Vermont Legislature SmartTranscripts:

[Speaker 0]: Online, and

[Speaker 1]: Jeff is online, and I think There we go. Yeah.

[Speaker 0]: Good morning. Welcome. It is Tuesday, April 14. It did we are here in Southern Economic Development Housing and General Affairs, and we have one of our housing experts from the who now lives in the Upper Valley, Jeff Lubell, joining us to weigh in on if we could make him full screen, that would be great. Jeff, welcome I'm to Senate Economic not sure you've met everybody in our committee in this configuration. So we're gonna just introduce ourselves if we can. David, do you wanna start?

[Speaker 2]: Yeah. Good morning, Joe. Dave Weeks representing Rutland County.

[Speaker 3]: Randy Brock representing Franklin County and Grand Isle County.

[Speaker 0]: And Alison Clarkson, Windsor District.

[Speaker 4]: Tom Chittenden representing Chittenden Southeast.

[Speaker 0]: And Kesha Ram Hinsdale, I hope will join us during the course of our conversation. Jeff, we in this bill, we don't do everything we'd probably like to do to add more tools to the housing toolbox for communities, but we do make some good, we make some steps, have some good steps forward. And I would love to have you weigh in on this bill, if you would be so kind.

[Speaker 5]: Great. Thank you so much for inviting me to come and speak with you this morning. I believe you have two speakers right for this half hour, so I'll try to go through my talk quickly, no more than ten minutes, and give you time for questions.

[Speaker 0]: Yeah, take your time.

[Speaker 5]: Okay, appreciate it. Thank you. I'm just going to share my screen. Let me make sure I can here. If you could turn on screen sharing, I'd be happy to share my PowerPoint here. Great.

[Speaker 0]: Got

[Speaker 5]: it. Thank you. Just give me one second to find the PowerPoint. Of course, it doesn't come up. I'm just going to share my entire screen and navigate to it. Great. Can you see my PowerPoint?

[Speaker 0]: Yep. Yep, we sure can.

