Vermont Legislature SmartTranscripts:

[Sen. Alison Clarkson (Chair)]: Trust. Yeah. Oh, great. Welcome. Welcome, everybody. It's Tuesday, April 7,

[Rep. Gail Pesha (Colchester) — House General & Housing]: and

[Sen. Alison Clarkson (Chair)]: we are in the Senate Economic Development, Housing and General Affairs. And today, are it's a housing day. And so we're turning to two important housing bills, one of which addresses mobile formal parks and manufactured housing, and the other addresses creating additional tools, financing tools in particular. Seven seventy five. Seven seventy five, doing it next. So we would we have already had Gail introduce it to us. We've had a a bit of a walk through. I'm not sure we did we finish walking through

[Sen. Thomas Chittenden (Member)]: it? Yes.

[Sen. Alison Clarkson (Chair)]: But I think we did. But the chair of house general asked, because it's a fairly technical bill, to give us sort of the story behind it and what they did and what they felt they accomplished and sort of tee it up for us in a more in a with a a a narrative from house general. So we welcome you both. Good to have you.

[Rep. Marc Mihaly — House General & Housing]: Mark McAuley, excuse me, recovery for all whatever. Don't think that I know what I don't have. I don't have anything to add. Go ahead. But You got it from me. Your update so far is.

[Sen. Alison Clarkson (Chair)]: Okay. Thanks. The floor is yours.

[Rep. Marc Mihaly — House General & Housing]: Yeah. I'm Mark Mahaly, chair of General Counseling in the House.

[Rep. Gail Pesha (Colchester) — House General & Housing]: And I'm Gail Pesha. I'm in General Counseling in House, and I'm District 20 in Colchester. Okay,

[Rep. Marc Mihaly — House General & Housing]: so I'm gonna be really brief about the type of housing we're talking about. You know what really got us interested, aside from the fact that Gail's an expert on the speaking she lives in one of these limited equity cooperative mobile phone, now known as manufacturer, is just this ongoing struggle to deal with the market reality, which is where need to steer edging. And the market reality is the free market cannot provide housing that the average homeowner can afford without subsidies. Period. Right? We're always up against this. And this manufactured housing, both of them kind of multiple variety, but generally, at the moment, it's the only type of housing in Vermont that an average homeowner actually can afford. We when we took a tour of the manufacture, What you think of is a double wide. Remember, single wide, double wides. We looked at a double wide that had a nice living room, a really nice dining room, a fun room with a washer and dryer and high high end appliances, heating that was close to net zero, heavily insulated wall wallboard, not plastic, you know, wallboard walls. But really, like, an en suite bathroom, the whole thing, one eighty five. And you plant it maybe two twenty five. So that was where our interest came from. It's like, Wow, this is affordable, form of housing that's affordable. So what we discovered is that this housing has been caught, because it's sort of caught in between two whole different legal regimes. One is the legal regime that covers things that move, like cars or trucks or trailers, things like that, on means, RVs. These things are personal property, and the whole regime is a personal property regime. The way they're thought about, the way the lawyers think about them, the way they're licensed, taxed, everything gets its own thing. Right. Then you have what we're all familiar with, which is real property, housing, not personal property, real property. Fixed. Is sold. Movable. Fixed. Fixed. Which is sold. So the movable ones, they're sold, they're sold via a bill of sale and the UCC Uniform Commercial Code governed and there you pay in you pay sales tax when you buy things. On the other hand, real property is in the regime of, you get a deed, you know, the thing. Is, you know, you get a mortgage. You know, I got a personal mortgage, you get a mortgage. It's just a different world. So what we found is we found ourselves engaged in what is a national effort, and we will hear this from you, they're really good. They're not that kind of in the middle of Vermont, but it's a national effort to try to get the world up to speed and realize these things are really like real property. Only 1% of them ever boomed. They're planted on foundations now. Their code is governed by HUD. The Housing and Urban Development has code. It's rigorous. These things, the newer ones now, appreciate just like they've built homes. They're like homes. They're homes. So they are, really are. So our effort was to move, to join the effort nationally to move in that direction. However So national effort to create parity? To really move that towards real property and get out of the personal property world. However, as you will hear from Christine and the bankers, we were warned and heard about elsewhere that although more and more lenders, including you'll hear maybe from BC Rides, there's really great lenders now who are really working to offer mortgages, real property mortgages to these people at rates that are maybe a little higher but not too much higher. You have to have 20% down. You have to qualify, and there are people still do not qualify. And really, their only recourse is personal property lending. And so the bankers urged us, Don't go all the way. Don't eliminate the other option, the personal property option. So the bill is technical in the sense that we were forced to get way into tax law, real property law, UCC law. We were advised by we had heard from bankers

[John Gray (Office of Legislative Counsel)]: all over

[Rep. Marc Mihaly — House General & Housing]: this area, etcetera, that the bill itself, in the end, I don't think really is that complicated. On h s one. What it really does is, at this point Randy, you're gonna time for me to say what the bill really does.

[Sen. Alison Clarkson (Chair)]: First of all,

[Rep. Marc Mihaly — House General & Housing]: in the tax regime, we really wanted to avoid the double taxation problem. Because the way the world works now, if I go to effect the oaths, if I have to pay sales tax, which is not inconsequential. Then when I slant it, I pay real property tax. And so the way it works now under this bill is if I buy it as real property, take the home to give me a deed. Ways and Means spent a lot of time with the tax department. They made modifications, so they're good. They respected the intent of the bill, but of course we didn't spend all the time they did with the tax department. We couldn't eliminate sales taxes, but if you buy it as a real property, you don't pay sales tax. Pay real estate transfer tax, which is the way it should be. And then, year after year you take property taxes. So you pay

[Sen. Alison Clarkson (Chair)]: the PTT on it. You pay the property transfer tax, but you don't pay sales tax. Do we know the difference between on a $185,000 home?

[Rep. Marc Mihaly — House General & Housing]: No. You don't pay sales taxes, which would be the Right. Pension. You do pay Property transfer tax. Very big.

[Sen. David Weeks (Clerk)]: How do they compare to church's question? The it's two different taxes. Purchase tax. Let's just say Purchase.

[Sen. Kesha Ram Hinsdale (Member)]: Depends on the land value.

[Sen. Alison Clarkson (Chair)]: It's 2 and a quarter if you include the water by charge.

[Sen. Thomas Chittenden (Member)]: First, like, 100,000 is exactly.

[Sen. Kesha Ram Hinsdale (Member)]: No. It's one.

[Sen. Alison Clarkson (Chair)]: It's We'll get we'll get packed in a whole country.

[Rep. Marc Mihaly — House General & Housing]: Tax is pretty low. It's really much much more than the

[Sen. Alison Clarkson (Chair)]: So how is it? So that's one option.

[Rep. Marc Mihaly — House General & Housing]: That's they

[Sen. Alison Clarkson (Chair)]: buy it as a real property, get a fee, they don't pay sales tax, they pay the property treasury But if they choose, they choose to have to buy it as a In the bank.

[Rep. Marc Mihaly — House General & Housing]: If they go and they decide to make it personal loan, if they buy it as personal taxes, they're exempt from, 90% value is exempt from the calculation of your sales taxes. That's the question If is, you're you buy it as real property, you don't pay sales taxes. Right. You pay property transfer taxes. If you buy it as personal property, you pay sales tax, but 90% of the value is exempt. So you're only paying sales tax on 10%.

[Rep. Gail Pesha (Colchester) — House General & Housing]: Who determines whether it's bought as real property or personal property? So that would be the bank or whoever the lender is. If they see that you don't qualify for a conventional mortgage, then they would offer a personal property. I can't see why anybody would want to take out a chattel loan if they're eligible for a regular mortgage because not only is there a difference with the sales tax, but there's a difference with the interest and the

[Sen. Alison Clarkson (Chair)]: term. So you use from Gail. I've never heard her. You used the term I don't know.

[Rep. Marc Mihaly — House General & Housing]: Channel mortgage. Yeah. I've never personal loan. Channel. I yeah.

[Rep. Gail Pesha (Colchester) — House General & Housing]: I don't particularly like No. It's a default.

[Rep. Marc Mihaly — House General & Housing]: What it's termed. It's it's I give

[Rep. Gail Pesha (Colchester) — House General & Housing]: you that name and stop calling it that.

[Rep. Marc Mihaly — House General & Housing]: Right. It's it's when you buy the dining room set and you take out a loan on it, you know, they, know, of course, they take it away from you. Right. You do that. That's called a chess mortgage. I have the thing is that the only other wrinkle I would add to to your question of how it determines it, not the world is not as orderly as we would wish. No. Really? Sometimes people just I decide to buy her. I'm a private party. She is a private party. I go to her and I say, I'm gonna buy your your mobile home, and here's 50 k. Give me your mobile home. Very often, she just gives me a bill of sale. You know, nobody even knows. On a napkin. On a napkin, unless they go to a bank. I need financing, and when I go to a bank, then they straighten it out. But one way or the other. The other area of this bill so that's one big thing it does. Try to straighten that up. The other area is a significant part of the manufactured home parks, mobile home parks, in Vermont are cooperative. And the term is limited equity co op, which by the way is not limited to mobile home park. It applies You can have a building with 20 units that is a limited equity co op. And it's just a form of cooperative. It's a form of ownership. It's co op. And this bill there are anomalies in the law that deal with limited equity coops. Having and this straightens them out. It just it it has a section on what you can sublease for because the law made no sense before. It made perfect sense if you were talking about a big building with units in it, but it didn't make sense if all you were talking about was a golf club park with your little ground rent. It just made no sense. I'm not getting into the same thing. And it also when you one of the major problems at mobile home parks, you see it's still bloody early, Keep slapping the hand, manufacture them. One of the biggest problems they face in the real world is that they're all tilted, you know, twenty, thirty, forty, fifty years ago. Their infrastructure is falling apart.

[Sen. Alison Clarkson (Chair)]: Yes. We can address this in this scenario.

[Rep. Marc Mihaly — House General & Housing]: And they need a lot. It's a big issue, and they need a lot more. One of the way one of ways they get the money is through grants. And when a limited equity co op applies through these grants, their registration that the Secretary of State had been messed up historically, and nobody knows quite what animal are you. Are you a nonprofit? No. They're co op. They're not. But they really look like a nonprofit. So there's a section here which was heavily negotiated It just basically says for purposes of safe drinks, we look like a nonprofit. We're considered a thing. If you're if requested. So, anyway, that's I think what about in terms of big picture, without getting into the weeds which are weedy.

[Sen. Alison Clarkson (Chair)]: So I I I forgot.

[Rep. Gail Pesha (Colchester) — House General & Housing]: So the focus on this bill is pretty much LECs that are leased land. The only two things that are in the bill are purchasing it originally from a dealership and then the other one, which is a great one, of being able to place some manufactured home anywhere that you can put any residential home. Other than that, the rest is about leased land because you had mentioned about the land value. So it's in a LEC and the reason that I wanted to do a bill on LEC is because I have the money and I lived in it when it was private.

[Sen. Alison Clarkson (Chair)]: And you took it into LEC land? Right.

[Rep. Gail Pesha (Colchester) — House General & Housing]: So we're cooperative and we're a limited equity How how many homes? 250 where I live. We're the second largest. I'm sorry. That is

[Rep. Marc Mihaly — House General & Housing]: And it's also a unicorn and in transit. It's beautiful park. I did forget one important thing. Wait. Did Gail, did you finish with No. She did the same. Go ahead.

[Sen. Alison Clarkson (Chair)]: No. That's okay. About about the land value.

