conservation Board. And that is the quick version of this 38.

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

[Sen. David Weeks (Clerk)]: Not sure you have it yet, but does CFO have an estimate on what kind of fund this? We could generate the following These two. That's what you're about

[Chris Donnelly (Champlain Housing Trust)]: to Great segue

[Kirby (Legislative Counsel)]: for Ted. So

[Sen. Alison Clarkson (Chair)]: why don't we segue to Ted? Because I would love to before we dive, we're obviously full of things to discuss. I'd love to hear from Ted and set up what what the what what this might generate and probably the and then I would really love to have us hear the need framed up and discuss what we have at the cosmic brain trust here, which would be great. Ted. Sure. Can you have on your desks, I believe, thumb up Ted's?

[Chris Donnelly (Champlain Housing Trust)]: Thank

[Sen. Randy Brock (Vice Chair)]: you. Perfect. Sure. I'll hang up for

[Edward “Ted” (Joint Fiscal Office analyst)]: a minute. It takes ten to the point. Great. Slightly left here. Okay. Great. Thanks.

[Sen. Alison Clarkson (Chair)]: Read it all now.

[Edward “Ted” (Joint Fiscal Office analyst)]: Perfect. Right. So on this in another committee, we have I'm drinking shoes now. Oh, I'm sorry. Edward and I joined fiscal office. In other committees, I've borrowed the term fiscal walk through, so we can now Kirby does a walk through. We now do walk throughs. Let's walk through. It feels new. It feels exciting.

[Sen. Alison Clarkson (Chair)]: That's what we want this committee to be. Always exciting.

[Edward “Ted” (Joint Fiscal Office analyst)]: It's the small things. So, yes, we're gonna go through the first table talked about I find it always helpful that when we're talking about a surcharge, exactly what the rate would be in different permutations compared with current law. So this first table walks through those. In current law, right, room stack's 9%. You have your 3% STR surcharge, that's 12%. But 2% surcharge, those rate move to 11 is 14%. You have talent for the local option, and so you add a percentage

[Sen. Kesha Ram Hinsdale (Member)]: of in those there.

[Edward “Ted” (Joint Fiscal Office analyst)]: I do have Burlington in the map. Correct?

[Sen. Alison Clarkson (Chair)]: In it. Yeah? Burlington is you know, and and we've obviously are gonna talk about what places that already have this in place because Burlington already has an aspect of this.

[Sen. Kesha Ram Hinsdale (Member)]: Yep. Big a big aspect.

[Edward “Ted” (Joint Fiscal Office analyst)]: Yeah. They do. Yes. It's their rate they have a gross receipts tax, which they're they've been given the ability to do this through a partner change. Yeah. Their tax gross receipts tax rate on per per rental is 9%, and it also So that would be in Burlington, this would layer on top of those rates as well.

[Sen. Alison Clarkson (Chair)]: Oh, oh, yes. Anyway, all up subject for discussion. How much discussion? I mean, like A lot.

[Sen. Kesha Ram Hinsdale (Member)]: I know.

[Sen. Alison Clarkson (Chair)]: But we're just hearing the proposal, and then

[Sen. Kesha Ram Hinsdale (Member)]: we'll have the discussion after we hear from Chris and Scott and Bob. To decide whether or not this would even make that a committee.

[Sen. Alison Clarkson (Chair)]: I think we have before we jump to

[Sen. Kesha Ram Hinsdale (Member)]: any breath or any No. No. I just like I don't know how I think I don't I won't say anything if we're just waiting

[Sen. Alison Clarkson (Chair)]: and The discussion will happen after we hear.

[Sen. Kesha Ram Hinsdale (Member)]: Mhmm.

[Sen. Alison Clarkson (Chair)]: I'll paint the picture of the need, and this is just to get the conversation going about how do we, going forward with no ARPA money, Meets the meet the need of housing revenue, which we don't have. I love to have that conversation. That's what this is about, really, though. But in all honesty, that is what this is about is how we raise more money for housing. So, Pat, why don't you finish, and then we will turn to Chris and Polly in terms.

[Edward “Ted” (Joint Fiscal Office analyst)]: Sure. So preliminary estimates of the revenue that this 2% housing surcharge would raise on the tax. So in fiscal year twenty seven, it's $1,616,400,000.0. That's with the effective date is August 1, so you would receive ten months of revenue in that first year. Folks remit in September based on their August revenue. So once that goes to effect, we'd only see 10 milks revenue in that first year. And then just near 28, it'd be 20,000,000, as I said. In addition, the housing investments special fund would receive revenue from the 3% STR surcharge. I will note that in this table, it's very conservative for fiscal year twenty seven. In conversation early on with some folks at JFO and Kirby, we haven't yet talked with the tax department about any sort of implementation with the sugar sweetened beverages excise tax, and you didn't wanna pull the SCR surcharge from the education fund until you were sure that the revenues from the sugar sweetened beverage excise tax. So this fiscal year twenty seven, this is just a placeholder. As conversations move forward, we would connect with the tax department and get their thoughts about the appropriate effective date. So here, we just assumed it was in the middle of the year so that it doesn't assume too much revenue. And then I have to come back and say, well, actually, you have less money to spend in twenty seventh than you're expecting. Right. So all in total between those two revenue sources in fiscal year twenty seven, it's an estimated 20,000,020,800,000.0 in fiscal year twenty seventh, and then 29,600,000.0 in fiscal year twenty eight because you're receiving a full year of revenue from the SCR surcharge.

[Sen. Alison Clarkson (Chair)]: I talk to somebody.

[Edward “Ted” (Joint Fiscal Office analyst)]: In both your fiscal notes and your logins Mhmm.

[Sen. Randy Brock (Vice Chair)]: Well, this was fabulous.

[Edward “Ted” (Joint Fiscal Office analyst)]: Do you factor in the elasticity of pricing? We do. This one, I will say, you can really I I dove into the literature two years ago looking at the SDR surcharge. I will say there's quite a bit of variation in elasticity estimates, and it really depends on whether you're looking at hotel motel, short term rental stays. I've plugged in kind of somewhere in the middle of the range, a little bit of a elasticity estimate. I mean, these elasticity estimates, you're looking on the border of, like, a negative point seven. So for every 1% increase in price, you're seeing a reduction in demand of about point 7%. That's that's kind of what's baked into this estimate. I will say, right, there are kind of broader macro trends that are right now stronger headwinds than in The US, see behavior change. Right? There's relationships with our native Canada, etcetera. So I would say those are also part of the picture. So continuing on that, and this is probably for a full fiscal note, not necessarily a walkthrough, but would you also approach a quick Google search and tell me that luxury and high ends are relatively inelastic, but mid scale economy and housing would be much more unitary elastic. You segregate out the anticipated effect on overall market demand in a full fiscal note? I don't think we would go to that level of specificity. We're trying to find any elasticity that's not that kinda reflects the full market for rooms. If you start getting into more speculative things, especially when you're trying to parse what you're seeing in the rooms tax by different segments of the market. I was really trying to understand how the walk through is different than a full physical dump finish.