[Speaker 5]: Okay, great. So I'm Jeff Lubell. I live in the Upper Valley. I am a senior fellow at the Urban Land Institutes to Williger Center for Housing. And I'm gonna focus on the off-site construction components of of the bill. I know we don't have a lot of time, so I'm just leaving you with a little bit about my background. I've been doing this for twenty five to thirty years working on the housing field, I've lived in Vermont for for eighteen of of the last nineteen years. This builds on a report that I that I worked on with Seth Leonard his IR team last year. And I'm just going to zoom through a couple of the high level findings, not really go into depth to make sure we get to the bill and your questions. But this was a report that was really designed to try to figure out what does Vermont need to do to make better use of off-site construction to meet your housing workforce and climate goals. And it was kind of premise on this idea that, you know, there's all this new technology about how to build housing, but we're still mostly building them the same way we did a hundred and twenty five years ago. Yeah. Really quickly in off-site construction, there are a couple of definitions that I think can be helpful. So off-site construction, you know, define relatively simply as housing produced mainly in factories rather than off-site construction. There are three, I would say, main forms and and a few other forms. So manufactured housing may be the type that you're most familiar with. You're familiar with single wides and double wides, for example. These are homes produced in factories that conform to the national HUD code. They contain a metal chassis that remains, for now at least, remains on the homes, although there's legislation pending in Congress to change that. And as you as we'll discuss, there are also high there's also high end manufactured housing that is designed to to look just like stick built homes. Volumetric modular, construction or just modular uses the same basic process to produce three-dimensional boxes that are constructed off-site and joined on-site. Huntington Homes is the main volumetric modular manufacturer here in Vermont. There's also a panelized construction, a little bit different. Instead of building the entire box, you're just building a two dimensional kind of wall floor or ceiling panel, and then you're kind of assembling them on-site. And there's some other types of There's kid homes, there's pods, But those are the three main, I think, for purposes of this. Just wanted to share I know some of you were in my testimony last year maybe, but others were not. Just some examples, right, from Vermont and Huntington Home and New Frameworks Homes on the left. The right are some examples of this sort of high end manufactured housing that I mentioned, and I'll talk a little bit more about in just a second. Just at a high level, I'm going to leave this with you, but, you know, there's a lot of potential for cost savings. That's one of the benefits here. Really, in housing, the way you achieve lower cost is through economies of scale, and we really struggle with that in Vermont. We're just not building at the scale of production builders in Boston or New York or Houston. And this is one of the main reasons why it costs more to build here than in those places. But there are other issues, and we have some savings. Land is less expensive here. But in terms of pure construction costs, it's just we don't have economies of scale generally. That's why having a factory is really helpful, because you can achieve economies of scale in a factory. There can be benefits for workforce development. If you are building these homes in Vermont, you've got shortages of labor right now in the housing world that need to be addressed, and this is one way to broaden the labor pool, because you don't need to have all of the same strength or specialized skills to work on an assembly line. You can build faster, you can build at higher volume with fewer workers. You can design the homes however you want, so you can achieve very high levels of energy efficiency and resilience, and that's something I would recommend doing. So there are also some limitations. The main one, I would say, is that right now the cost savings potential is not always being realized. We have tremendous economies of scale and low cost in manufactured housing, but in modular housing, we're mainly using it for custom builds. Every order is different. And since every order is different, and there's no reliability or ability standardize designs and achieve greater scale, we have much higher costs than we need to in a modular and panelized world. And that's really important reason why we need this legislation and need this progress that we're hopefully making. Manufacturers are vulnerable to downturns. There are issues related to variations in local building codes and inconsistent interpretation of state codes. Some other issues that I think if we were dealing with this more broadly, we can talk about, we talked about in the report. Some of the ideas that we talked about in the report, some of these are going to resonate today in the bill. We talked about using bulk purchase guarantees to achieve larger, lower costs. So if you buy 50 or 100 or 200 units a year, you're going to get lower costs. There are some other things that I think are being considered elsewhere, not in this bill necessarily in terms of investing in new or expanded factory capacity. You do touch on statewide building codes, so we'll talk a little bit more about that. Pre approved designs is something that Vermont is working on. So you are working on a number of these things, And, but I really want to focus today on H-seven 75 and also on a related program being offered by the Vermont State Housing Authority. So basically, think there's been a lot of progress towards implementation really in what's just a year since we came out with the report. There are now two proposals for the bulk purchases of homes produced through off-site construction. You have the Off-site Construction Accelerator pilot that is included in H-seven 75, and that would be conducted by the Agency of Commerce and Community Development in collaboration with the Departments of Building and General Services. And the Vermont State Housing Authority is planning a program they call Move In Vermont. H-seven 75 also proposes a credit facility for the purchases of homes produced through off-site construction. And really, I think if these initiatives pass and move forward, this will represent a really important step forward, both for reducing lower cost homes, but also laying the groundwork for what will be, I hope, be a larger expansion down the road. So I wanted to just walk you through the two pilots so you understood them and how they differed. But really, I think they're complementary. They're both really helpful. They test somewhat different things, and I think they both could be enabled by H-seven 75. So the first is the Off-site Construction Accelerator pilot. The pilot legislative language is silent about the exact housing type. But my understanding is that this builds the homes for all initiative and the eight zero two homes project. We have preapproved designs and a lot of those designs are what we call missing middle housing. They're duplexes and triplexes and quadruplexes and townhomes, kind of designs that are very efficient but sometimes hard to build, particularly in infill settings. Although I think some of their designs are single family and accessory dwelling units. They plan to use modular and panelized construction. Eight zero two Homes program, I believe, will be optimizing those designs for both methods. And really what they're testing is the use of preapproved designs and municipal collaboration to streamline the approval process. The ability execute a bulk purchase agreement to identify sites to actually move it forward. And the hope here is that through the streamlined approvals process through the lower cost for design, some modest savings from the bulk purchase, there will be some lower costs relative to doing this through stick built construction. And I say modest cost because I think, you know, with bulk purchases modular manufactured housing, you know, if you do 20 or 30 units, you get some savings, but not the same savings that you will ultimately get with 100 or 200 units, And particularly, once this becomes regularized, so that as a manufacturer, you can actually expand your capacity, knowing that you'll have the orders year in and year out. That's when you really achieve the major cost savings. So the hope here is in the pilot phase to achieve modest savings and then a larger savings down the road when this gets expanded. Move in Vermont sounds similar, but it's a slightly different design, and it tests somewhat different things. So it focuses on single family homes mainly, possibly duplexes as well, but it uses manufactured housing rather than modular or panelized. So as you may recall, these are what we think of as single wides and double wides, but these are, I call these high end manufactured housing. They're using a type of housing called a cross mod, which is I'll show you a picture of it. It looks just like a conventional, stick built home. It has sort of solid middle class amenities. They're beautiful homes. And what they're testing here is the ability of high end manufactured housing to provide attractive homes at low costs. They will be trying to identify infill sites around the state. They will be aggregating the demand from those sites to place a single order with a manufacturer, possibly two orders because there are two manufacturers, but they'll be aggregating them into single orders with each one. There will be revolving fund that will be used to fund these, and they'll be testing the effective execution. So this has significant potential for cost savings because it takes advantage of the high scale and volume of manufactured housing plants. Ultimately, the hope would be that if this works, maybe you do 10 or 20 homes the first year, but then you expand your network, you increase your volumes, you increase your utilization of the revolving fund, you layer private credit on top of the public credit, and you're able to really ramp this up to do quite a bit more in volume.