[Rep. Gail Pesha (Colchester) — House General & Housing]: So the the land value when you live in a LEC, you own a home and you are taxed on your home. That's another thing that they call that personal property, but it's real property. It's a fixed and you're taxed equally proportionately to everyone else in the community in your town. Of course, because their value is less, it's gonna be less taxes that you're paying into each town. But, proportionately, it's the same as down the road with somebody who owns a stick built house. The land, the cooperative owns the land. We each have a share. What's great about an LEC is that it's perpetually affordable housing, low to moderate income, and because it's an LEC, if it were to dissolve, it would have to go to another LEC or five zero one three c. So it's much more stability and security. When you are privately owned, you don't know what's gonna happen. It's really Vermont that has the 10 BSA sixty two forty two. Such forward thinking. This is how to save people their homes. I would when we were converting, I we didn't know what was gonna happen. You only get eight once the developer buys it, you get eighteen months and you have to either move your home or you lose your home. So it's a lot of stability and security for people that live in them currently. So just to

[Sen. Alison Clarkson (Chair)]: go just to finish on property taxes. Does the cooperative pay for

[Rep. Marc Mihaly — House General & Housing]: the Cooperative pay. Here is the other thing in this bill that I forgot to make.

[Rep. Gail Pesha (Colchester) — House General & Housing]: Yeah. That's an important piece. It's not in a bill anymore. That's why.

[Rep. Marc Mihaly — House General & Housing]: Oh, that's right. Yeah. But it's being taken care of. Here's the deal.

[Sen. Alison Clarkson (Chair)]: But I it promised your souls to ways and means to take care of it.

[Rep. Gail Pesha (Colchester) — House General & Housing]: I made sure I looked at the bill that they said they were putting it in. That doesn't mean it's gonna stay there.

[Rep. Marc Mihaly — House General & Housing]: It what it is is that the assessors, they have no idea what the hell to do with these mobile home parks, particularly the limited equity co ops. And so in some places, we're talking about the land the co op owns. Okay? That the that the residential leases. Yeah. The the the whole in some cases, like in Tri Park, I think.

[Rep. Gail Pesha (Colchester) — House General & Housing]: Tri Park, they don't pay.

[Rep. Marc Mihaly — House General & Housing]: Yeah. They assess that it's zero or they don't pay taxes because No, they

[Sen. Alison Clarkson (Chair)]: pay taxes on their Same house.

[Rep. Marc Mihaly — House General & Housing]: Yeah, the co doesn't pay at all. The co

[Sen. Alison Clarkson (Chair)]: op doesn't pay any No,

[Rep. Marc Mihaly — House General & Housing]: because it's counting as zero because they can't, there's no commercial value because they can't sell it. It has no resale value. It has to be passed on to another co op. It's like a non fraud company. On other places, the assessor says, Oh no, you know, and they assess them a lot of money. So what we did is we set the ways and means. We do a study in which the Department of Taxes tells, looks what's being done and comes up with a standard way. Yes. Sounds like it needs a consistent way of being they said why they said sure, but they took it out of here and they put it in a bill that is I think it's Is

[Sen. Alison Clarkson (Chair)]: it the yield bill or is it miscellaneous?

[Rep. Marc Mihaly — House General & Housing]: No. I think it's the miscellaneous.

[Sen. Alison Clarkson (Chair)]: I'll ask Charlie. Okay.

[Rep. Marc Mihaly — House General & Housing]: And it's important. Yeah. Right now it's just like all over the place. This is classic for this field. It's just messed up. Yeah. Because of this It's it's this artifact of half real property, half personal property. So so on the nonprofit no tax status, many of

[Sen. Alison Clarkson (Chair)]: our towns vote every on a schedule of, like, every five years or something for individual properties to to not be taxed. Right. Obviously, religious institutions that statewide not not taxed. Right. But often with other unusual properties, we all vote in tap meeting to continue to have something nontaxed, and we assume that onto and spread that You spread that word. Common good. And so which way are the LEC's tax Three different ways. No. No. But which are they voted on by the municipality, or are they now in state statute context? They're it's neither. It's neither. That's the problem, and that's why Okay. So that's part of the study. Yeah. Yeah. Okay. Great. I think that's correct. Because I

[Rep. Marc Mihaly — House General & Housing]: think it is little. All of it. It's the Wild West. Yeah. Wild West in the East. Right. Wow.

[Sen. Alison Clarkson (Chair)]: Thank you. Anything else that you Do you

[Rep. Gail Pesha (Colchester) — House General & Housing]: I wanna mention the mobile home part. The reason why it's so important that we stop calling them mobile homes besides the fact that they're not mobile is that the banks were viewing them as mobile, which was a higher risk. Because if you can move it out in the middle of the night, if you did that to my home, first of all, structurally it would fall apart. The only time that they're mobile is when they come from the dealership until they're affixed to the land. And once they're affixed to the land, you can't just pick it up and move it. The other part is, and I feel this is really important, we need to get rid of the stigma. And if we get rid of that, you don't hear it called trailer park very much. For three years, I've been working really hard. I don't like correcting people, and it's not just because I live in one. It's because they're not mobile and they're not trailers.

[Sen. Alison Clarkson (Chair)]: Yes, we have a piece in our bill which you'll see, section seven or eight, where we have manufactured homewide, right?

[Rep. Marc Mihaly — House General & Housing]: Right, Which is a bigger

[Sen. Alison Clarkson (Chair)]: piece of what you've got.

[Rep. Marc Mihaly — House General & Housing]: Right. The feds are in the midst of House and Senate negotiations on a housing bill, and in that housing bill, in both the House and the Senate versions, here's a section that says that manufactured homes that were considered mobile homes, they used to have to be on a chassis. Right? And now that's gonna be taken out.

[Rep. Gail Pesha (Colchester) — House General & Housing]: Generally. You had asked me last time I about is it just manufactured like trailers. There's a gigantic difference between a modular home Right. Molded by manufactured or prefab. Right. And expense wise, there's a big difference also. So the most cost effective home ownership today in Vermont is a manufactured home. That brought in sold sold. Brought in home. Right. And fixed to the land.

[Sen. Alison Clarkson (Chair)]: And just what what and and on your LEC, what is the minimum lot size? Well What are the lot sizes? They my guess is there's a

[Rep. Gail Pesha (Colchester) — House General & Housing]: range of lot sizes. You well, yeah, there really isn't because they looked at it as one big house with a long driveway. But Westbury is huge, and we have a 183 acres with 250 homes. So each one of us have I would love to see this everywhere, but it's not gonna pencil out. We have about almost a quarter of an acre each, which makes a big difference as far as dignity and outdoor space. When I spoke to anyone that's a developer and they went, what can he do for on an acre? It just wouldn't make any sense financially. So I start out

[Sen. Alison Clarkson (Chair)]: For a note? No. For a manufactured mocha. Yeah. Like, if there was a lot more

[Rep. Gail Pesha (Colchester) — House General & Housing]: want more. They would want, like, eight or 10, and even that wouldn't be so bad compared to the railroad, which shot them. Yeah. Yeah. It's not dignified, and it's what causes the problems with people being so close together. Of course, they're gonna be best friends, neighbors, or you're gonna hate each other.

[Rep. Marc Mihaly — House General & Housing]: It's it's worth about another. Yeah. It's really worth considering you're about to look at $7.75, which is the excuse me. Rural it's a rural finance housing finance bill. Let's turn I think it's worth spending a moment on turning over. We have housing that we call off-site modular housing. They're referred to as volumetric at the last night. They are like Huntington's. You know, if it's a factory, they build a house. It's a stick built house. Only they build it in the factory. Right? Whole or in sections? In sections. With big sections. The panels? No. That's panels mostly. Okay. Big sections. And then they truck it out to it's a foundation board. They truck it out. Plant this, etcetera. They have their own needs that are really interesting. Generally speaking, those houses, they're one offs, they're not much cheaper than regulars they build. They're faster. You can build it in the winter. The workforce doesn't age as quickly because they're not outside all the time. You know, they which is a big problem in Vermont. The age of our workforce is old. And construction But they're not much cheaper. You'll see in July something called a housing accelerator Right. Which is aimed at trying to bring down the price of those guys. And the way to do it is bigger orders. And so it allows states to help facilitate taking small orders, moreover month, five here or there, and aggregating them into a big order of, say, 40 and going to a place like Huntington and saying, Nick, what kind of price can you give us? And Huntington's feeling is they could come down, particularly if under eight zero two homes, were able to pick one one type of home. But anyway, that's off-site modular houses. Right, which

[Sen. Alison Clarkson (Chair)]: were quite addressed in eleven to 12. Right, okay.

[Rep. Marc Mihaly — House General & Housing]: Then there's manufactured houses. And in fact, houses are built in factories around The United States, but like for example, big factories in Pennsylvania. They can churn out a thousand in a year. They're built on assembly lines. A thousand what? A thousand thousands. Modulars who are penalized now. Manufacturers.

[Rep. Gail Pesha (Colchester) — House General & Housing]: Well, you'll be calling them mobile home or

[Rep. Marc Mihaly — House General & Housing]: a trap. Yeah. These guys are, these are much they're they're mass manufactured in a factory. More and more, they can Sorry. They produce double wides. They produce single wides. But I have looked at the catalogs that we could produce, and they produced 1,800 square foot two story houses too in the factory. They're completely built in the factories. They come out on huge trucks. They may be split into two parts or three parts.

[Sen. Alison Clarkson (Chair)]: Yeah, they do finish it. We'll make

[Rep. Marc Mihaly — House General & Housing]: sure that In fact, the double wide is manufactured by two single wide units that are put together. But they're all much cheaper. They're just a different form of manufacturing.

[Rep. Gail Pesha (Colchester) — House General & Housing]: A single a single wide with two bedrooms and two baths with three three bedroom, smaller bedrooms with two baths. Once it's affixed, purchased, landed, affixed, hooked up, would be about $170,000.

[Sen. Thomas Chittenden (Member)]: You call it the land box or the land cover?

[Rep. Gail Pesha (Colchester) — House General & Housing]: Not the land. The land.

[Rep. Marc Mihaly — House General & Housing]: Land. On the I think we're gonna see and then there's see, forgive me for going through all this, but I was so confused with you have these off-site modular houses like a honeycomb. Which is what

[Sen. Alison Clarkson (Chair)]: we deal with in July.

[Rep. Marc Mihaly — House General & Housing]: Right, that are stick built. Then you have manufactured houses that are the size of single wide and couple of wides, and then you have the other manufactured houses which are even bigger. Then there's a third category, which is just other techniques, other building techniques that are emerging to make easier to build. And one big form of it that we mentioned is panel lines. These are pre manufactured, insulated, structurally self sufficient panels that can be assembled, hooked up together, and you don't they can hold up a roof. So a house can be built of cannabis, and that's happening as well. What we're trying to do in this bill here is just start with one kind. You know these double wide state of mind manufactured housing that is what used to be called mobile homes that are in mobile home parks. That's all that's in. It isn't evidence. In July, which contains six different strategies, one of them is the housing accelerator. Right. No. We appreciate several tools for instance, which is great. Any questions for you, Mark, again? Can I help you guys at any time?

[Sen. Alison Clarkson (Chair)]: No. This is very helpful because it is a fairly technical bill, and you've illustrated its need beautifully. So thank you both.

[Rep. Marc Mihaly — House General & Housing]: Yeah. And it's it's

[Rep. Gail Pesha (Colchester) — House General & Housing]: But I

[Sen. Alison Clarkson (Chair)]: think everybody brought a lot of That's why we asked yesterday.