[Sen. Alison Clarkson (Chair)]: Oh, this is a starting point, and I don't think we want anyway, Ted, why don't you finish? David, did you have a question?

[Chris Donnelly (Champlain Housing Trust)]: I did

[Sen. David Weeks (Clerk)]: have a question. Okay. So essentially, it looks like the first half of the of this proposal is targeted towards rooms, which is targeted really towards tourism. And I noted in in the third page of your walk through that New Hampshire, New Hampshire and Upstate New York are kind of our competitors at least regionally. New Hampshire is roughly currently half of what we're proposing as far as rents taxes. New York City is highlighted, but not Upstate New York. Can you characterize what Upstate New York is REMS taxes would amount to? Would

[Sen. Randy Brock (Vice Chair)]: have to

[Edward “Ted” (Joint Fiscal Office analyst)]: take a look. New York on the table jumping ahead. New York has a general 4% sales tax supply statewide, and then different localities have different local sales tax rates. And I have to take a look at what it is in in neighboring counties in New York. Okay. Thank you. Yep.

[Sen. Alison Clarkson (Chair)]: Fine. I can finish.

[Edward “Ted” (Joint Fiscal Office analyst)]: Right. So just jot that down because I will leave for granted entirely. Yes.

[Sen. Alison Clarkson (Chair)]: And there Ted has sent out. There are lots of resources on there are hundreds of jurisdictions that have housing surcharges, some of which go into housing trusts with like BHCB that that generate affordable housing. So there are lots of us examples for us to look at, which he has sent and then CSL has some, we have lots to look at on this.

[Edward “Ted” (Joint Fiscal Office analyst)]: Sure. So moving from the revenue, from what I understand, there are appropriations in the bill. These appropriations will be placeholders until revenue is finalized. Some of the implementation considerations we were talking about get ironed out as well, but the bill as introduced has 5,000,000 going to DHCV for VHIP and 14 and a half million going to VHCV for housing development funds. So that is the housing investment special fund piece looking at the education fund in fiscal year twenty seven. The 1¢ per ounce sugar sweetened beverages excise tax for estimating, this is a half year revenue. We're assuming January 1 effective date is $7,300,000. And so net of the half a year of SDR surcharge reallocation, you're seeing about $3,000,000 for the Education Fund. Not within the context of the Education Fund, that's relatively small, but it's positive. And in fiscal year twenty eight, the full year impact of that switch, you're seeing losing $9,200,000 from the SDR surcharge reallocation, like gaining 15,800,000.0 for the SSP, use acronym, excise tax, and so on that $6,600,000 for the education fund, right, in 2018. We did provide a page of considerations if you're thinking about these different tax types. In addition, I'll run through these generally. In addition, do wanna note that I didn't put this in the considerations, but it's worth mentioning here is that because the sugar sweetened beverages excise tax is 1¢ per ounce, unlike a percentage on a base, that amount wouldn't grow with inflation. It would depend on consumption. Right. You know, as we're we're seeing a little bit of you know, as people are trending healthier, that base might actually be declining a bit. So that's a consideration there. You would see over time potentially this benefit to the education bond on net start to shrink. So in addition to that, we're you do wanna flag the implementation costs. They're certainly not zero, and so we'll gain more information on that. Do also wanna note that because it's 1¢ per ounce, for example, on a two liter of soda, two liter of soda is between sixty seven and sixty eight ounces, and so that's a 67 I'm setting a 67¢ tax, which is a relatively high effective tax rate. The two liter of soda is $2, and so 67¢ on top of that is much higher than my comparable meals tax, sales tax on goods. Right? It's much, much higher. Do also wanna note that in jurisdictions that have implemented an excise tax, there has been a pretty strong behavioral response, whether that's people are buying sugar sweetened beverages in other jurisdictions. A lot of places that have implemented business in cities, and so folks are relatively it's easier for them to to purchase in another jurisdiction, and also just consumption decreases because, right, it's more expensive. So do wanna flag that these estimates do account for this type of behavior change, but I would say that there's more downside risk on this text type. And so certainly something to be mindful of there. And, yes, the next two considerations are those cross border issues.

[Sen. Randy Brock (Vice Chair)]: Yeah.

[Edward “Ted” (Joint Fiscal Office analyst)]: Folks, right, if they're because there's a relatively high tax on sugar sweetened beverages, they say, okay. I'm gonna do more grocery shopping in New Hampshire, but while I'm here, I'm gonna do I'm gonna go to the stores that are nearby, and so we start seeing less sales tax. We we didn't factor that into the incident, but that's

[Sen. Randy Brock (Vice Chair)]: certainly a configuration here.

[Edward “Ted” (Joint Fiscal Office analyst)]: And then the rest of the discussion is talking about competitiveness. This is how the rates for months, tax rates with the surcharge would compare to other jurisdictions. I think it is helpful to look at that in rooms taxes in particular because there are so many different ways of structuring rooms taxes and it depends different cities have convention center fees. They layer all these different taxes on top. It's hard to say generally how we compare to our neighbors and thinking about competitiveness with what for example, I was gonna say that by us talking about something similar. Right? Like, what's competitive to Vermont is places with trees, maybe not New York City.

[Sen. Kesha Ram Hinsdale (Member)]: Sorry. So you have Burlington on there and a discussion of STRs.

[Edward “Ted” (Joint Fiscal Office analyst)]: So this is looking at the current law tax rate. So if you were in Burlington Yeah. This is factoring in, right, the looking at the state rate

[Sen. Kesha Ram Hinsdale (Member)]: You may not know that Burlington doesn't allow short term rentals.

[Edward “Ted” (Joint Fiscal Office analyst)]: They sharply regulate them, but

[Chris Donnelly (Champlain Housing Trust)]: they still have

[Sen. Alison Clarkson (Chair)]: the It's not a short

[Sen. Kesha Ram Hinsdale (Member)]: term rental if it's if it's less than thirty days. And I don't know how many there are, but there's probably, like, five of those.

[Edward “Ted” (Joint Fiscal Office analyst)]: So, yes. These rates are provided for reference.