[Speaker 0]: And just just who is the Rutland State Housing Authority setting up their revolving loan fund with? Are they doing that themselves? Are they doing that with the HFA?

[Speaker 5]: Well, the hope here is to use the credit facility that the treasurer is setting up as part of Even this

[Speaker 0]: though their proposal isn't in this bill, the use of the credit facility is what will enable a lot of this

[Speaker 5]: for That's exactly right. I'll talk a little bit more about it in just a second, but the credit facility, I believe, is adequate to fund both pilot initiatives.

[Speaker 0]: Right. Okay.

[Speaker 5]: And I would encourage you to think of them that way. The Vermont State Housing Authority program is based on a program in New York called Move In New York. There was a New York Times article in September about it. This is an actual picture of one of the pilot homes. They developed three pilot homes last year. They cost about $250,000 all in, not including land. And it's not shown here, but the homes also include a garage that was built next, either a garage or carport. So that home would cost about $400,000 to build stick built. So huge cost savings. Are now Sorry, in the process

[Speaker 0]: how much was this?

[Speaker 5]: The cost was about 2 and 50,000 Wow. It's a 1,500 square foot home, roughly. It would cost you $400,000 to build this stick built. And because they're doing this with manufactured housing, you take advantage of the huge economies of scale that are kind of built into manufactured housing. This year, they've rolled it out now to municipalities. They are providing grants. New York is providing grants to municipalities to buy. They have to buy at least 10 homes. They have to have sites for the homes, infill sites. They're they got reservations for close to 400 homes. So we're hoping in the next year to build 300 to 400 homes. They

[Speaker 0]: Is are going to that all over New York state?

[Speaker 5]: All over New York. All over New York, even in Long Island. They got some reservations in the Hamptons. So very it's a really interesting program. They do have a lot more money than we do, so their program's gonna be bigger at first. But I think we can do something similar and really exciting in Vermont. Yeah, so basically, my conclusion here is that the I think the Off-site Construction Accelerator pilot is an important step forward. It's gonna generate actionable learning. It's gonna pave the way for future scale. We should look at it as a pilot and not as the end. And so if you achieve five to 10% savings from the bull purchase, that's great. But know that as you enlarge it, you'll get fifteen, twenty, 30% savings down the road. The credit facility is extremely helpful. It addresses a key obstacle for the move in Vermont. The main obstacle that it addresses is the fact that, you know, we're going to the Vermont State Housing Authority is gonna be placing these homes all over the state. It doesn't make sense to have a separate construction loan for each of those homes. It's just a lot of work. If you have a line of credit, you need to make the factory deposit, you draw on the line of credit. You need to pay the home when they deliver it, you draw on the line of credit. Once the family pays for the home, you reimburse the fund and it's cost neutral. That's the concept of the revolving fund for that program. I think you can do something similar at the pilot phase for the Off-site Construction Accelerator, but over time, I think you're gonna mainly wanna use that fund for, particularly once you start to scale it, you're going to want to use that fund for the factory deposit, which is the hard part to finance and get a construction loan to finance the on-site construction work. So that's something we can talk about. Think that this credit facility both has application for the pilot, but also we can start to think about how you could leverage it to draw on additional private capital to really do a lot more once you're rolling it out. But having that base will be super helpful. So I noticed that you request input on statewide building codes. I think that's great.