[Rep. Gail Pesha (Colchester) — House General & Housing]: So my my intention was if we clean up some of the problems with the existing scotch that we will not have developers inheriting the same problems. And that has to do with infrastructure down the line and the cost. You know, there's a big difference with somebody who's purchasing a mobile home when there's a $6,000 difference because you're not paying the sales tax on on something.

[Sen. Alison Clarkson (Chair)]: No. It makes a big difference. What did you do

[Rep. Marc Mihaly — House General & Housing]: to solve our problem of financing the infrastructure needs for our mobile home bars or our manufacturing home bars? We made it easier for them to apply to finance. Right. Period. We did not

[Sen. Alison Clarkson (Chair)]: You didn't create a revenue stream for you.

[Rep. Marc Mihaly — House General & Housing]: We did not create a revenue stream.

[Rep. Gail Pesha (Colchester) — House General & Housing]: Sorry. We

[Rep. Marc Mihaly — House General & Housing]: did not Okay. We did not pull the Yeah. Wish we could've. If you, in any way, I can help you with $7.75, we really care deeply about this bill. If you wanna take one second to tee up, because then we're gonna go to camp and work

[Sen. Alison Clarkson (Chair)]: a little on this bill. But if you wanna just take a second to tee up up on the next bill, we're gonna be healing at eleven.

[Rep. Marc Mihaly — House General & Housing]: I could do that very quickly. Very big picture. Very big picture.

[Sen. Alison Clarkson (Chair)]: It's got some stuff It's we know we worked

[Rep. Marc Mihaly — House General & Housing]: like don't know. Pill. It's it's aimed. It came about very simply because remember last year we all worked on ships? Yeah. There's a lot of towns in Vermont that are never going to be able to navigate ships even though it's easier. It's not that easy. And in addition, it doesn't work with really small projects. I mean, you're not gonna have a five unit or a 10 unit project. It doesn't generate enough increment to really go through that. So we started off by saying, well, what else do do? So that we're over money. It's the last time it is. And here's what we came up with. One, a new process for infrastructure financing for very small projects, and it involves a streamlined approach to project specific special assessment districts. Basically, there's two types of bonds. There's a revenue bond where all the bondholders can look to is the assessment district. They cannot ask. They can look to the full payment credit of the town. Okay? And then there's revenue. Then there's GO bonds, general obligation bonds, which are issued and approved. They do, if the assessment doesn't cover it, God forbid, then they go to the town and say you have to tax your people. So with things that are revenue bonds, where they cannot look to the town, only look to the source, No vote. And that's one change. So there's only a vote in the full faith and credit of the town. The second increase is the treasurer's 10%. Right.

[Sen. Alison Clarkson (Chair)]: Which we worked on in February.

[Rep. Marc Mihaly — House General & Housing]: You did too and you sent it over to us. And then the next is the modular manufactured home accelerator. The off-site accelerator. Accelerator. And it authorized one thing that's in our bill is the treasurer's 10%, which went to 12.5%. Percent of that can be used to backstop all the words, serve as a credit facility, to backstop these small orders aggregated by the state. And the reason is, just felt I put myself in the shoes of my coming to I'm gonna use some antibiotics as an example. The state comes to them and says, Do we have a deal for you? We have an order for 40 houses. Well, beauty is the developers are going to pay for those 40 houses. The state doesn't have to pay. But they're small orders. It could be 10 developers. Huntington Oaks, if I were them, I'd say, how do I know I'm gonna get paid? These are a small crime. They're not big developers. I have no facts. This allows the treasurer to say state facts of those deals so that Huntington owns the whole of the new line or whatever. So the treasurer can offer that.

[Sen. Alison Clarkson (Chair)]: We're having Alex. Alex will be in

[Rep. Marc Mihaly — House General & Housing]: the school. Yeah. And they have ways of making it. They can make sure there's zero risk by buying insurance to make sure there's no risk. We just figured it would make them more solid. VHIP, remember VHIP guys? Yep. We could also It's a re reimbursed program. You have the landowner, the building owner, has to pay for the whole thing, then they get the VHIP. Right. This allows VIDA, when they want, to advance because, again, it's all on Friday. They may not have access to capital or it's expensive. We have a provision that allows VIDA, the Vermont Economic Authority, to lend. We have a thing. And then same thing with Seniors bills, a provision that incorporates the housing targets

[Sen. Alison Clarkson (Chair)]: into the law. And we got new language from the planners.

[Rep. Marc Mihaly — House General & Housing]: Right. We have, what, seven seventy you know, in some ways, seven seventy five. That's the same thing. So you have it three twenty Plus. But expand it because we had more time or we got it later. You did more time. So we got a sort of a round two. Right.

[Sen. Alison Clarkson (Chair)]: That's it. Great. Terrific. Thank you both very much. Thank you. Really helpful to tee out of this bill and we do the whole thing.

[Rep. Marc Mihaly — House General & Housing]: 75 today. We're doing both today.

[Sen. Alison Clarkson (Chair)]: Right. Okay. We get, you know, hour chunks here as we try and go through these bills.

[Rep. Marc Mihaly — House General & Housing]: But we only have today, only two hours. Right. Okay. Thank you. I appreciate your help. We appreciate your work. The best.

[Sen. Alison Clarkson (Chair)]: Well Thank you. We appreciate your good work. Thank you so much. Okay. I think before Oh, great. I think we don't I think we're gonna go turn to Jeremiah Wood who's, I believe, online. We don't have pure charitable trust or we do. Is Rachel Winsdale?

[Sen. Alison Clarkson (Chair)]: They didn't reply. They still haven't replied. It's pretty odd.

[Sen. Alison Clarkson (Chair)]: Okay. Jeremiah, we're gonna switch to you because we're today, we're really hoping to do the big picture on the manufactured home bill. That's what we're trying to do is understand the need and how these measures in the bill meet the moment and answer the need. So, Jeremiah, welcome. If you'd be kind enough to introduce yourself

[Sen. Alison Clarkson (Chair)]: and take it away.

[Jeremiah Ward (Cooperative Development Institute)]: Sure, thank you very much for having me. My name is Jeremiah Ward. I work with Cooperative Development Institute, which is a five zero one(three) nonprofit that has two programs. One, which I was part of from its inception, helps residents across New England, including in Vermont, to form cooperative LACs to purchase their manufactured housing communities and then supports them in the day to day after they purchase. And then my current program in CDI is called the Water Infrastructure Support Program, where I help resident owned manufactured housing communities raise capital for infrastructure upgrades.

[Sen. Alison Clarkson (Chair)]: And Jeremiah, where are you based?

[Jeremiah Ward (Cooperative Development Institute)]: I'm actually based in my home office in Plattsburgh, New York across Oh, the

[Sen. Thomas Chittenden (Member)]: Plattsburgh.

[Sen. Alison Clarkson (Chair)]: Okay, great. There's a TV ad index behind you.

[Jeremiah Ward (Cooperative Development Institute)]: Oh, that's actually a picture of a trip in Peru.

[Sen. Alison Clarkson (Chair)]: They're a little newer than the Adirondacks. I

[Rep. Marc Mihaly — House General & Housing]: already That's right.

[Sen. Alison Clarkson (Chair)]: Okay, great.

[Jeremiah Ward (Cooperative Development Institute)]: So yeah, I had previously given testimony to Section three in the House General about the property tax issue and how it relates to infrastructure in manufactured housing communities. I could speak to that, or I can answer any of your questions on some of the more technical parts of the bill that are currently

[Sen. Alison Clarkson (Chair)]: Well, in we're the not closely familiar with this bill yet. We've walked through it. If you wanted to give us as much big picture and then we can dive into a section that you would like to give testimony on, happy to do that. But you wanted to give sort of big picture idea of the need for this and why you've been working around New England helping communities create LACs, that would be great. And then go to section three, think you want to testify on.

[Jeremiah Ward (Cooperative Development Institute)]: Yeah, I mean the big picture, so I actually, in my sixteen years in this very niche line of work have helped form sixteen of the 18 limited equity co ops in Vermont.

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

[Jeremiah Ward (Cooperative Development Institute)]: So when you total up all 18, that's the 1,700 manufactured home lots, which is about 24% of the entire manufactured housing lot stock in the state. So it's a big chunk of the sector that I work directly with. And in my current role raising capital for infrastructure upgrades, are very much needed as was previously

[Sen. Alison Clarkson (Chair)]: Yeah, as Mark and Gail identified.

[Jeremiah Ward (Cooperative Development Institute)]: Yeah, so the big picture from my perspective is these communities were built in an era where there was very little regulation on the peripheries of a lot of towns and cities and they were generally built in the 60s and 70s and they weren't always built to the highest quality construction. It was more kind of an afterthought and a money making venture at the time. And now in 2026, that infrastructure has passed its useful lifespan and needs to be replaced and there is much more substantial red tape regulation, quality control in the infrastructure, you know, regulation permitting environment. So it's very costly to replace the infrastructure and what some aspects of this bill are getting to are just certain barriers I've encountered, we've encountered with raising that infrastructure funding. So for example, the nonprofit designation issue is one of those. The big concern there is more and I think there's it's been been resolved is my understanding is, well, there's an inconsistency. Of the 16 co ops that we helped form, eight were designated as nonprofit, eight were designated as for profit, even though they were incorporated using the same language, the

[Rep. Marc Mihaly — House General & Housing]: same But

[Sen. Alison Clarkson (Chair)]: in different towns. So towns have a way in here too. Would assume

[Rep. Marc Mihaly — House General & Housing]: Yeah. That

[Jeremiah Ward (Cooperative Development Institute)]: Whatever the case is, Secretary of State chose some to be designated nonprofit, some as for profit.

[Sen. Alison Clarkson (Chair)]: So that is a good question. We should probably consider having the Secretary of State as well.

[Rep. Marc Mihaly — House General & Housing]: Got it.

[Jeremiah Ward (Cooperative Development Institute)]: And I guess my concern the concern that drove that designation issue for me is one of sometimes funders will look to this designation of an entity as, like, the proxy for is this a good use of public investment? And if they're designated as for profit, some funders might stop there and say that this co op is not eligible. Although I would try to make the case that all of these limited equity co ops operate on a not for profit basis, it makes no sense for the members that control the finances of these co ops to charge themselves more than what it costs to run the community. And so more savvy funders will look at the will respond to that argument, look at their governing docs, and agree with me that they are a public purpose. But some there's always a concern that some funders will just look at that designation and stop and not offer a funding source to immediate project. And I think the language that's been added into the bill as it's gone through committee where it specifically talks about, you know, these are a public benefit, these LEC's, I think that will be enough to assuage that worry that I have and what we've experienced over the last several years.

[Sen. Alison Clarkson (Chair)]: So with your many state perspective, it would be curious for us to hear, yes, we reduced the barriers for them to apply as nonprofits for these infrastructure grants, which are so desperately needed in so many of our manufactured home park. But tell given your other state perspective, can you share with us how other states are financing the infrastructure needs of these manufactured home parks?

[Jeremiah Ward (Cooperative Development Institute)]: I bore you with minutiae, but Vermont is, of the New England states, Vermont is one of the better set up states to support manufactured housing communities. There are some, it's interesting, other states, the ones that are more progressive and have a more diverse array of funding programs available to co op MHCs are Vermont, Maine and Rhode Island. And then other states like Massachusetts are much further behind. I would say, though, even in the case of Vermont that I think it's worth pointing out is that a lot of infrastructure funding flows flows is through federal programs that are really designed for municipalities. Take for example, the Community Development Block Grant program.

[Rep. Gail Pesha (Colchester) — House General & Housing]: Right.