[Sen. Kesha Ram Hinsdale (Member)]: And No. I know. It's just that we also have to take into account that there is nowhere else for people to go in a place like Burlington or in South Burlington if they limit short term rentals. Like, that also makes the freight fire of our very limited So it's I just don't want the committee to not understand that there's almost no short term rentals in Anymore. Right. The rest of Chittenden County Of and so are looking at it.

[Sen. Alison Clarkson (Chair)]: No. And I appreciate that. And I think I think we will dive into this. I think we'll just try I'm just trying to get a picture of of the and and launch this conversation because I think we have to have it. It's like affordability. We talk about how unaffordable everything is, but we all wanna talk about one side of the equation. None of us wanna talk about the other side of the equation, which is what we earn and what sets our attitude about what is affordable or not. So we in this building could be addressing what we earn, and we're choosing not to this year. However, with housing, we know it surprises, but we also have some financial muscle we can I mean? The question is

[Sen. Kesha Ram Hinsdale (Member)]: If we're saying that we want to meet our housing targets Correct. The bill should be about lowering the cost per unit.

[Sen. Alison Clarkson (Chair)]: That is a piece of it, but they also need more revenue to

[Sen. Kesha Ram Hinsdale (Member)]: Because, like, there was one that was $20,000,000. It costs about $600,000 to build and you do housing right now. Appreciate it. I

[Sen. Alison Clarkson (Chair)]: I'm just gonna get Ted to finish, and then we're gonna turn to our house our housing team behind you.

[Edward “Ted” (Joint Fiscal Office analyst)]: Sure. And this table is is for y'all's reference. You can kinda digest Right. These rates compared to other jurisdictions. Quick note on how to look at this table. The state so in each jurisdiction, for example, if we looked at Boston, the first column shows the base state and or federal rates in that jurisdiction, and then the next column shows the local taxes in that jurisdiction, and then there's a column for the total tax rate in that. So in that locality, so, yes, couple that kinda go left to right and builds the tax rates all the

[Sen. Randy Brock (Vice Chair)]: way up

[Sen. Kesha Ram Hinsdale (Member)]: to able to see how much short term rental revenue is generated in Burlington?

[Edward “Ted” (Joint Fiscal Office analyst)]: No. We don't have that Okay. Specific information. We just have we have information about

[Sen. Alison Clarkson (Chair)]: But we have an agreement with tax that we can see some of them.

[Edward “Ted” (Joint Fiscal Office analyst)]: I will look into Because

[Sen. Kesha Ram Hinsdale (Member)]: I don't wanna disagree about something neither of us know, but I have I believe it's a municipal amount of money that be going. You would have to do thirty days or more unless you also take a section eight. If you have a section eight tenant in your building, you can have one short term rental. That's gotta be My 10 Yeah. Houses might be.

[Sen. Alison Clarkson (Chair)]: I don't I don't know. So I also would appreciate it if you would thank you for this, Ted. If you'd be kind enough to send us the and I you know what? I have it. I have the link that you sent me. I will send it to the committee on the the other resources that we enter other jurisdictions.

[Edward “Ted” (Joint Fiscal Office analyst)]: Sure. Yes. About specific surcharges dedicating the helpings. Yeah.

[Sen. Alison Clarkson (Chair)]: Yeah. Mean, people should just be able One

[Sen. Randy Brock (Vice Chair)]: of the things that's important to all of this is how people who are consumers use this information at all. For example, if you were trying to wrap up a hotel using a travel agency or other services, or if you're using a convention planner to decide where to put your convention, what information do they give? I'm sure they don't give them this mess.

[Sen. Alison Clarkson (Chair)]: And how often when you get a price? Do you get all the tax

[Sen. Randy Brock (Vice Chair)]: You get a number that they provide. So the question is, what are by bay? There's just a limited set of bays. What do they provide?

[Sen. Alison Clarkson (Chair)]: I agree. And I think when we get into those are the questions we'll be asking. Ted, anything else for us to look at?

[Edward “Ted” (Joint Fiscal Office analyst)]: That is it for now.

[Sen. Alison Clarkson (Chair)]: Great. So given how short our time is, I would love to turn to Chris and Polly and Gus to help paint the picture of the of the revenue. Right. And before you got here, I I just had mentioned that one of the things that we I asked the brain truck the housing brain truck to look at this summer. Okay. So we know we need to be seven building 7,500 units a year. Of those, how many need state how many need public support to come in here affordable housing units. And I came back Chad came back BHFA came back with a guesstimate of of four thousand 7,500, 4,000 need to

[Sen. Kesha Ram Hinsdale (Member)]: be Funded a 120% AMI?

[Sen. Alison Clarkson (Chair)]: I I think that's what he is. Okay. Okay. Chris Donman, we welcome you. Chris Donman, thanks for thanks for having me. You have this at your place. I what's that? You have You have the chart that you provided at our place.

[Chris Donnelly (Champlain Housing Trust)]: I got it. I didn't have that. Yeah.

[Sen. Randy Brock (Vice Chair)]: We have. Okay.

[Chris Donnelly (Champlain Housing Trust)]: There's two there's two charts. So just thank you for having me and thanking the last time revenue was raised for housing in this building, Stamperless, New York.

[Sen. Alison Clarkson (Chair)]: Yeah, 2017. Nope. Oh, property transfer Yeah, Our transfer tax, the property transfer tax.

[Chris Donnelly (Champlain Housing Trust)]: Absolutely. And the time before that was 2017. Right. So I want to thank this committee for the long history of supporting housing production. To Senator Ram Hinsdale's comments, yes, we need to be at the cost. Focused on that. We embrace that wholeheartedly because we want to build this much housing. Yes, hear hear. So I appreciate the continued focus on this committee's. That as well, I know that there are a couple members of the finance committee here, a couple members, people that have been raising means in the house, and I know raising revenues and equity fee. So I would come here to appreciate that as well. As was stated before, twothree of the households in the housing needs assessment, twothree of the housing that we need to generate that was mentioned in the housing needs assessment needs to be subsidized somehow. It's for people earning up to 120% of AMI, unless we can bring the cost way down. That number 4,000, it's a big number. I don't think we're talking about getting to that today. I mean, we're talking about getting to that today, but we can't just slip faster through it today. Sorry,

[Sen. Kesha Ram Hinsdale (Member)]: go ahead. There's a, right, so the cost of renting and buying is anticipated to level off or come down in places where we are getting close to achieving vacancy. So did you factor in the what happens if we if we ever I mean, a main thing if we got to the Fed up Yeah. To would a 120% of also change.

[Chris Donnelly (Champlain Housing Trust)]: You would you would hope so as Yeah. As people's incomes go up. Right? And I have the charting with real numbers for the for the committee.