[Speaker 0]: Well, it's critically important. I think that we have, for several years, had recommendations that we need a statewide building code, which would be really helpful. We've had a task force working on statewide energy codes, which had been, in some ways, should have been united and we are where we are. So statewide building codes would help us. That's great.

[Speaker 5]: I mean, to some extent, do have a statewide code, but it's not really being enforced consistently, and there are some local variations on particular items. You know, I'm I am as part you all I is in the process of finalizing funding for a working group of Northeastern states. And one of the things we'll be talking about is actually the idea of a regional building code for the entire Northeast.

[Speaker 0]: I I think that is a great idea, particularly if we're looking at building to scale these on these modules.

[Speaker 3]: That's right.

[Speaker 5]: Homes. Yeah.

[Speaker 0]: Like construction. You don't have regional building codes, then you're gonna have to, know, design them per state. It it just it you reduce savings by not having a regional code.

[Speaker 5]: No. That's exactly right. I I would I would just say that imagine a world where there's a single regional building code from Pennsylvania to Maine. There there's a ability to get preapproved designs in one state that would be recognized across states. There is a rational inspection regime where at the state level, we're inspecting the boxes when they leave the factory, and we don't reinspect them at the local level. And we've trained our local building inspectors on what they do and what they don't do. I mean, you just unlock a huge amount of investment in the sector by people who say, oh, now I can build 500 townhomes to the same design. And if I don't place them in in in Vermont, I'll place them in New Hampshire, I'll place them in Maine. And, Really achieve significant cost savings at no cost to the state. This is really almost no cost. Potentially, there's actually cost savings because you're not duplicating the work across

[Speaker 0]: the state.

[Speaker 5]: I know you have other witnesses, but I wanted to

[Speaker 0]: I don't know. Have the treasurer to build on your testimony already. We have the treasurer's office coming to to talk about the credit facility. I guess my one of my questions, do you think that that conversation that you're conducting on regional building codes will be ready for prime time for next year, for next session?

[Speaker 5]: A great question. I think we'll definitely be in a position where you could have a hearing on it. Our plan is to lock up our funding by the June, have a kickoff meeting for the states in the fall. We will have concept papers about the regional code available at that time. We will be taking people's temperature and really seeing who's ready to move. But the goal of that group is action and not just talk. We really think that, if we as the states do our part in creating a business friendly ecosystem that solves for these issues that are inhibiting scale, I think we're going to see significant benefits. And at a time when we all have budget deficits, we need to be taking these low cost actions or no cost actions that really can Thank lower

[Speaker 0]: you. This is terrific. And in some ways, so any questions for Jeff before, because I think this is a complimentary conversation when David joins us. Because David's gonna talk to us about the credit facility. Any questions for Jeff before we shift? Yeah, David.

[Speaker 2]: Sure. So Jeff, I appreciate the testimony. Certainly, you're bringing a lot of experience. You have a lot of enthusiasm. Your recommendations are good. But on page five, which is the comparison between the different types of off-site construction, I'm curious why you didn't include a cost matrix with all things being equal, the four different types of off-site construction, what they would sum up to versus a stick built home. That would make your briefing completely compelling. Just wondering why you should go there.

[Speaker 5]: I appreciate that. I will say this. The issue of cost savings is something I've looked into a lot, and it's not as straightforward as you might think. There are a lot of different building types, for example. There are single family, there are multi family, there's missing middle. There's also the

[Speaker 2]: can world have denominator. You have a common, you can at least compare