[Jeremiah Ward (Cooperative Development Institute)]: In that case, a co op, which is a private entity, has to convince their municipality to apply on their behalf. And that can be a dead end in many cases because a municipality might also wanna pursue community development block grant funding for another project. So in our experience in Vermont and across New England is sometimes towns get it and they realize this is an important form of affordable housing that needs to be preserved, but other times they just have an infrastructure project in another corner of their community that takes precedent and that just creates a dead end for our

[Rep. Marc Mihaly — House General & Housing]: co ops for funding. Right.

[Jeremiah Ward (Cooperative Development Institute)]: What's nice about Vermont is there's two EPA sourced programs, the Drinking Water State Revolving Fund and the Clean Water State Revolving Fund, where in Vermont there's a path for co ops to apply directly rather than having to ask their municipalities to apply, which makes Vermont ahead of other New England states. But there are always programs where, oh, a municipality can apply, but a co op can't without their support that causes an issue for us to fix and fund some of these much needed upgrades.

[Sen. Alison Clarkson (Chair)]: Got it. So you want I'm just cognizant of our time. Know Christine is only about two minutes. If we can give you another six minutes or seven minutes on the sections you wanted to address specifically.

[Jeremiah Ward (Cooperative Development Institute)]: Anything further on the sections that you wanted to address specifically? So I think I made the case for why the nonprofit designation issue is important and how it's been resolved. The other, I'll leave it to others to speak to the titling of manufactured housing as real property versus personal property. I think titling as real property opens up much better financing terms to home buyers and it will just make housing much more affordable to go down that path, but that's not really my expertise. I will speak to the subleasing part, which is very technical and probably boring.

[Sen. Alison Clarkson (Chair)]: Quickly, that would be great. The subleasing part? Section?

[Rep. Marc Mihaly — House General & Housing]: For those of us who are trying to follow along.

[Jeremiah Ward (Cooperative Development Institute)]: Oh, I don't have it up in front of me.

[Rep. Marc Mihaly — House General & Housing]: It's the

[Sen. Alison Clarkson (Chair)]: Cam, what section is subleasing? Well, that's okay. Just talk to

[Rep. Marc Mihaly — House General & Housing]: us and we'll find it.

[Jeremiah Ward (Cooperative Development Institute)]: Okay. So like was mentioned prior to me joining, the subleasing language was originally put in title For

[Sen. Alison Clarkson (Chair)]: the committee and the public, it's on page eight, the subleasing piece.

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

[Sen. Alison Clarkson (Chair)]: So

[Jeremiah Ward (Cooperative Development Institute)]: there's a requirement in Title XI, Chapter 14 that upon forming a limited equity co op, the articles of incorporation have to have a, if there is a sublease situation, the sublease can't be greater than 110% of the proprietary lease of the member. And that was intended for stick built apartment housing coops and doesn't make sense for manufactured housing. In manufactured housing, a homeowner that's a member in their proprietary lease, they're paying essentially lot rent for certain services like

[Rep. Marc Mihaly — House General & Housing]: plowing, Yeah. Yeah. So old tennis courts, whatever they own in-

[Jeremiah Ward (Cooperative Development Institute)]: Yeah, right. But then personally, outside of that proprietary lease, they're paying a mortgage insurance and electricity bill. And so that language of the 110% restriction on subleasing doesn't make sense because if a homeowner of a manufactured home in a manufactured housing community needs to move away because of the, you know, whatever issue, they need to find someone to rent that home and not only pay the lot rent for those manufactured housing community expenses, but also pay for those other housing expenses like a mortgage insurance, the electric bill. And so the original language in the statute didn't cover, was never really plugged into how MHCs are structured. And so this bill clarifies that and solves for that.

[Sen. Alison Clarkson (Chair)]: Right. Terrific. Anything further? Do work with our wonderful CDOEO a lot on helping communities create LACs and take them co op?

[Rep. Marc Mihaly — House General & Housing]: Yes. Right.

[Jeremiah Ward (Cooperative Development Institute)]: They have been for many years. They're great.

[Sen. Alison Clarkson (Chair)]: Yeah, they are. We're very lucky to have them. Well, thank you very much. Feel free to stick as Chris Delia comes and testifies. Chris is gonna as our resident banking advocate is gonna come and join us, and feel free to stay and and add your 2¢ after Chris is done.

[Sen. Alison Clarkson (Chair)]: Okay. Welcome, Chris Delia. Morning,

[Chris D’Elia (President, Vermont Bankers Association)]: madam chair, committee members. For the record, Chris Delia, president from our bankers association. So, obviously, we followed the bill as it was making its way through the house, and we get right to the point that we do support the bill that has passed the house because it does preserve the variety of financing options that would be out there in the marketplace. One of the things that we shared with the committee upstairs was we didn't wanna do anything that would limit the number of financial financing options that are out there, and this bill does preserve it. I can go into what those are if you'd like, but

[Sen. Alison Clarkson (Chair)]: I know you do have a short time frame. Well and

[Sen. Alison Clarkson (Chair)]: you said it.

[Sen. Alison Clarkson (Chair)]: So

[Sen. Alison Clarkson (Chair)]: I mean I

[Sen. Alison Clarkson (Chair)]: think I'm

[Sen. Alison Clarkson (Chair)]: on your own. Say that, oh, there's an option of the twenty minute.

[Rep. Marc Mihaly — House General & Housing]: Oh, no. I would not be.

[Sen. Alison Clarkson (Chair)]: But if you fill us in because we I think Mark and Gail gave us a pretty good sense of that real property versus personal property. Yep. And this not great term, chattel lump, which is really

[Rep. Marc Mihaly — House General & Housing]: a horrible term. Is that

[Sen. Alison Clarkson (Chair)]: in statute anywhere? I don't know. Well, ask Pam.

[Sen. Thomas Chittenden (Member)]: I the actual definition of chattel is personal robbery.

[John Gray (Office of Legislative Counsel)]: That's not a real property. So it's it's it's just the definition of what it is.

[Sen. Thomas Chittenden (Member)]: Right. I understand that it has some sort of connection, connotation to the slavery, but

[Chris D’Elia (President, Vermont Bankers Association)]: the foreign chattel means personal property. So And he's, like,

[Sen. Kesha Ram Hinsdale (Member)]: kind of attached to the person.

[Sen. Alison Clarkson (Chair)]: Collateralized. I think

[Sen. Thomas Chittenden (Member)]: that It doesn't have to be Correct. The asset, the personal property. It's not collateral to the loan. As it relates to the definition that we're referring to, Chittenden, but typically, if you get some sort of personal property loan, there's likely to be some sort of security in the property itself.

[Sen. Alison Clarkson (Chair)]: Right. So why don't you give them your time? Give me five minutes. Why don't you share with us what those options are? Because I think they understand the personal and real property difference.

[Chris D’Elia (President, Vermont Bankers Association)]: Got it. High level, two ways to look at this. Financing in portfolio, where the bank does the loan and keeps the portfolio. Financing with underwriting to sell it in the secondary market. Got Very clear distinctions. In the case of manufactured homes, I have institutions that will finance them only as real estate, regardless of where they're located. It could be in a leasehold park, it could be on their own land. I have others who will do a hybrid. If you own the land and you're buying the unit, they will finance it as a real estate. If you don't own the land and it's, know, leasehold park or on lease land, they will finance it as personal property. And then I have the final category, which is a handful of lenders that only finance them as personal property. So those are the three broad categories that are out there, whether it's banks or credit unions, we approach it in very similar ways. So this

[Sen. Alison Clarkson (Chair)]: So I guess I'm not clear on what the third one is. You said the real property option, the personal property option. And

[Chris D’Elia (President, Vermont Bankers Association)]: And I have some banks that if you're in a leased park, they only finance them as personal property. Or, excuse me, if they're in a non leased park where you've got a private owner and there is no ownership stake that the individual unit owner has in that property,

[Rep. Marc Mihaly — House General & Housing]: they will finance as personal property. My apologies. So it's like that's kinda like a subset of the personal property. It's a qualified

[Chris D’Elia (President, Vermont Bankers Association)]: Yeah. I I create a park, and I'm the private owner of the park, and I lease lots out to the individuals. I'm the one that owns the park and not the human owners. So in those cases, I have institutions that treated this person. Different financing terms. So they're absolutely correct that if you could do real estate mortgages, you're gonna get better terms, longer terms, let lower interest rates. But the reality is we wanna preserve as many lenders in the marketplace. My fear was if you only go to residential, and that's the edict in Vermont, you're gonna have a number of lenders that are gonna take the mortgage.

[Sen. Alison Clarkson (Chair)]: And given the mortgage rates now, the the how do we compare those two financing options?

[Chris D’Elia (President, Vermont Bankers Association)]: I would say you're looking at anywhere from two to 3% higher on a personal property loan than a real estate loan. Generally. Yep. Two to 3% higher? Yep. In a shorter term. In other words, thirty years on a real estate versus something that would be short of personal property. Underwriting criteria the secondary market does look at, is it on a chassis? Does it have wheels? Is it permanently fixed? They will not buy those types of units in privately held products. So there is an effort underway with Fannie Mae to look at leasehold parks and the opportunity to expand their programs and purchase units that are in leasehold parks. But that's who knows when they're able to they're gonna make the final decision. Okay?

[Sen. Alison Clarkson (Chair)]: Yeah. And we should have asked maybe Jeremiah has the answer to this and certainly what Gail would have what is life expectancy of a manufactured home? What do they and I mean, have a life expectancy on cars. We have I mean, the, the, you know. Yep. Do we have a, a life expectancy on me?

[Chris D’Elia (President, Vermont Bankers Association)]: I, I, I can, I don't have the life expectancy data, but I will say Board of Representatives, Mahali and Lupinia, these are not 1970s, kind of studies are far better than that? Right. So you're almost on parody, or pretty close to parody with the stick bags.

[Sen. Alison Clarkson (Chair)]: Jeremiah, do you agree with that?

[Jeremiah Ward (Cooperative Development Institute)]: Yeah, would say that the big driver, what has led to depreciation and a lower lifespan of a manufactured home in the past was them not being installed on a properly engineered foundation. And as long as homes are properly installed on, you know, frost protected slab, engineered foundation, they will last as long as any other stick built structure.

[Rep. Marc Mihaly — House General & Housing]: All David.

[Sen. David Weeks (Clerk)]: In the difference of the loan types that you were talking about, are there other risk factors in this equation that, you unique to the type of customers? I mean, is it just simply personal property versus real estate? Is there

[Rep. Marc Mihaly — House General & Housing]: No. Anything else going

[Chris D’Elia (President, Vermont Bankers Association)]: I mean, it's a complete underwriting process that you're going through. So you want the creditworthiness, income, etcetera, etcetera, etcetera. So that is always a signature. That is all the same with regards to the borrowers. Then you get into where is the collateral, what is there a high risk with that collateral security and real estate? So you have

[Rep. Marc Mihaly — House General & Housing]: a much higher level covered versus if that's the real enough interest. I wanna make sure that there was no there's not any other unique factor in this market that

[Chris D’Elia (President, Vermont Bankers Association)]: you're not talking about. We apply the same underwriting standards for obligations and liabilities.

[Sen. Alison Clarkson (Chair)]: Right? Well, we know where you are in case we

[Chris D’Elia (President, Vermont Bankers Association)]: Yes, ma'am. We do.