[Sen. Kesha Ram Hinsdale (Member)]: Well, not just as people's incomes go up, but

[Sen. Alison Clarkson (Chair)]: as the cost of

[Sen. Kesha Ram Hinsdale (Member)]: income spend two years talking about is the only research that's endorsed across the country is that when you build a large amount of multifamily housing, homelessness comes down and rent prices come down. That is settled research if you want your trust to come in and say that again. Great. Okay.

[Chris Donnelly (Champlain Housing Trust)]: So, I know this first chart here, I have two charts that look very similar. Which one do you want us first start? One has the big drop off at the end. That's housing production and preservation, and then projected through fiscal year thirty without new revenue. And so this is, and to Senator Brock's question, this is when the housing has been funded, it's not when it's been billed. Because the different programs that we fund, be it with farm worker housing, or shelters, or apartments, they all take different times. I'm just trying to standardize what we're looking at, this is when the money has been allocated to a development. There's BHFA, VHCB, the department, all track when the housing actually comes online too.

[Sen. Randy Brock (Vice Chair)]: So just make sure I The understand comparisons in terms of cost are based on when the money is allocated? I'm not

[Chris Donnelly (Champlain Housing Trust)]: doing a comparison on cost. I'm talking about the number of units that have been funded.

[Sen. Randy Brock (Vice Chair)]: Number of units that have been funded depends on the cost of the unit.

[Sen. Kesha Ram Hinsdale (Member)]: How much state money goes

[Chris Donnelly (Champlain Housing Trust)]: into But

[Sen. Alison Clarkson (Chair)]: that's agreed on. It wouldn't be on the chart if they hadn't come to it. Right.

[Sen. Randy Brock (Vice Chair)]: Funded These They are negotiated developed agreements. And I'm I'm trying to just understand the time value of money Yeah. As it's associated with this. And when when I'm looking at the money here, what's allocated and what it actually costs at the end, are those necessarily going to be the same?

[Chris Donnelly (Champlain Housing Trust)]: They generally are, unless there's a longer period of appeal period or what have you.

[Sen. Randy Brock (Vice Chair)]: You don't know what that period is, do you,

[Chris Donnelly (Champlain Housing Trust)]: at that point? When the product has been funded to when it gets

[Sen. Randy Brock (Vice Chair)]: What I'm talking about difference is there, you know, on average at the end, are you looking at numbers that are solid in terms of the amount of money that's actually expended for these particular projects? That's what I'm trying to get at.

[Chris Donnelly (Champlain Housing Trust)]: Yeah. So they're different for the different types of so a VHIP unit may take six months or maybe longer at times, but that gets, money gets allocated very empty, that's reimbursement. So a VHCB might be the first money that comes in, then you have to go and assemble all the other financing, and then you can get, you know, those are the process. So that might be twelve to eighteen months. But we could find an average for you for the different types of programs.

[Sen. Alison Clarkson (Chair)]: That would be great. Yeah. If you Sorry. I just wanna make sure we get Yeah. The way through the bias.

[Sen. Kesha Ram Hinsdale (Member)]: Love Chittenden, someone who does housing in Chittenden County is representing the problem because we need to build housing elsewhere. I think people are gonna start to get mad that, like, the sketches, you know, are like the Burlington Waterfront, and we're need to be statewide. Talking But but we need to see that broken down outside of Chittenden County. Right. It's there are other costs and delays. There are other considerations for how we get those units. And frankly, Chittenden County is now dealing more effectively with its vacancy rate, and the rest of the state has blighted properties, and they're seeing, they're not gonna wanna see, oh, we're raising all this money, and we're looking at projects that are moving in Chittenden County.

[Sen. Alison Clarkson (Chair)]: That is nowhere here, and that

[Sen. Kesha Ram Hinsdale (Member)]: is nowhere on this chart. Well, to be, to move anything that's politically Right. Almost impossible would take making the case that we're going to build in rural places. Absolutely.

[Sen. Alison Clarkson (Chair)]: We're going to build all over the state where housing is needed and wanted. And and I think Chittenden that is, I think, a piece of our conversation. But I really given our time

[Chris Donnelly (Champlain Housing Trust)]: This this work came from discussions with housing partners all around the state. These are five Not just housing partners. Not just me. So what I wanna do is I wanna just show you the comparison of these roof guards. I didn't throw up on the screen. So the chart on my right hand is what happens if we don't raise any new revenue. And we just have base funding. Is, some of these out here. It's what has been funded. It's, thank you very much, the ARPA funds, fantastic, general funds, increase in the revenue for property transfer tax. That fueled the capacity across the state to develop more housing of all sorts of different types.

[Sen. Kesha Ram Hinsdale (Member)]: Could you give us an average cost per unit from what we, like, let's say he took $10,000,000 of the investment, if you average it across all of the investments,

[Sen. Randy Brock (Vice Chair)]: how

[Sen. Alison Clarkson (Chair)]: many units did we get?

[Chris Donnelly (Champlain Housing Trust)]: I think this is what Senator Brock was saying. But you have to

[Sen. Kesha Ram Hinsdale (Member)]: have that. I mean, I don't know that you have it's not always apples to apples, but how much money are we getting per 10,000,000? How much how many units are we getting per $10,000,000 Is

[Sen. Alison Clarkson (Chair)]: that is that for Gus and Polly, maybe? Would you be, we're

[Chris Donnelly (Champlain Housing Trust)]: kind trying

[Sen. Alison Clarkson (Chair)]: to answer that question more generally. Chris, why don't you?

[Chris Donnelly (Champlain Housing Trust)]: So, the concept here is that we are, the nonprofit housing network with no new revenue will essentially see our pipeline drive, and we will be developing 150 to 200 units a year statewide without new revenue. That's just the reality. New revenue would allow us to contribute to these overall larger housing builds. I have the second chart, it's been modeling. Yeah. So was $45,000,000 raised. I have the walkthrough. So it was $45,000,000 raised, 30 of it went to BHB for a range of programs, 10 of it went to the housing finance agency for their homeownership development, and five went to VHIP. Then we would be contributing at about between 500 to 600 units year. Define a unit, how do you define a unit? An apartment or a home, or

[Sen. Randy Brock (Vice Chair)]: a VHIP. There are different prices for an apartment, yes.

[Chris Donnelly (Champlain Housing Trust)]: And so what did was put into a model 5,000,000 into a vehicle that's at a certain cost per unit, you know, up to 50,000. And then I just put these allocations into some models.