[Speaker 5]: For sure, for sure. The other thing I would say is that there's also the world as it exists today and the world as it will exist when we rationalize the policy environment. And I would say right now that the main advantages right now are manufactured housing versus the other housing types, including stick built. And the reason for that is that Clayton Homes builds 50,000 homes a year across its factories because they have a national building code to build to. And so they have incredible economies of scale that we don't see in other fields. I think modular housing can have a lower cost, maybe 10 to 15% currently, depending on how it's utilized. It's sometimes utilized well and sometimes it's utilized poorly. And it's really important to recognize that it's not just a single number, it really depends on you have to integrate the design from the very beginning, you have to do designs that are friendly to off-site and not unfriendly to off-site. But what we hope to accomplish through the bulk purchases is to significantly lower those costs. So that's why, again, I think the state of the world as it is, is modest cost savings on manufactured housing and penalized, not large cost savings. But once we get to once you're placing a single order with hunting and homes for 100 homes that that will enable them to shop that around to get better pricing on on the parts. It'll enable them to expand their production facility so they can do more and amortize their costs over a larger number of units. Really, the goal here is to lower costs further, so that's partly why I didn't, right now, include a table on that page.

[Speaker 2]: Yeah, good work. So regarding bulk purchase, I think at this point it's pretty clear that commercial entities, developers, bankers, they have a choice to do bulk purchasing now. There are vendors, folks out there constructing them. It's a commercial option. Why do you think that drawing the state into it for bulk purchase is any different from, how a commercial developer would approach the same question?

[Speaker 5]: Yeah, it's a great question. So, the short answer is that in larger markets, the manufacturers are doing bulk purchases. A lot of the production builders are incorporating off-site production into their production building processes in Boston's and New York's. The the part of the issue here is that in Vermont, we don't have any builder that's building at that scale, whether it's site built or off-site. And so there's a real need to aggregate the demand from multiple individual builders and developers to an order that's large enough. So that's one issue why we're not seeing that in Vermont as opposed to why we are seeing that in other places. The second issue I would say is that we have different building codes in each state. In a lot of localities, have different building codes. That's inhibiting scale and standardization. My hope is actually that the state is not going to be doing this forever and is not going to be doing this mainly, that the state is basically aggregating demand and demonstrating the viability. There's a lot of issues that are inhibiting the private sector from doing this. In a state like Vermont or a state like New Hampshire. If we demonstrate that it works, I think the private market will come behind it and will scale it. And that's ultimately what we'd like to see. But they might need to be aggregating demand from three or four states rather than just from a single state. That's gonna We have to prove out the market. The goal of the state, I think, in part is to prove out the market. We can't subsidize our way out of this problem. We have to figure out a way to lower costs. This is a way to lower costs for housing the product that you you would have wanted to do anyway, and we prove out the market, and we bring the private sector in behind us.

[Speaker 0]: Thank you, Jeff. Thanks. Kesha, that's a question.

[Speaker 6]: Here, I asked you to share a a slide. It's slide nine of the deck that I just shared to you shared with you. And this was something I brought into the conversation during the passage of the Home Act. Hi, Jeff. Good to see you.

[Speaker 5]: Nice see you again.

[Speaker 6]: The HOME Act and Act one eighty one. And it's something, you know, there are a lot of new people on the committee, so hopefully you'll be able to see it soon as well. Where, you know, when you specifically mention, we don't have a lot of demand for these. We also are a state where people love to have their own four walls. So you would think naturally we have this demand. When I started in the legislature, 8% Vermonters lived in mobile homes, what we solely define as mobile home. And as you probably are keenly aware, and I'm saying this for the treasurer's benefit as well because they know that I have opposition to a set aside just for manufactured housing, This is our problem in Vermont. I want everyone to see this and it startles some people. It's easier when you look at it as a sort of one length. But Vermont is a UFO out there in terms of its average lot size. That's about two acres. Our average lot size in Vermont is two acres. The last time I had a witness testify on this committee from Orleans, he was trying to convert a previous industrial park into a one might call a manufactured housing park now. So he was trying to get he was trying to bulk purchase a number of mobile or manufactured homes, and he was trying to get I think it was two per acre. And Orlean said, we have a one per acre.

[Speaker 0]: Right. I remember this.