[Sen. Alison Clarkson (Chair)]: So thank you. Any other questions for Chris before I Thank you. This is terrific. This is, I think, teed us up well on this bill. And now we're gonna shift gears and move to our second housing bill. Yes. And, Mark, peep feed us up a little bit further on. H775. It's confusing because there's one's an airplane and one's a not the numbers. Although, I don't know. Sub 50 sevens are still flying, are they? Who made them? Boeing? Airbus. Mercedes. Yeah. Yeah. So let's shift gears to seven seven five. We have finished walking through seven seven five. And as you'll recall, this creates a number of different financing options and other options for producing housing in our rural communities. So I think John Gray was going to be here, but I think let's begin with Michael Gone. And, Michael, if you'd be kind enough to join us, and we have Alex Farrell here also. Michael runs the Vermont Bond Bank as we all recall, and you're heavily implicated in this in this bill. Good.

[Rep. Marc Mihaly — House General & Housing]: And so I want you

[Sen. Alison Clarkson (Chair)]: to be kind enough to introduce yourself and speak to the bill and share with us your thoughts.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Sure. Michael Gaughan, executive director of Tomato Bond Bank. Wonderful to see you

[Sen. Alison Clarkson (Chair)]: all in person again. It's good to see you too. So,

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: yeah, we've been very involved in advocating for this potential flexibility for municipalities to finance infrastructure, in particular, to finance infrastructure that will support housing development. This idea grew out of an effort that you may recall from A and R to develop village wastewater systems. And if you recall from that, you know, there was a large amount of potential grant funding that could be leveraged on the part of the the towns through a small amount of debt issuance. And there was a mixed record of success despite overwhelming grant support for that. And so we started to think about oh, yeah.

[Sen. Alison Clarkson (Chair)]: Sure, no. I think you're starting with section one, the Special Assessments Act, Brad.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: That is my specific focus for

[Sen. Alison Clarkson (Chair)]: Okay, let's just tee up up because we don't do we not currently have specialists at different districts in Verona? It's not oh, California. There's a lot of them. I know other places.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Yes. Yes.

[Sen. Alison Clarkson (Chair)]: So would you kind of Yeah.

[Sen. Kesha Ram Hinsdale (Member)]: Help us?

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: I was giving yeah. I was giving my policy origination story, but, yeah, to skip to the chase a little bit.

[Sen. Alison Clarkson (Chair)]: No. Well, I mean, I will not skip to this. Give us the big picture so that they're not so many.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: We have special assessment districts. You cannot use those while those can be used to support bonds that a municipality might issue, All bonds other than for utilities in Vermont have to be general obligations. So what that creates is essentially veto power on the part of the entire community on a specific type of public improvement that may impact only a limited segment of town. And so as a result of that, that's sort of where we sort of saw the need for this when we were observing these village wastewater systems. You know, you had folks that would be directly impacted by it, but the entire town kinda got a vote on something very specific there. And and so we started to think about, well, how do we just provide another tool in the pool belt for public improvements that are needed to support some level density, some level of housing.

[Sen. Alison Clarkson (Chair)]: And in a special assessment district, if I recall, only those who benefit pay in That's correct. Pay in

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: That's correct. And so, you know, there's that we're not touching that part of current law. There's a process for that where there's levers to receive approval on the Special Debt Assessment District. What we're saying is that under this potential legislation, you and municipality can leverage. You can borrow against the specific streams of revenue from that special assessment district, with governing body approval, but it's solely secured by those special assessment district revenues, nothing else. And 39 states have this power well, more may have it, but over I did some this is the test the documentation I shared is that over the last five years, 39 states in the total amount of $17,300,000,000 have used this tool. 17,300,000,000.0. That's right. Yeah. In one form or these are numbers that are through, like, January. They've changed. But 39 states, I think, including peers like New Hampshire, North Dakota, you know, smaller rural areas. So there's West Virginia. So it's quite a familiar and well used tool. Our thinking about this was, this is a great tool, but we want to make sure this is a different type of debt than we normally see. This is not as, the credit quality. This is of a different nature than a general obligation because you don't have the diversity of the tax base of a of a full talent. So therefore, we want this tool to be used, with some discretion. And that's why you see three levels of pre qualifications that need to be met to issue bonds in this manner.

[Rep. Marc Mihaly — House General & Housing]: There are

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: three levels of qualification. Yeah, one, the bond We'll

[Sen. Alison Clarkson (Chair)]: go through those with Ken.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Yeah, one, the bond bank would have to give you a commitment, So, you know, we're we're obviously very vested in making sure there's not a lot of bad municipal debt around the state. Two, you would have a flat triple b rating from a statistically recognized rating agency. Flat triple b. A triple b. So lowest investment grade.

[Sen. Alison Clarkson (Chair)]: So each town has a bond rating?

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: No one has a rating other than SOH and Burlington currently. We're saying rated best. Burlington is double a two, Stowe is double a three. That's Moody's. They all have their own unique system. So Stowe is higher than Burlington? No. Stowe is one notch lower. Oh, it's two? It's double a three, which translates to a double a minus.

[Rep. Marc Mihaly — House General & Housing]: Okay. We're not gonna work that seven.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: I think for this purpose, what you need to know is that investment grade is generally considered triple b minus, and we're saying one notch, one rating category higher than that at at flat triple b. Okay. And the reason it's you know, we wanna provide options. Like, the bond bank, we hope we're involved in a lot of these with the housing fund that you all were generous with us last year. We think we can accommodate a lot of this debt, but if there's other options for municipality, by all means, they should they should go and pursue that. And then the third one is no surprise. It's a it's a commitment letter from a regulated either current union or or bank. So we think that provides some guardrails on this without there being an explosion of speculative, great debt and save. So but but I think the takeaways here are those that will benefit from the infrastructure pay for it. We don't create a new unit of You know, some states approach this problem by creating new, what are called special districts, like a new form of government. We don't want any more new forms of government, so we keep it at the town level. And, and then we have, you know, guardrails around how and when when this is used. It fits into an existing framework under existing law with the special assessment districts. So in a community that may serve the common good to have it,

[Sen. Alison Clarkson (Chair)]: but the cabinets may not be able to afford a special assessment. I mean, on top of what they may be being charged for rent or lease, whatever. Us pay a manufacturing company that they could do a special assessment to create an LEC or whatever they're gonna create. And they may not have the ability to I mean, they did have to have probably a long time to do that. Right. How do you deal with communities that may need this infrastructure, but may not be able to finance it as easily as That's a good question.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: On one part, that's sort of status quo, but on another part, this does, I think, provide some additional flexibility. So number one, there's a mechanism under current law by which the affected properties have to approve it. So from a government's level, we're not suggesting any changes the way the current framework for special assessment work. But what this does is, particularly with the bond banks programs, in particular, the what we call our housing infrastructure loan program that you all helped us out with Right. A grant last year, is that we can get those into a municipal financing bucket, as opposed to because It's much lower. It's a

[Rep. Marc Mihaly — House General & Housing]: much lower rate. Exactly.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Got it. And so And even though it's only secured by those special assessments, that's still higher priority than any other type of lien. So that's So when you're talking much lower rate,

[Rep. Marc Mihaly — House General & Housing]: what rate are we talking about?

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: I mean, right now, I mean, listen, I can't explore all the options. We only have seven and five million dollars under this special fund, but we're putting that money out at 2.75%, which even compared to our other more conventional point programs 72.75%. And even compared to our more conventional programs, that's still a percentage that I have discount, which are which, you know, those are already very low. So, versus private financing that

[Sen. Alison Clarkson (Chair)]: Well, it's lower than it. I mean, it's not that much lower than what some of us were lucky enough to be able to look

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: In the old days.

[Sen. Alison Clarkson (Chair)]: In the old days. Right. But now with mortgage rates at six point

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Yeah. 6.5%. Yeah.

[Sen. Alison Clarkson (Chair)]: That's what I'm hearing. This is substantial. Yes. Okay. Got it.

[Sen. Thomas Chittenden (Member)]: I think I understand this. I just wanna make sure that overlaying with what I remember city council based special assessments. This would not require a vote for the entire town. This would just require a vote of the elected legislative leaders. Would it would require sign off or a vote of the affected properties that are Yes. Committee? Okay. Yeah. Just they would conduct a special election

[Rep. Marc Mihaly — House General & Housing]: or something.

[Sen. Alison Clarkson (Chair)]: That's right.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: There's a that's current law. No changes to that. So if it's a single property owner, they can just consent. But if it's more than a single property owner, then there's a whole process by which that approval needs to

[Sen. Alison Clarkson (Chair)]: occur. Okay. Two votes.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Is that right?

[Sen. Thomas Chittenden (Member)]: Sign us sign off.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: There is a vote process under current law under special assessment districts. But for this purpose, for securing those special assessments for revenue Yep.

[Sen. Thomas Chittenden (Member)]: You have governing body approval. With public notice and all that. We're all about it. Yeah. And then really quick, I heard you say wastewater. Is that the of what these are out there, or is it also for roads, storm water, any Any permanent infrastructure?

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Yeah. Any it's the language in the special assessment is very broad, so it would

[Sen. Thomas Chittenden (Member)]: be anything that's covered by that. It's basically public improvements. And it would be collected on the tax bills. That's right. If they went belly up, then the lenders that backed that loan won't be able to go after the town.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: They would just Well, yeah. You you presumably have, like, a tax sale process or something. But that's why that's what makes it a a really helpful form of finance, although it doesn't have the general obligation. It does have it is first priority name, and it's a uniform tax bill. So you're ahead of a mortgage. You know, you're ahead of a second mortgage. You're ahead of everything else. So from that perspective, it's actually quite good.

[Sen. Thomas Chittenden (Member)]: Other states do this. 39 states

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: 39.

[Sen. Alison Clarkson (Chair)]: So when you say governing bod bod the body, to go back to Thomas' was just about the select board or the governing body of the assessment?

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Just the select board. Yeah. Because we're in this our a key feature for us was in Florida, Colorado. They create new units of government around this concept, and we really are struggling with a lot of these legacy fire districts, and so we did not want to create new units of government, so it would be at the

[Rep. Marc Mihaly — House General & Housing]: town level. Got it. Got it. That that

[Sen. Alison Clarkson (Chair)]: is and, in your tenure did did your question your tenure at the Bond Bank, have you seen successful examples of this in Vermont? Isn't allowed, Kirk? Because it's still not allowed.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Right. It's not allowed, but I think these waste these village wastewater systems would be a good example. Yeah. And also, you know, some of the developments that are proposed right now around the state, they have things like public parks that will be widely accessible, but are currently having to be financed with HOA fees, essentially. And this might be another tool to lower the overall cost. So I can't say that's going to solve housing in Vermont. No. No. But it's another another tool that a creative developer or town can

[Rep. Marc Mihaly — House General & Housing]: put in place. So I apologize.

[Sen. Alison Clarkson (Chair)]: For some reason, thought we could do these in Vermont, but we're this is really giving us the green light to do them here in Vermont, which is great. Yeah. Because I do know so many other states. I mean, I know in particular, Mark's discussing them in California. Yeah.

[Sen. Thomas Chittenden (Member)]: And since this isn't redirecting any attack revenues like the CHIPS TIF thing, this is just should be an easier structure to set up. You're just putting on the book to pay off this infrastructure. Those are gonna benefit from the life of the. That's a great summary. Yeah.

[Sen. Alison Clarkson (Chair)]: Yeah. And with the length of time on these bonds?

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: It would depend on the financing source. So for tax if they're tax exempt eligible, it's generally matched to the useful life, that best principle, certainly. That's what the bond bank would look at it, but it's sort of whatever is otherwise allowed. It's thirty years, except for town force under current under current law.

[Rep. Marc Mihaly — House General & Housing]: David? Similar to Mellow Roots? Exactly.