[Sen. Randy Brock (Vice Chair)]: So this is an ad, in fact, in total cost, the average cost of a unit of housing, which could be an apartment, it could be a home, and so on, and you simply average all of those that

[Sen. Alison Clarkson (Chair)]: you'd to average everything from home share through our affordable housing. To answer

[Chris Donnelly (Champlain Housing Trust)]: your question before, if there's 500 units and we have $45,000,000 it's 100,000 units. At average.

[Sen. Kesha Ram Hinsdale (Member)]: And you do not include a chip?

[Chris Donnelly (Champlain Housing Trust)]: No, chip I actually put into the model.

[Sen. Kesha Ram Hinsdale (Member)]: Okay, just get in

[Chris Donnelly (Champlain Housing Trust)]: your It's not chip is built into the financing of all the houses.

[Sen. Randy Brock (Vice Chair)]: Again, I'm not sure that I fully understand. When you come to 100,000, what's the 100,000? Is that the amount that you are using to subsidize? It's not the cost of the unit. No. That's cost of the unit that I'm interested in. So there's other are building 100,000 or 4,000 or a thousand of? What is it? Right.

[Chris Donnelly (Champlain Housing Trust)]: So there's other there are other federal sources, other leverage that we bring in to build the units. That's not included here. It's in the modeling, though.

[Sen. Randy Brock (Vice Chair)]: No, in terms of the target, what's the unit cost? How much are the average units cost if somebody were to go buy one, for example?

[Sen. Alison Clarkson (Chair)]: Well, it depends on where where you're looking or or to rent it. Well, I mean, I don't know what

[Sen. Randy Brock (Vice Chair)]: we're talking about is my is my question.

[Sen. Alison Clarkson (Chair)]: But I I think that part of our ongoing discussion, we have everything from Phoenix, which may be on average $39,000 to create a new unit to 600 and 600,000, let's say. Right. So it's a whole rent.

[Chris Donnelly (Champlain Housing Trust)]: Right. But the 600,000 is not gonna be what the state puts in. It's going to be leveraged by the financing for the private more public financing.

[Sen. Kesha Ram Hinsdale (Member)]: So you're saying $400,000,000 a year to 45. Build 4,000 units a year at $100,000 each.

[Chris Donnelly (Champlain Housing Trust)]: You wanted to it's at 45. It's 400,000. Well, if you wanted to do 4,000

[Sen. Alison Clarkson (Chair)]: Units.

[Chris Donnelly (Champlain Housing Trust)]: Units. Subsidized units Right. A So, I'm not sitting here suggesting that the legislature do that.

[Sen. Kesha Ram Hinsdale (Member)]: Right, and this doesn't raise anywhere near that.

[Sen. Alison Clarkson (Chair)]: Right. Right. But it's a start.

[Sen. Randy Brock (Vice Chair)]: This question is, are you saying that the amount of money that you're talking about is the amount of money that the HCV, for example, would have in play for each unit that is to be built. That what we're talking about?

[Chris Donnelly (Champlain Housing Trust)]: Correct. We have each We unit

[Sen. Alison Clarkson (Chair)]: have them and we'll invite them up together in a second. Chris, what else would you like to share with us?

[Chris Donnelly (Champlain Housing Trust)]: That's that's all I really wanna Yeah. I'm gonna

[Sen. Kesha Ram Hinsdale (Member)]: let you know. Methodology is really is critical, and I'm wondering. Did you ask your housing partners how many we can't like, I would love to build 4,000 units of housing and have the federal drawdown and make How it many units does the housing does the affordable housing community think it could build?

[Chris Donnelly (Champlain Housing Trust)]: Well, you can see the capacity. When there was resources, we 14 could 100. Yeah, we could do maybe even more. There are resources, we have a pipeline.

[Sen. Kesha Ram Hinsdale (Member)]: But don't you think 1,400 is, like, think you could build 4,000 instead of 1,400?

[Sen. Alison Clarkson (Chair)]: Not of the current shopping. Not of the current inflation or tariff. You know,

[Chris Donnelly (Champlain Housing Trust)]: I mean, mean, would be a big whip, right? That's why Okay.

[Sen. Kesha Ram Hinsdale (Member)]: It's gonna be I mean, should we be looking at 1,400 as like a, I mean, we're never gonna have more money than we got out the door from the federal Yes, no, would, I mean Maybe when housing gets so expensive.

[Chris Donnelly (Champlain Housing Trust)]: Two years ago, I came up with a ten year model, and it started out at 200,000,000 a year, and it was gonna generate 11,000 units of housing.

[Sen. Alison Clarkson (Chair)]: Thought

[Chris Donnelly (Champlain Housing Trust)]: it's 3,000 units. Got scaled back to about 100,000,000, and then it was 7,500. Thank

[Sen. Alison Clarkson (Chair)]: you, Chris. I'm gonna switch to Polly and you guts. This is just setting the table for this conversation. So thank you very much.

[Sen. Kesha Ram Hinsdale (Member)]: It was 1,400.

[Sen. Alison Clarkson (Chair)]: Chris and Polly. I mean, to Gus and Polly. Chris, thank you. Pull up one of your chairs. I think we're gonna need excuse

[Chris Donnelly (Champlain Housing Trust)]: me.

[Sen. Kesha Ram Hinsdale (Member)]: Can I just say while they're getting enough? Eventually I mean, I'd like to know the cost per unit in all of the housing regions. You know? I don't know that it's gonna relate to this bill, but what we eventually need to know is what money it would take in each region of the state to meet their housing targets, which is a different and to to loosen up vacancy. It's a different converse this the that's why we have the housing targets. It's like Yep. What does lover need to meet its housing targets?

[Sen. Alison Clarkson (Chair)]: Yeah. And what does that lend me? And to that, next week, we're having some of our housing partners from all over the state ask to do exactly that. So let's ask that. Think that's a piece of this.

[Sen. David Weeks (Clerk)]: In those comparisons I would really like to know the population of the topics that we're all experiencing. You know what's happening in Chittenden County is quite different.

[Sen. Alison Clarkson (Chair)]: Anyway. Exactly.

[Sen. David Weeks (Clerk)]: Knowing that we have a negative immigration

[Sen. Kesha Ram Hinsdale (Member)]: I don't think we've defined the need clearly. I mean I define the need every breath I take, but I don't think we've defined the need now that we have housing target numbers. Like, that would be Well, it's not This is a really undefined conversation. Right. And it it's being defined by taxes that aren't gonna get

[Sen. Alison Clarkson (Chair)]: passed. The being need defined by all the work that's being done by our RPCs right now.