[Speaker 6]: And it completely stopped the project. So until we have communities in Vermont that are willing to accept smaller lot sizes for our mobile and manufactured housing, essentially, potentially create new mobile home parks, which senator Brock has brought this up in the past. Like, why are we just simply infilling existing mobile home parks with slab development rather than allowing for small lot size manufactured housing communities around the state. And you said high end, and I struggle with all of this because we have we have significant discrimination against mobile and manufactured housing. We could not even cite FEMA trailers after our 2023 flood. So until we solve this problem, I will just say for everyone's benefit, I'm not gonna support a set aside for bulk purchasing manufactured housing because we need to make the reality different on the ground for that to actually have the intended cost impact.

[Speaker 5]: Well,

[Speaker 0]: sorry, Gina. Feel free to respond because I was gonna say we've heard slightly different testimony in our manufacturing housing bill. I mean, just talking about that, the huge park up in Colchester where the average lot sizes varies is

[Speaker 6]: is so important make sting manufactured. Right.

[Speaker 1]: That's an existing mobile home park, and

[Speaker 6]: we are not allowing new mobile home parks to be created in the state by virtue of this reality that is zoning. Like, what people might wanna call them tiny home villages or cottage communities or whatever. We need so many more of those, but we need to reduce the lot size discrimination that we have before it's financially viable for people, period.

[Speaker 0]: Jeff, what's your thought? And then we're gonna shift to David because we're already

[Speaker 5]: That'd be great. You may wanna stop sharing if you wanna see me. So I have a couple of responses. The first of all, think it's really important to distinguish between manufactured housing parks and between move in Vermont at the Vermont City Housing Authority because they're two completely different programs. They have very little to do with each other. So move in Vermont is gonna put homes in places that have water and wastewater in infill settings in cities. They so as you know, you passed a law that requires them to have five units per acre minimum zoning. Right. So these are places that have the zoning, that want the homes. These are middle class homes. There are nothing like single wides or double wides. Just just because they're built in the same factories, believe me, you're welcome to go to Syracuse and see one of these homes. They are beautiful homes. They look just like a Stip Bill home. So the

[Speaker 1]: Just program that we so you just so you

[Speaker 6]: know, though, the five units per acre does not really help us with infill communities. And we've gone back and forth with the majority of our major communities because they're using the long, water and sewer regulations, and most infill opportunities don't have an acre or more. So we are looking to try and be Portland, Oregon, but we're talking about, you know, much more ADU type allowances in those communities because discrimination does continue in infill even on what a quadplex can and should look like in our infill I

[Speaker 5]: think that's fair. I just wanna say that just like I just think it's important not to think about manufactured housing parks when we're thinking about moving Vermont. These are homes that are going to be put in the same lots that we're putting single family homes right now. Full stop, right? These are homes that have water and wastewater. Their homes that are already entitled there into I mean, it's just It's just we're putting a single family housing down. Basically it's just being built in a factory. So please don't think of these and I'm not saying that there's anything wrong with manufactured housing parks or there's anything wrong. You know, I completely agree with you, Senator that we need to think about how to create new forms of manufactured housing communities. And I'm actually working separately on that. Don't I think there's a way to make manufactured housing communities look nothing like a manufactured housing park. We're just using lower cost homes in a residential setting. I'm working around the country, tiny home villages, on ADU sized homes, but the idea is to make them feel like a residential community and not like manufactured housing park. But that's just not this program. It's just

[Speaker 1]: a different program. Get it out of

[Speaker 0]: the realm of affordable housing. Brooke?

[Speaker 5]: Just to be clear, the homes that we're going be building through Move In Vermont are going to be priced at 2 and $50,000 $300,000. It's more of a workforce housing thing. But the homes that we could be building pre manufactured housing communities, I think could be as low as 100,000. I think they would be affordable. I'm happy to talk to you separately about that. Is something I'm working It's not this bill.

[Speaker 0]: Right. And Jeff, how far along is move in Vermont as a pilot?

[Speaker 5]: Basically, you approve the credit facility, they will issue a request for people to volunteer their sites. The idea

[Speaker 0]: That pilot is Okay.

[Speaker 5]: It's ready to go. It's ready to go. It's a little bit further advanced than the other one. Basically, the hope is that you'll approve the credit facility, they'll issue the request for applications, they'll identify the sites this year, they'll place the orders in the winter, and the homes will be installed next year.