[Sen. Alison Clarkson (Chair)]: Yes. Yes. Similar to what?

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Yellow roost. It's a tool in California.

[Sen. David Weeks (Clerk)]: It's a big tool.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Yeah.

[Sen. David Weeks (Clerk)]: Big house. Yellow roost. Yeah.

[Sen. Alison Clarkson (Chair)]: Yellow roost. I think of yellow roost being a a

[Rep. Marc Mihaly — House General & Housing]: With a a bird thing. Okay. Got it.

[Sen. Alison Clarkson (Chair)]: Anything else you want us

[Sen. Alison Clarkson (Chair)]: to know?

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: No. No. I appreciate

[Sen. Alison Clarkson (Chair)]: your time. Go go for the gusto is what I think I hear you saying.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Yeah. No. I think this should be really helpful. It's a goal. And and, yeah, just thank you for the willingness to consider it.

[Sen. Alison Clarkson (Chair)]: Right. Thank you very much. Alright.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Hope I'm gonna listen in a little bit more then.

[Sen. Alison Clarkson (Chair)]: Yeah. Well, we go to Alex, I think, while we still have special assessments in our brain, I think this is John Gray's part of the bill. Is that correct, John Gray?

[John Gray (Office of Legislative Counsel)]: That is correct.

[Sen. Alison Clarkson (Chair)]: Would you like to join us? Sure. Chat further about it as we now are beginning to understand and appreciate it more fully.

[Sen. Thomas Chittenden (Member)]: I can trade.

[Sen. Alison Clarkson (Chair)]: Good morning, everyone. Good morning.

[John Gray (Office of Legislative Counsel)]: John Gray, office of counsel. Essentially, it should be relatively simple for me to jump through what gone on behalf of the Vermont. Vermont Bank has actually blame this quite well, I think. The the really The thing I would hit again that I think it's just important to note based on the lines of questioning that I was hearing is that there's a distinction. What's being proposed here is just a new financing pool that leverages an existing state process. So nothing about the existing process for imposing special assessments, which are locally imposed taxes essentially to fund public improvements funded on the basis of the properties that benefit from those improvements. Right? Nothing about that process has changed. So all the voting mechanisms, to your line of questioning, that are required to impose the special assessments still exist, and that's done in one of two ways. So one is you can get a majority vote of the of the municipality as a whole, or if you get the universal consent of the affected property holders, then you can oppose the special assessments. So those Universe. Yes.

[Rep. Marc Mihaly — House General & Housing]: So What does that mean?

[Sen. Thomas Chittenden (Member)]: This is new development, so that's probably easier to do.

[Sen. Alison Clarkson (Chair)]: So that's a majority vote, or is that everybody vote

[Chris D’Elia (President, Vermont Bankers Association)]: by way? If if you're

[John Gray (Office of Legislative Counsel)]: going the route of the affected property holders, you need every every affected property holder's consent to do it. But this is just the existing law process for

[Sen. Alison Clarkson (Chair)]: That's what confusing me because my understanding from Michael is this is new law for Vermont, and you're saying

[Rep. Marc Mihaly — House General & Housing]: it's a lot of existing law. David, you had a question?

[Sen. David Weeks (Clerk)]: I'll keep listening.

[Sen. Alison Clarkson (Chair)]: Okay, great. And then we'll go to David.

[John Gray (Office of Legislative Counsel)]: I'm trying to distinguish between two things, because I think some of the lines of questioning were about coming from an angle of, oh, could you somehow sneak this by? If only the legislative body, the municipality has to approve, does that mean that the effective property holders have no say in this? What I'm trying to draw out is the imposition of the special assessment still goes through its standard process under law and requires those voting mechanisms. This is a new measure to provide a new financing tool, and all that it does is provide a revenue bond that is backed by those special assessments, meaning it's not a general obligation bond, which would allow the holders of the bonds to compel a tax levy rate. That's we're typically concerned about, and we require special votes in those instances is that you could affect all the property taxpayers since you have a funeral obligation bond. But for a revenue bond, the only recourse that the bondholders have, the only bonds that they have access to are those special assessments. So what this is doing is it's not disrupting anything about the existing special assessments process. It's saying if someone could use this as a financial tool, it's now available, and it simplifies the problem that Michael Vaughn identified, which is that you may require majority municipality consent to do your general application bonding, and so this simplifies the process of financing by offering these bonds. But again, you would still have to impose the special assessment through the standard processes and statute. If it's helpful, I can pull that up. I will say I'm not an expert in the way those special assessments work. This is really a limited tool and a limited section that happens to implicate broader types, right?

[Rep. Marc Mihaly — House General & Housing]: No,

[Sen. Alison Clarkson (Chair)]: appreciate that. David?

[Sen. David Weeks (Clerk)]: So I appreciate this conversation, because I've always been curious why Belarus wasn't, the concept wasn't instituted in Vermont. Now I Is this

[Sen. Alison Clarkson (Chair)]: Belarus or Belarus? With an F. Okay. That helps me.

[Rep. Marc Mihaly — House General & Housing]: Belarus. So

[Sen. David Weeks (Clerk)]: just for a couple seconds, California used it for housing developments, infrastructure, the new roads to serve those development, large developments, new schools, new police stations, new fire stations. So it's like comprehensive. So if you're going to buy into that large area, you end up, you pay Melrose simply taxes for whatever the term is. My question is, you mentioned property owners voting, but if this is in advance of development, who votes? If this is in advance of development,

[Sen. Thomas Chittenden (Member)]: so you would So you're not going

[Sen. David Weeks (Clerk)]: to build unless you have this infrastructure, you know you have a bond, you're incentivized to go, but there's no development yet. It's, you know, it's greenfield. So who votes?

[John Gray (Office of Legislative Counsel)]: So, in that case, again, it it the the question you're asking is about the approval for the initial assessment of the spectrum I think And so it's it's still the same. It might be that it's the the majority of the municipality. Let me just pull up

[Sen. Alison Clarkson (Chair)]: the be the majority of the select board because it could be the governing body.

[Sen. David Weeks (Clerk)]: That's The payers are only the ones who are living in the proposed Right.

[Rep. Marc Mihaly — House General & Housing]: Not the

[Sen. David Weeks (Clerk)]: rest of the community. Right.

[Rep. Marc Mihaly — House General & Housing]: Really exempt.

[Sen. Alison Clarkson (Chair)]: Yeah. Yeah. Maybe that development, they would have had to have signed up and been part of it. Mike?

[Sen. David Weeks (Clerk)]: So they're gonna talk about

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: I I would just say, I think the likely use case for this is sort of what you're identifying where you have either a a large property owner, either like a brownfield or a greenfield or something like that. And they say, we know we're gonna have these infrastructure costs because we're the master developer, and therefore we consent because this isn't their and it's just them.

[Sen. David Weeks (Clerk)]: So the master developer would consent. They would go into the board of whatever the municipal board is.

[Sen. Alison Clarkson (Chair)]: Okay. Got it.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: Yeah. Exactly. And that's the use case. I mean, pejorative term for these are dirt bonds. Dirt bonds? Dirt bonds because they occur before any development has occurred.

[Sen. Alison Clarkson (Chair)]: Oh, right.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: And that's where it becomes speculative grade, and that's why we wanted the guardrails on on this, but Florida, Colorado are very common in addition to California for using it in that context.

[Rep. Gail Pesha (Colchester) — House General & Housing]: Just to

[Sen. Thomas Chittenden (Member)]: crystallize this point, those new developers are locking in the future owners to these repayments and that's why it's easier to get universal

[Sen. David Weeks (Clerk)]: That's right. As opposed to everybody else is already in the community having to pay for that infrastructure for that development. Which is the issue we have

[Sen. Thomas Chittenden (Member)]: with storm water so we have these HOA non existing HOA parcels that are all on the hook but they don't have an organized structure to pay it off. We can't just put a special assessment on there without a pay group, but that's a separate conversation.

[Rep. Marc Mihaly — House General & Housing]: Okay.

[John Gray (Office of Legislative Counsel)]: So I think that likely addresses the big concerns that folks had, but just to reiterate, because I came in a little bit after I testified at starting on this, the pieces that are included in this sections line, they set up what's required for approval and issuance of these revenue bonds, and that's approval of the legislative body of the municipality. We have the standard call out language that it's issued for the central and governmental purpose, often test the bonding language for tech purposes. The big language that you want for protection purposes, although it's implicit in the title revenue bond, is subsection b, which says that a revenue bond issued pursuant the section shall be payable solely and exclusively from the specialist of this levy on the property is to be served by the improvement. It shall not constitute general indebtedness of the municipality. No holder of a bond issued a section shall have the right to compel any exercise of the tax of power of the municipality to bring up the bond. So that's drawing out the distinction between revenue and general obligation bonding. And then c, this was really included in the Vermont bonding's suggestions. I think you've already heard all these pieces, but it requires that you meet one or more of the conditions. Either you receive a commitment letter from one of these reliable funding institutions or you receive that minimum investment grade rating from a nationally recognized rating agency. And that is it.

[Sen. Alison Clarkson (Chair)]: It's a surprising amount of fairly modest language for a big new opportunity. Thomas.

[Sen. Thomas Chittenden (Member)]: Trying to read the language, but it's just easier to ask you. Does this just apply to residential development, or is this also for stadiums, commercial developments? I think this is For residential center.

[John Gray (Office of Legislative Counsel)]: I I think the answer to that question is the question of what assessments can be used for, and so special assessments may be under title 24, section thirty two fifty two may be made for the purchase construction of air, reconstruction, or extension of a water system or sewage system or any other public improvement that is a benefit to a limited area of the penalty to be served by the improvement. I have to call out for us.

[Rep. Marc Mihaly — House General & Housing]: That's the progress.

[John Gray (Office of Legislative Counsel)]: That's not included in the act. I'm just talking about existing law and special assessments. If you want the call out for that, I can give you its Title 24 secondtion- Would

[Sen. Alison Clarkson (Chair)]: you send us that email with that section?

[Rep. Marc Mihaly — House General & Housing]: Sure. That'd be great. Thank you. So I can see the convention center, Thomas, can just take out every entry charge, you can have a a special assessment charge. Right. Right. Always. Any other questions on this?

[Sen. David Weeks (Clerk)]: I just sent the committee a link to divine knowledge The knowledge? To see kind of a sense of what

[Rep. Marc Mihaly — House General & Housing]: other saints do. Right. Well,

[Sen. Alison Clarkson (Chair)]: if the thank you, John. Anything else for us to think about as we go through this? So there was no shift to Alex and move to the not the second section, which is the the treasure. We'll have the treasure back in, but this off-site construction. Michael and John, thank you very much. More to follow. Thank you. As needed, dirt bomb. Love this idea of dirt bomb. It's dirt bomb. It's dirt bomb. Bomb. Bites. Everything. So more more to follow, but thank you. This was really very helpful. Good morning. Welcome home. We are now focused on section four, I believe, unless you have thoughts on sections one, two, and three. All that because you're welcome to comment on everything thus far. I appreciate it. Very short of section one was being discussed. On section two, the only thing I'd offer, and I don't have a strong feeling either way, but on the changes to LIAC, and I'm looking at top of page three, really not my issue, but if I were the treasurer's office, I don't know, I'd wanna maintain more flexibility, so I wouldn't want Subdivision B or Subdivision 2. Just, You could do that without those sections,

[Chris D’Elia (President, Vermont Bankers Association)]: so I'm not sure.

[Rep. Marc Mihaly — House General & Housing]: We won't talk about them with the treasurer.