[Chris Donnelly (Champlain Housing Trust)]: Yeah. We will

[Sen. Alison Clarkson (Chair)]: be very clear on our need by December in addition to all to to this work. So I think we're gonna have a very clear picture of the need. Right.

[Sen. Kesha Ram Hinsdale (Member)]: I mean, they're just saying they're stopping their need in most of the places of the state is the land use review board. So That Like, it I just I don't know how far a small amount of money is gonna get us, and I'd I'd rather define the need. And what that is what we're trying

[Sen. Alison Clarkson (Chair)]: to do. So, Holly and Gus, would you be kind enough to take over and help us define the need?

[Sen. Randy Brock (Vice Chair)]: Madam Chair for the Record, Gus Seelich, Executive Director for the Monmouth Housing and Conservation Board.

[Sen. Alison Clarkson (Chair)]: And Pauline

[Sen. Kesha Ram Hinsdale (Member)]: Major, the Policy Director for

[Sen. Alison Clarkson (Chair)]: the Monmouth Housing and Conservation Board.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Let me start off with some broad numbers to remind you of that we provided in past presentations, and just also to say that in the more than three decades I've spent working on this issue, we have always incrementally attacked this problem. Never been in a position say that we can raise enough revenue or get enough partnership to solve it in five years. And that was true even before I started this work in the heyday of the Section eight Construction Substantial Rehab program. So I think some of the questions you're asking are important questions that there are not easy answers to, and certainly not now to the level of Glover Vermont, but certainly there are regional questions. Broadly, we presented to you a few weeks back our work over the course of the pandemic, which was investment in more than 5,600 homes, apartments, and shelter beds across the state and special facilities, whether for people with intellectual and developmental disabilities, recovery residences, trying to meet a broad range of need that includes home ownership and includes rental housing and includes making homes accessible where otherwise somebody might need a nursing care facility, farm or greenhouse. So there are very different costs for each of that. Over the course of those 5,600 residences, we invested $80,000 per unit. We leveraged the state's dollars or the ARPA dollars with another just about $2 for every dollar provided to us from one of those sources. A big part of the question we've always you've always asked us is how much leverage can we get? Where can the leverage come from? And what we're trying to do, I think the other point we're trying to make is we're always looking to have an analytic impact where we do something and it sets other things in motion. So we don't count in our numbers the housing we did not invest in in the South Burlington New Town Center, but we were the first two buildings that helped the developers free up their capital to begin to work on other developments. Same thing in the Tift District in St. Albans and Cambrian Rise and StoneCrop at Middlebury. We've kind of become an anchor, and that helps get some private sector investment by itself that we don't report to you on our numbers because somebody who I couldn't say but for our investment. I can't say that it wouldn't have happened, but I can't say, having talked to developers over the years, that having freed up some of their initial investment, it allows them to go on and do more. That happened in Morris over a month on a smaller scale than most other projects I talked about. We built somebody did a turnkey deal to a nonprofit of 30 units, and then he built 60 more, and that got his money back out of that initial investment in construction building. What I'd like to do in the few minutes we have is to also say that whatever revenue you can provide, and I like Chris, I've been around a long time and seen how difficult it is to raise revenue, it will send a signal to developers to take risks that they might otherwise not take, because why are you gonna go option a property, begin engineering, begin permitting if you don't think your deal can be done? So we are beginning to see a falloff in applications. Having said that, we will have more applications than we'll have the dollars to provide. I just wanna give you a few very quick ideas of things that can happen in the future if there's more resources and may not happen without them. So if you just walk down Court Street, you know you have all this parking including behind the Federal Building. Federal Building, which has been empty since the flood of twenty three, is vacant. This the community is very concerned about its future. There are people who have bought property in Montefilliard Barrie and just sat on it and left it vacant for years and years. So they've done some feasibility work. They believe that parking lot behind the Federal Building, they built 90 units and houses.

[Sen. Kesha Ram Hinsdale (Member)]: Who did that work?

[Sen. Alison Clarkson (Chair)]: The Commission on Resilience in Montpelier. Okay. Doyle's?

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Ben is the part, Commission on Resilience. It's not Ben. Ben is on the city council. Right. John John Pope Pence is about John Pope That's right. They're probably gonna ask us for a loan so that they can try to buy up that property so that they can be have some future on it. That's what you're looking at right here. There is more opportunity in the Tift District in Saint Albans. There is a property put some money in the capital budget for last year in Brattleboro at the site of the Austin School where probably 200 units could be shelved. In Bennington, at Putnam Block, there are still two parcels to be developed. Ever North has an option on one for its 30 units. In Newport, we have just begun phase two at the Sacred Park site, but there's room for more housing in a phase three. When we celebrated the signature of the Chip District, Fairhaven indicated the desire to build housing there. I know from talking to Commissioner Farrell, they're looking at state land in Virgins. There's been a lot of discussion over the years at the Regional Planning Commission. Madam Chair, your district is very interested in the empty prison site at Windsor, which is a nice residential neighborhood. There's water and sewer at the site. So there there is lots of potential to do more, and we're hearing from the community. But will people continue at the pace that we've had of a little over more than a thousand units a year of the multi types I described without there being a signal that there was gonna be money? I don't think so. Here's something that we just got an application for. We have not analyzed it, but this reflects the planning that the city of Burlington has done and the rezoning in the South End. This would be a 204 unit development. They're asking us for support for 67 of them. That wouldn't be market rate, but we're doing more affordable. Likely to sort of, even after CHIP, they likely probably need something like $7,000,000 from us. We haven't Mhmm. Can't talk about details, but we just got the application materials on Friday. But obviously, when I talk about catalytic impact, if you can put $7,000,000 at whatever the cost is gonna be into a deal, a $100,000,000 deal, you're gonna have a positive impact on the housing market. Can we pause here?

[Sen. Alison Clarkson (Chair)]: Yeah. It just we're over time, and so I would I'd love to be able to get Gus and Polly to finish.

[Sen. Kesha Ram Hinsdale (Member)]: I mean, I'd love to talk about things that will lower the cost of housing that when an affordable housing partner comes in and when we use state dollars, they're getting a density bonus. They're we keep it at a certain number of units. They get expedited permits. They might get a construction materials tax break. Like, I just like to talk about things that that could lower the cost of the project.

[Sen. Alison Clarkson (Chair)]: Yeah. No. That's a piece

[Sen. Kesha Ram Hinsdale (Member)]: of Please. You know? It it just I I I can't see spending more time on trying to raise $40,000,000 in an impossible environment to do that. They're real. See us talking about lowering the cost of all of these projects when an affordable housing partner is brought in and when state dollars are brought in. We

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: would love to be able to figure out how to lower costs. We're looking at the issues we control. My board spent a huge amount of time at its annual retreat bringing in architects and builders to talk about that. One of the interesting insights the builders brought to us is when we're looking for labor, we are competing with people who are building luxury homes. And there's more profit margin in a luxury home than there is in a affordable home, we don't have enough workers, but that's a question for another day. To go to our budget, what you see here is what our budget is. In the coming year, the congressionally directed spending is almost a miracle, but that's not necessarily to be repeated. We hadn't had it last year. Likely in an election year, the Congress can't pass budgets, we won't see any of it. So that's probably a two year number rather than a one year number, and comes with a bunch of restrictions. But it is about half of what we averaged our total budget during the pandemic, which was in the $77,000,000 range that we were able to commit projects across the state. So we're going to have less capacity, and that's why I say the signal we'll be sending to developers out is bringing us bring us projects, and you'll be able to complete them You can be helpful there if you can raise more money or provide one time money or any others. We've already talked about some problems. This is a Federal Home Loan Bank in Boston. I did a design competition that students across three schools worked on. This is 60 units that could be built at Jay. We don't have an application for it, but again, speaking to rural communities, the shortage of housing, this is a very exciting modular construction innovation. One of the things we're trying to do to be innovative and save costs, we just made a small grant to the Rutland Chapter at Habit for Humanity. They have this facility that they have just relocated to where they want to be analyzed indoors to speed up construction. There are two service organizations in Brooklyn that have agreed that they're gonna that's gonna be their service and projects to the community. Habitat is the most affordable homeownership that we can get because the homeowners sign up to do something like four hundred hours of sweat equity. Right. They still need professionals, but that's one of the ways, Senator, that we're trying to address the cost issue. And I understand that you might say it's a drop in the bucket, but we used to do four units a year with Habitat. Recent years, it's been seven or eight. This facility helps us to get to 10 a year, I'm very happy to have a big grade. And so we'll give it a try and see if it works. This is another Rutland project that has been under negotiation with the Archdiocese, which is in bankruptcy court, that there's now an option on. And the plan here is half of the site at the Loretto home would become a shelter and the other half will be mothballed until there's enough money to turn that into permanent apartments. So I know we're over time, so I

[Sen. Alison Clarkson (Chair)]: won't No. You're up till we're till 10:15. Okay.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: So I'm gonna say a couple more words.

[Sen. Alison Clarkson (Chair)]: This is in down this is right in Downtown Rockland. We looked at this. I feel like we That

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: quite stands for Western. Western Edge. But I do want to say a word or two about this one, or should I just keep going? I just keep going. Okay. We're gonna keep going. The idea is also to demonstrate to the neighborhood that there is a, hopefully a connection between people going into shelter and moving into permanent housing, but there isn't the financing right up front to do that. And then I'm gonna stop. Here is the last thing, which meets our mission, but we're gonna get some quest to help with the location of the Norwich Farmers Market, and adjoining it is a site that we can build two fifteen unit buildings on. So this is just to give you an example of things that are not in our immediate pipeline, but that there is a great opportunity. And to the extent that you help us send a signal that there'll be more resources, I expect we'll get more applications that will be more ready to go. Senator Brock's question of time value of money. There's the time value of certainty that you, or if reasonable certainty that you can get your project funded, is gonna make a big difference, and we will see things slow down without that signal. People will match their Well, they'll still exceed our budget in terms of their hopes and dreams, but they'll go faster, and we saw that. We went from a much lower level of production, even with the help of a housing revenue bond in the three years prior to the pandemic began. When the pandemic care and funding became available, people ratcheted up. And they're all, you know, we saw we converted 12 hotels to housing and shelters all over the state. That was an example of trying to be very cost efficient. Hotels cheaper and faster in most instances. Across the pandemic, our average cost of our multifamily portfolio was about $335,000 a unit. We will not duplicate that because costs have gone up so much. It's much less expensive beginning of the pandemic to build housing than it is today.

[Sen. Alison Clarkson (Chair)]: Yeah. Right. Gotcha.

[Sen. Kesha Ram Hinsdale (Member)]: What if certain affordable housing organizations themselves became Act two fifty theft? I mean, what if you said, you know, you're the Housing and Conservation Board. If you're involved

[Sen. Alison Clarkson (Chair)]: Right. That would bring

[Sen. Kesha Ram Hinsdale (Member)]: You're meeting all of our environmental standards. You talk about certainty, right? Like, if you're going in with a developer, that also brings up a lot of certainty.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: That's an interesting idea. I had not thought of that. I'm happy to think more with you about that. That is an interesting Where

[Sen. David Weeks (Clerk)]: would you be building, though, outside of tier one

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: where the accident is already happened.

[Sen. Kesha Ram Hinsdale (Member)]: Tier one b and tier two need and besides, those act two fifty exemptions right now are temporary. Right. So so a, everything besides tier three. Tier two right now is a huge chunk of the state, and we really haven't done anything to incentivize housing development there that is affordable or even multifamily. Tier one b, it would be the perfect place to say any project that is partnering with an affordable housing partner is exempt because they are exempt.

[Sen. Alison Clarkson (Chair)]: Now that is a great idea and what I think we should explore. This is good. I think I think just to go to finish on Gus' point, put a pin on it. I think with all business, what we hear in every committee is stable ex stable expectations, stable funding, knowing what's coming in, knowing what can be expected signals a climate in which they want to invest their time and energy. And I think, to go to your I think that is post COVID, that's an important thing for us to be able to do. And we've done it in part with the addition of the in the PPTT tax. You but I I think and and, certainly, we're gonna be addressing this as we look at the additional loan capacity the treasurer is rolling out for us. And and with the and we're gonna be revisiting this with Alex and the treasurer with the off-site pilot in purchasing, bulk bulk bulk housing development. They have a proposal for that as well. Again, those are those are loans or very different. And and perhaps you'd like to because this is great new money coming into housing development conceivably. And and because we're looking at if we raise that 10 to 12 and a half, that's $30,000,000 again, their loans. How does that I mean, you partner with the treasurer and the the the local investment advisory committee a lot. Well, how can you just speak to that? Because we're gonna be looking at that also.