[Sen. Alison Clarkson (Chair)]: If they feel that there's some benefit to that. Okay, so section four. I walked through a more robust version of this that you initially had in S328. And so you heard from me that Yeah, and then, but just to give everybody background, just to remind everybody, Yeah. We looked at this initially at the beginning of the year, at the beginning of the session.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Well, they happen to coincide. And then we pulled it out as we knew that the house was gonna deal with it So they have done initial work of flushing this workout. And And the concept is to try to find a municipality or potential development for a demonstration project or off-site construction, leveraging things like purchasing the designs from eight zero two Homes, etcetera. So the testimony that I provided previously is that a lot of this will be happening and that's part of our eight zero two Homes pilot. And where is that pilot? Sure. Where is it? Is that in progress? '25? We don't need a darn thing. Okay. So you don't need us to do that pilot. So that's good. Thank you. Because I was pretty rare. Where is that? I know. I know. Well, I'll I'll I'll so we'll know that in a for that, but you need us for this. Let me let me say let me frame that differently. A lot of what's captured here are things we are doing anyway. Now what, what this does, asks that we report back on lessons learned from whatever pilot, particularly not just any eight zero two Homes pilot, utilizing catalog, but particularly this is asking us to report back on lessons learned from any of those pilots that utilize modular. So we're engaged with communities right now, both pilot communities who have developers that wanna take on a pilot project if they go to homes, as well as other communities that are reaching out to us to ask how they can participate in the eight zero two Homes catalog and potentially utilize it for development. So we are confident that there will be demonstration projects moving forward. And all of the elements that we are asked to consider here are things that we would have less to learn on. Now, the caveat is not every Inno2Homes unit nor will any development utilized catalog be modular necessarily. So we don't know for sure, especially not bringing the resource state resources to bear, we can't ensure that a modular demonstration project will go forward. So we we have no way to sort of make that happen, mandated, we are Right, you could have included a different budget. That's right, there was no budget, there was no appropriation to So make that that was a choice, I mean, could have been. Right. There's no yeah. There's no appropriation to make this happen. So what I would offer is happy to have this all stay as is. Well, the concept is you were gonna talk big picture of what what this section of what the off-site construction accelerator pilot is. Sure. And how it funnels into and supports eight zero two homes. Sure. It's really tangential, but it's it's a way to demonstrate how this catalog of of 10 homes and eight zero two homes could be utilized for modular construction because it gives manufacturers some assurance that if they both produce one of these 10 designs that there will be a bargain for that because there's regulatory avenues to support them. So, know, I guess I'll just offer, we are largely indifferent to this section. We're happy to report back if, in the event that we are successful in getting a community to do the A02 Helps demonstration project utilizing modular. But I'll just provide the caveat that we have no way of making that happen. So However, there might be conceivably a public private partnership on this, conceivably. Absolutely.

[Rep. Marc Mihaly — House General & Housing]: And all

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: And so to have this as a benefit and and gives us space to do that Sure. An opportunity. Sure. Yeah. So having This report back on a demonstration project. So I guess I'll offer that this doesn't necessarily compel us to do anything that we aren't already doing, except that it asks us to report back if any of those are modular. What I may ask then is that the committee consider building in flexibility for us in the event that none of these projects end up being modular. We're happy to still provide a report back on lessons learned, but it might not be from a demonstration project. Got it. And then my final ask on this would be that, slide six on page six.

[Sen. Alison Clarkson (Chair)]: Okay, wait a minute. We're gonna get us up to speed here.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: This is just the difference on when the report's due. I'd ask that that be pushed back a year. To 31? Line six. So when the report is Oh, sorry. Sorry. Sorry. Yeah. So this Yeah. Maybe 11/15/2028. I I asked, give us till 11/15/2029. Development takes longer.

[Rep. Marc Mihaly — House General & Housing]: Think we have two different versions.

[Sen. David Weeks (Clerk)]: We have 3.1. And you have

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: We have by the house. So actually, have by the house, which we'll get to. Are you on 775? Yep. 353.

[Rep. Marc Mihaly — House General & Housing]: So we'll

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: get you by the house. Okay. But it is it does say 2028. And so okay. Here's my I I don't mind considering that, but how are gonna ensure there'll be continued leadership on this?

[Rep. Gail Pesha (Colchester) — House General & Housing]: Sure. If it works.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Yeah, I mean, this is one of, you know, this is, it's because it's a great question.

[Sen. Kesha Ram Hinsdale (Member)]: I mean, is anyone supposed to I would have

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: it about, you know, how do we keep it on track with a changing possibly changing administration Oh, Chinese. Leadership. That's what I'm asking, darling. Is that is that I'm hoping this will be so sick. I mean, I won't we wanna front jump start this so that it's on track and

[Rep. Marc Mihaly — House General & Housing]: in motion.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Everything I this do administration may be I assure you that everything I do is with the intent of being sustained regardless of who has my job. Thank you. That was the answer I wanted.

[Sen. Thomas Chittenden (Member)]: You're not leaving, are you?

[Rep. Marc Mihaly — House General & Housing]: Boy. No. He's now. Not yet.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Hopefully. You won't have to confirm me every couple of years. No. But we don't have to do it this year. We did it already. You did it already. Thank you. So 2029 is your request.

[Rep. Marc Mihaly — House General & Housing]: Got it?

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: That's right.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: And and and then I I do wanna zoom out to answer a broader question I think you asked before, is what would we need to make a Vito2 Homes more impactful? Maybe I'm putting words here about the Madam Chair. That's a key question. And in my opinion, to make bulk purchasing more viable and to really leverage what we're doing with VDO2 Homes more broadly, it it really would have been the language that I I presented earlier in the session to you all, but was the jurisdiction of the Senate Natural that was in our housing bill, which would have made the catalog of designs by rights statewide. So I still encourage you all to explore that language. It's been discussed with various committees, so I'll just bring it up to you all again. So, well, may I just maybe ask? Sure. You've made the same request to House General. Was, why did they end up not doing Well, I'll say both you and House General have the same conundrum, which is that both Chambers' view of jurisdiction puts that because it's municipal zoning change in the jurisdiction of House Environment to their chamber and then Senate Natural Resource to your chamber. If you are so inclined to dabble in municipal zoning changes, I would encourage you to So then did Senate Natural discuss this? They did discuss it. And chose not to do this. They chose not to include it in S-three 25, which would have been their vehicle to include it. I'll offer that, they can speak for themselves, I'll offer that. Believe their thinking was they'd rather study it rather than provide a patent implementation. Our our language actually does lean on the current pilot that's ongoing, and then ask the the effective date of it is 07/01/2027. So if that language is brought into a bill, the legislature would still Sorry. Look what Matt has done. Oh. Matt, here you go, David. Thank you, Matt. You are just terrific. As passed by the house. So that language is in section eight through 10 of s three twenty five.

[Rep. Marc Mihaly — House General & Housing]: And You want this? And

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: if the committee were inclined to include those three sections of s three twenty five in each seven seventy five,

[Rep. Gail Pesha (Colchester) — House General & Housing]: the legislature But they end

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: up not including it, three twenty five. That's right. Okay. Well, no. I'm sorry. I said 03/25. It was not included in 03/25. Was included in the administration's bill, which Right. Which is not in advance. Was not fifty three twenty five. The legislature would reconvene prior to date. Right. It's

[Sen. Thomas Chittenden (Member)]: not the bill that went through the large large a lot of the processes, multiple committees, and that was ultimately pulled off of the board. Is So this language that had a lot of support or else is something else?

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: This is something began with us. This this was the administration's housing bill, which should remain a home senator.

[Sen. Thomas Chittenden (Member)]: I'd certainly welcome the revisiting of this language, if that's it, there's time to do so now.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Which also gave you three new positions. Just saying. Well, sure. Okay. But not in line with the budget, which is what

[John Gray (Office of Legislative Counsel)]: I'm saying.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: So are you able to do this pilot with both staff you have now? It is a question. The pilot's moving forward, and I'd say yes. I'd say everything that we plan to do, is really essentially just referenced in this pilot, is already happening, it's already in motion, and I don't see any disruptions with the set up that we have now. Okay. And so the just expand a little bit on the catalog choice. If you choose one of these designs. Mhmm. Sure. The piece. If you chose one of these designs Sure. You would that includes water, sewer, everything else. And you chose it for a like a tier one a or tier one b, that they would automatically, this would be by Wright able to

[Rep. Marc Mihaly — House General & Housing]: be built in that type of way.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Simpler than that. So, and perhaps it's worth me coming back another

[Sen. Kesha Ram Hinsdale (Member)]: day Yes, think maybe it looks, yeah.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: The object is just that they're by right, respected to the zoning.

[Sen. Thomas Chittenden (Member)]: Got it.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: If it's an area zone for duplex, the duplex, they're by right in that area. Still have to adhere to such and etcetera. So why don't I plan to come back another day and talk about those three sections? So so that's the pilot. As I say, with pushing the date back and perhaps flexibility recognizing that we have no way to compel any of these pilot projects to go as modular versus stick build, we are more than happy to sort Do of know you have I mean, given there were all the talk about Fairhaven and that possible facility, do you have a private company that you are exploring working with on a modular aspect? I would say we have a path to partner someone privately. I wouldn't go outside of Okay. Pultz three point five and and see contracting and choose someone before we have violent but I I wouldn't worry about there being a partner. I I'm not. I just asked. Yeah. Yeah. The Fairhaven us We were very excited. I mean, we're excited by the opportunities Fairhaven offers. Sure. Yeah. We and we provided a planning rate for them to hopefully attract some. Okay. So keep going. So so that's pilot. Any any further questions on that before

[Chris D’Elia (President, Vermont Bankers Association)]: I move on to other sections? No.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Section five is a minor change to V hip. There There had been some, and I think you thought in House General that VHIP could be utilized by more folks if capital could be provided up front rather than on a reimbursement basis, where folks have to get perhaps bridge loan or come up with capital on their own, and so could, rather than the awards being, having been transferred to the awardee on a reimbursement basis, could you just provide the full grant upfront and then And what would they have to supply to make you do that? Well, there's really Do you support this concept? I support it because it still gives us and the HOC discretion. We we technically have the authority to do that now. It's just not something we do with, generally speaking, with state. Have you had any developer ask you to do it? We haven't had anyone that I'm aware of to ask us. More likely it would be, these would be the small I one unit think we would be very cautious in exercising this. I see us exercising this very sparingly if ever, but if we felt that there was, if we could especially secure the grant, we may exercise this. So I'm fine with this language. It still gives us the agency discretion to have that exercise. And just remind us all because oh, David,

[Sen. Thomas Chittenden (Member)]: you're a professional.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: No. Just remind us all. Have now built over a thousand units with b with b hip. That's right. About 1,300. Yeah. That's what I yeah. Well, I should say funded about 1,300. Believe 800 or so are online. Yeah, and anything else you want to update us on? What's VITAM? A program that we all love. Well, we, as you know, the House passed, concurred with the Governor's recommendation for base funding for beta at 4,000,000, that's currently important to maintain that program. It's the perpetuity and so that the home ownership centers and by department can plan and and staff appropriately. Well, even more important, this

[Rep. Marc Mihaly — House General & Housing]: committee asked to have a fund of it funded.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Okay. So you should be actually advocating for that means. I I advocate for the governor's budget. Yeah. Yeah. I get it. You had a question.

[Sen. David Weeks (Clerk)]: I do. Thank you. Sure. In this language, says authorizing partnership organizations. Does that have any special meaning for

[Rep. Marc Mihaly — House General & Housing]: a partnership? Where are you, David? On line six. On page seven?

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Yeah, it's a good question. That that specifically refers to five homeowners and centers who administer this in the region. So, the new region to be Cornerstone used

[Sen. David Weeks (Clerk)]: to be neighborhood. There's only the nonprofits, not the commercial people who are requesting BHIP for commercial

[Rep. Marc Mihaly — House General & Housing]: property, are commercial entities? So they would be the awardee that would benefit from this.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: So my staff doesn't administer the full BHIP program. We have five regional partners at the home ownership centers who administer it across the state. That's really just to leverage their off the ground experience for and so they could excite us to get staffing.

[Rep. Marc Mihaly — House General & Housing]: So we're only potentially funding that partnership organization, not the necessarily eventual They're funding you, and they're distributing it out.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Well, good clarifying question. This this has nothing to do with the funding isn't going to the partnership group. It's it's authorizing

[Sen. Kesha Ram Hinsdale (Member)]: I very much understand that. Right? I mean and also, it's about the same price as a motel stay. So The yes.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: You did that.

[Sen. Kesha Ram Hinsdale (Member)]: To have to have a real permanent revenue generating nonrevenue sucking brand list value is absolutely like and and this is where we need to bring down all of the cost of housing. This has been effective. I think that not hitting some of those permit and regulation costs and time delays, If there are any in the way, let's get them out of the way.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Right. The scattered site nature of this means we generally to avoid things like triggering at two fifty, complex municipal zoning. I mean, those are some of the reasons that we can both keep it on, why the media has been so successful and and why it has some inverse relationship to the economic success of of a region or municipality. What I mean by that is the the talented communities that have benefited most from this are those who've been the most economically depressed because they tend to have neighborhood with big They can lie to the non code compliant bill. That's exactly right. So

[Sen. David Weeks (Clerk)]: I'm not saying it as a knock to the program. Obviously, very much with program consistency.

[Rep. Marc Mihaly — House General & Housing]: It's kinda like a trick loss. A 100 a 102.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: And and but you're right. Compared to

[Rep. Marc Mihaly — House General & Housing]: an affordable housing unit that's costing $450,000 a unit, this is Up to Yeah. $50.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: While while we are speaking of Do you have

[Sen. Kesha Ram Hinsdale (Member)]: All of like, while we're

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: talking about traumsing in general,

[Sen. Kesha Ram Hinsdale (Member)]: Matt, can you what is your name about that?

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Is your Matt? Dot. That's a r e n.

[Sen. Kesha Ram Hinsdale (Member)]: That's Matt dot s there it

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: is. Okay. Body chart. Did you put this screen?

[Sen. Kesha Ram Hinsdale (Member)]: Because I only meant to I wonder if we have isn't even hitting the federal reserves count of permits pulled for housing Oh, good question. And that's great. And I, like, I was having a text conversation with an engineer friend and I this morning about, like, we truly all know when when we have achieved what we set out to achieve in this building. And to that end, like, I I believe between the Pizza Hut being gone over seven at this chart,

[John Gray (Office of Legislative Counsel)]: I was gonna

[Sen. Kesha Ram Hinsdale (Member)]: die happy at this point. Is it working?

[Rep. Marc Mihaly — House General & Housing]: I haven't got a GDI, I see why

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: you're Oh, doing And what's your last name?

[Sen. Kesha Ram Hinsdale (Member)]: It's been in your scenario. I definitely sent it to the right, you know, let's see.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Well, that's sorted out. I can, I do want to address that exact point? So, that's a good question because that would help. Well, I'll start by answering the direct question about are the immunes counted and what we get from the Census Bureau and what is reported on the HFA site or housingdata.org. The Census Bureau relies on essentially a survey of municipalities and we do a decent job of municipalities participating in responding to that survey, reporting permits. So if a municipal permit was pulled to create one of these units, which I'd say almost always that will be the case, that it'll be included in that count. Let me make one more general statement, not a very specific statement about the data. Generally speaking, and I think everybody in this committee agrees that, the funding, public funding for, say, affordable units, that is not where we're going to make up the number of our housing deficit. Correct. We can't buy our way into needing the housing. This is where we can round out and make specific policy choices about where we know there are gaps or specific investments that are made.

[Sen. Kesha Ram Hinsdale (Member)]: This is an interesting train of thought because so I think you're probably hearing the same thing. I am in Chittenden County, particularly the Greater Burlington area, which is we're succeeding. Rents are coming down. I hone my hat on that, that if we started to loosen up the vacancy rate, there would be vacancy. We wouldn't, you know, be seeing a thousand people fighting for a 100 properties. And Worse. Oh, sure.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Let's put that Yeah. For that briefly.

[Rep. Marc Mihaly — House General & Housing]: That'd be great.

[Sen. Kesha Ram Hinsdale (Member)]: Do we need to start tailoring these programs outside of areas where we have achieved a healthy vacancy rate?

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: I'd say thinking about program design so that we'll inherently be more effective in those areas that are less likely to succeed based on the market is smart. I mean, that, that, so that is what was intentionally done. Okay.

[Sen. Kesha Ram Hinsdale (Member)]: I love this chart. Yeah.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: But you're saying, does this chart reflect the number of starts

[Sen. Kesha Ram Hinsdale (Member)]: permits? I mean, I am or as authorized by building permits. And it would be nice maybe senator Watson who shared this with the senate would know better what we mean by building permits because I think there's only a few municipalities where you pull a building permit from the municipality. Are those counted? Well Are those yeah. What's being counted here?

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Sure. So I I I think when you look at the methodology and the Census Bureau's reporting, it's it's acknowledged that there's a pretty

[Chris D’Elia (President, Vermont Bankers Association)]: there's large, large of error Mhmm.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Reported. So to take these numbers too literally, I think, is a mistake.

[Sen. Kesha Ram Hinsdale (Member)]: Are you still happy about it? It's still great news.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: And they are still directionally accurate. And they're a good way to capture what's We are working very hard to develop a far more accurate account what's actually happening, and I continue to point people back to the housing dashboard, some of the changes we've asked you all to make, maybe for us so that we

[John Gray (Office of Legislative Counsel)]: can have more of us.

[Sen. Kesha Ram Hinsdale (Member)]: So if we go to the VHFA housing dashboard right now, will we see a trajectory of success told on the front page? Oh, 100%, you absolutely will. Probably that. Thought it would work.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Within, say, the last Well, Matt can probably pull that up right now if If you you were to just look at building permits over the last ten years, you would see that. Now

[Jeremiah Ward (Cooperative Development Institute)]: I wanna try and pull

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Let it keep going down that path. It's about our data. So, our new dashboard that we have high hopes for to be more accurate, we're going to layer on several sources. We are still only relying on one source while we now assume we reap the benefits of some of the changes you make to statute. So I'll I'll talk about that very quickly. So E nine one one data is sort of the the core of the the new housing dashboard, housing data dashboard.

[Sen. Kesha Ram Hinsdale (Member)]: I went to the fuel your new year's resolutions with housing data, probably Leslie. It's the link. Oh, sure. I don't know. Because here, if if you go down, it tells me I mean, it leaves more alone, but I might tell Leslie. So on the left is like a do my gloom. Like, it's stubby. And on the right is I'm I just clicked it to see if it's like

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Should we click it?

[Sen. Kesha Ram Hinsdale (Member)]: Are we doing well? You know? Like, it would be nice to show people Good work. Accurately at some point Yeah. That that This is the chart.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: I've shared with us right now. Let me let me I'll try to answer the question with the data that I have. Yeah. The data shows the changes we're making aren't working. We haven't necessarily made changes at the scale, or let me recreate that. The changes we've made haven't necessarily affected the outcomes at the scale we need yet. Right.

[Sen. Kesha Ram Hinsdale (Member)]: And what we hear from some of our colleagues when we try to even celebrate this chart is which counties. Sure. Right? And so that would that would be helpful. You know, we believe that VHIP is helping smaller projects in more rural population that have lighted property. Do we at some point need to really target to make sure that where we've achieved healthy vacancy Right. We're not just simply And how are Right.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: And how are we partnering with our assessors and listing offices to get that data in the per in the zoning offices to get the permission. So so you all you all made a change at our request last year to allow us to access CAMA data. Don't know if that term rinsed out. Will soon be incorporated in the housing data dashboard that I've been referencing. This is that other dashboard, so not the building permits. That new dashboard that BHFA has signed up to also share through housingdata.org, but it's also published on the state website. This is utilizing E nine eleven data. We will soon be layering in CAMA data to add to the accuracy, and we also are trying to work with UVM to layer in satellite imagery to bring in just one more layer of capturing activity. Though the AI team at ADS is also trying to ensure that everything's de duplicated, at one source, brain science So is checked by other that will, I'd say within the next year, be the most accurate source for exactly We will look forward to seeing it, Jen. I appreciate that. It also so but senator, Ram Hinsdale's point, it also includes in that dashboard, the global speedometer. How close are you coming to hitting the low end of the housing targets versus the high end of the housing targets? The county that's coming the closest to either hitting the low end, still not hitting it, is Lemoyle County.

[Sen. Kesha Ram Hinsdale (Member)]: Yay, Lemoyle County. We should have them in and thank them and congratulate them because I was very impressed in our flood recovery hearing with how coordinated they were, that alignment allows for absorption of capital and outcomes.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Their long term recovery working group has been very It's a pretty amazing. Very strong. Yeah.

[Sen. Kesha Ram Hinsdale (Member)]: We celebrate you.

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Yeah. We're celebrating you. And deserved. And so Gotcha. We are trying to incorporate both pieces of that. What's the trajectory? What have we done? How are things trending? And how did these results compare to what we've all agreed we need to be producing? So we're trying to do both. So don't want us to be doing glue. Don't want it to be overly optimistic. It it's

[Sen. Kesha Ram Hinsdale (Member)]: But maybe we could ask our Memorial Traumatology Partners to come in and talk about what's working and what would help them. You know, that's really what I'd like to spend the next six weeks on. Mhmm. Just putting my own thoughts out there. Right. It's like, how do we do more of what's working and less of what's not working?

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: Right. Anything else? And you're you've gotten through section five,

[Rep. Marc Mihaly — House General & Housing]: and we're now at section six, which

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: you probably don't have thoughts on, although it does provide more loan money for housing, multiunit housing. I I'm I'm generally supportive of

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: this because it And the rest of

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: it here is supportive of the housing targets obviously as well. I I I am. So I'll I'll let me just touch on section seven because house general took one approach. We took a slightly different You took a slightly different approach, which I think was reflective of testimony that you all got from Josh and from Sam and from Catherine. That's right. So what I'll say is I am perfectly fine with both of these just reflecting what's in 03/28. I I'm okay with what's in 03/28. I think it achieves the broad goals that we want in the housing target.

[Michael Gaughan (Executive Director, Vermont Municipal Bond Bank)]: You know, I So you

[Alex Farrell (Commissioner, VT Department of Housing and Community Development)]: think March slightly more than this? I think to keep it straightforward, my understanding of of of the feedback I've gotten because let me go back. Section seven is built on the administration Right. I appreciate plans. And then chair Mahali and I worked together to adjust some of this language, and that's what's in section seven. I'm still hearing that some feel this is hard to digest, so RPCs and BLCT likes once again section twenty twenty eight. So let's go with that. Yeah. Well, just that one second. I have to go there in about twenty minutes,

[Chris D’Elia (President, Vermont Bankers Association)]: so I'm not gonna say that. Sure.

[Sen. Alison Clarkson (Chair)]: Right. I think on that note, that's a good note to end on. Thank you, Alex. This is really terrific. And thank you committee. More to follow. We shall see you tomorrow morning.