[Sen. David Weeks (Clerk)]: So, you know, I I

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: well, two things. You're right that we have partnered on lots of deals with the treasurer's office where they've because they're providing debt at, let's say, 2% or 3%, that's much less expensive than a commercial loan. And so it helps the borrower borrow more money. It reduces the cost. Of our money. It doesn't reduce the cost of the project, but it I reduces the cost of don't know if the treasurer's used his funds as construction loan. One of the things that happened over the course of the pandemic was construction lending went from 3% to 9% in a while. And so when you think about eighteen months at 9% on a $15,000,000 project, that added cost. The treasurer's done some projects that are just much more focused, and I think this is true in the roofs over Rutland and the Reddington down there where they're just making loans, but the housing they're producing is in a, as I understood it, into $2,400 $2,500 a month level for rent, so that serves a segment of the market, but not people who are making 50,060 thousand dollars a year and less. Certainly not people who are on SSI, which was our discussion to the other body, but yesterday, we're services committee and how do we get people out of transition to hotel closing in to close down. So there's a range of different need across the continuum. The treasurer's dollars are a big help, but there are a lot of Vermonters who can just have to bring the capital costs down, whether you're talking about homeownership or rental. To speak for a moment

[Sen. David Weeks (Clerk)]: to the

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: project we all celebrated in your community in Shelburne this year, 26 homeownership units delivered at under $200,000 a unit to the whole box. It included a purchase by the state trooper, included two people who worked at Wade Robin, a chef at Shelburne Farms, a single mom who worked in childcare using Section eight to homeownership to be a homeowner, probably the last person who gets to do that. So I think we do serve a wide range of people, from people who are disabled to people who are what I call the essential workforce. But even when you're in that mid range of $60.70, dollars 80,000 a year, it's not enough to have low cost debt to get affordable homeownership or affordable rent, you need to bring the capital cost down. Exactly.

[Sen. Alison Clarkson (Chair)]: And what were you on average those homes were sold for? 180. That's amazing.

[Sen. Kesha Ram Hinsdale (Member)]: Right. And so the headline was that it was $550,000 a unit when

[Sen. Alison Clarkson (Chair)]: we took the cost of

[Sen. Kesha Ram Hinsdale (Member)]: the project and divided it by the number of units. Amazing things were done with it. I'm just the biggest champion of that project, and I got pushed back from people who very much support housing because that, you know, that's taking labor and and resources and and time and money, and people are going it's very hard to say, you know, we're gonna raise taxes to fund units at $550,000 per unit. And even that would be great because if the project wasn't 94 units and someone cut the units in half, which is so common around the state, we'd be spending enough that we'd be national news like Chicago for the cost of an affordable unit of housing. No.

[Sen. Alison Clarkson (Chair)]: I appreciate that, but I also think we have to remember that this would be funding everything from VHCb. I mean, VHIP to our our more expensive affordable housing units. So if I would love to have an average cost, if we look across the spectrum of of the whole range of housing, I mean, share is even lower than we have, but if we take an average cost of a new unit coming online, it's 38,000 of our investment, state investment, up to a 100,000 part of our investment. That that is that is not 500.

[Sen. Kesha Ram Hinsdale (Member)]: I mean, the cost to I appreciate, but I also know that the cost that is a wide range of cost that that we're trying to enable, not just I think our unique work this year is to say, how does our investment lower the cost per unit? What can we do to say now the state is investing and it needs to be a denser project? We need to pile on other support. Like, that's what I hope the Affordable I mean, you all know how I feel. Like, you need to come to us and say, I mean, you've nerve. The nerve is now in the way of a lot of projects. Like,

[Sen. Alison Clarkson (Chair)]: we were Kesha, I I I completely appreciate that, but I also

[Sen. Kesha Ram Hinsdale (Member)]: I I feel sincere urgency about this because we're just talking about something that's not gonna make it. The conversation has to be had, though.

[Sen. Alison Clarkson (Chair)]: I'm sorry. I think that it's a piece of conversation that we have to have.

[Kirby (Legislative Counsel)]: Not necessarily to the two witnesses, but on this topic, I'll just say, I'm generally supportive of the sugar sweet beverage tax. The lodging tax had great positive, but I'd rather focus our energies on what I think is feasible in session, and I think that's on permit reform and not on new rep based upon housing initiatives like this. That's where I think our energy should be placed in.

[Sen. Alison Clarkson (Chair)]: And and and appreciate that. I think that's you have just heard from our our our some of our best partners on housing why it's important that for us to think about revenue.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: I could add just And one more

[Sen. Alison Clarkson (Chair)]: then we're gonna break.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: One more consideration, is I appreciate focus on cost. I have never across my career seen costs go down dramatically. I've seen costs get stabilized. Maybe we're at a moment in time where we can reverse that trend, but I think the other thing you need to think about, and that is eroded into our statute, what your predecessors did, is how much are we leveraging? Think when And And I think there's two different kinds of leverage I'm speaking to. One is people who live in Shelburne, work at Shelburne, getting to live in Shelburne, being homeowners is a certain kind of leverage and currency, whether you're a teacher, a nurse, a janitorial worker at one of the great facilities Shelburne has. The other kind of leverage, and this goes to the proposal that CHD and Ride Your Bike has been the Ride Your Bike folks are working on here, is the utilization of a 4% tax credit, which is an unlimited tax credit, virtually unlimited tax credit. So all that private equity coming into Vermont is also of value. So when I say spend $7,000,000 block a 200 unit, dollars 100,000,000 deal, I think that's a great return on investment for the state of Vermont.

[Sen. Kesha Ram Hinsdale (Member)]: Need to start leveraging for density. We need to start leveraging to say, we're putting this much money in and it's a VHCB project, So it's going to get 20% more units. That's not coming down because that actually brings the cost down for the consumer Yep. As well. Yeah. It it also need more units.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: We do, and I think you'll also find if you want to serve the rural communities, that density that's appropriate to Chittenden County would not necessarily work in some of those locations. The other kind of leverage that we're seeing, and Madam Chair, you saw this in Windsor, is leveraging funds to clean up the polluted sites like the one on Main Street. That's one of the things that's happening in Save the Market. So the price tag is way too high, I agree with that, but when we're bringing in dollars that wouldn't normally serve a housing development to do that cleanup, that's a good thing.

[Sen. Kesha Ram Hinsdale (Member)]: Right, but then that's cost that needs to be spread across more units. Even in our rural places, if we're gonna have an elevator, if we're gonna build more than three stories.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: I was trying to be specific to if we bring in, if the price tag is higher but we brought in environmental cleanup dollars that would not normally build housing someplace in that location or any place, I view that cost a little bit differently than I

[Sen. Alison Clarkson (Chair)]: would build a few high cost of building. Right. Because you're getting a non housing source to pay for it. You're leveraging that. Right. Which we did. Which we did. And we actually got a second some other options of how to address that contaminated dirt, which thank we we did last year. Thank you to this. So thank you. We're gonna go off live. We're gonna come back at 10:30. Thank you, everybody. I think