[Speaker 0]: We need to move on to David because we're behind time. We're going to give this another

[Speaker 3]: Can ask one, just mention one thing about that? Yeah, sure. It's just that while this testimony on this building going on, I've been reading the history of Levittown, which is very interesting

[Speaker 0]: in terms of the type

[Speaker 3]: and of what it looks like at the space and so on, and many of the same questions being dealt with between 1946 and 1951. It's kind of interesting and suggests everybody here might take a look at that.

[Speaker 1]: I see

[Speaker 3]: a lot of parallels.

[Speaker 1]: Here's something I really need

[Speaker 6]: to understand about this bill because whatever we're talking about, if you're talking about infill opportunities behind someone's existing single family home, for example, most of our communities, this includes Burlington, you know, all of the ones with zoning, do not generally allow for a subdivision so that the other person could own this property. And they still, and I fought with Madam Chair on this multiple times, they still have an owner occupied requirement for any apartment housing. So when you when we've had people show up for interest events in what should be the most ideal housing we can build, this is what's working in Portland, Oregon, A one to three units in someone's backyard. In most of our communities, people won't build those because the it has to be owner occupied. The short term

[Speaker 0]: rentals have to be owner occupied. No.

[Speaker 1]: The AEU short term. AEU. All AEU.

[Speaker 6]: All of it. Yeah. So we have a lot of other problems to solve, Jess, that I'm just not sure if you've like, people who are very excited to take money to get a eight zero two home, whatever manufactured housing, whatever program we're calling it, they're going to run into huge, barriers between their municipal and state law about what it then looks like to rent or provide ownership for any of those properties because of problems with subdividing and problems with owner occupied requirements in most municipalities for having an additional rental property essentially built on your own property.

[Speaker 5]: And so again, just to be super clear here, the move in Vermont will be built on standard, fully subdivided lots.

[Speaker 0]: Right.

[Speaker 5]: We'll be working with nonprofits and municipalities to identify these lots. We will only put homes on places that where they will be able to be legally, subdivided. The homes are not intended for rent or intended for sale. So I I I completely would love to talk with you about ADUs and how to deal with some of those and that's just not this bill. This bill is

[Speaker 0]: about single family homes.

[Speaker 6]: Because how about for humanity struggles all the time to find a lot where they can build a home

[Speaker 0]: for free for people. Right, in a subdivided situation.

[Speaker 1]: So this is just, it's so not relevant on the ground.

[Speaker 0]: We will continue this conversation, Jeff. We would love to have you back and we can also chat offline about because I'm happy

[Speaker 5]: to. Happy to. Yeah, that'd be great.

[Speaker 0]: Thanks so much. Stick around. David Sheer is going to join us and talk, and then we're going to have to shift to H757, the manufactured homes. Share. At least I go back and forth. I'll answer David, share.

[Speaker 1]: Let me see. Great, Tammy.

[Speaker 3]: Thank you for having me, madam chair of the record, David, chair deputy treasurer. So I'll speak a little bit about the h seven seven five section two, which is the kind of facility for local investments. LIAC is what we call it, stands for local investment advisory committee, but doesn't really explain what it does. Our legislative director, Peter Tromble, testified in front of you a month, a month and a half ago now, and he gave a nice overview of that LIAT program. So I don't wanna repeat all of that. But just as a brief reminder, the lab program takes 10% of the state's daily cap balance, which currently is about $1,500,000,000. Although we estimate one to 10% conservatively at about $1,200,000,000, and we lend that 10% out to get very favorable interest rates. And the treasurer's although the statute does not restrict that lending to housing, the treasurer has made the determination that given the extreme need for housing to provide his loans under that program have focused almost exclusively on supporting housing. Right. And we we have passed, as you know, out

[Speaker 0]: of this room, the increase to to well and half percent. That's exactly right. And that's come back to us in this bill, which we appreciate. However, we the credit facility, did not make a decision on because we knew the house was working on it, so it has come to us in this bill. So picking up at the increase of the two and a half percent, which would add an additional, I think, 30,000,000 in loan. Yes. Got the numbers. So very exciting in that regard. Talk to us about then the next step, the credit facility.

[Speaker 3]: Yes. Thank you, madam chair. And I do wanna emphasize to your point, the most important part of this bill in our view is in fact the part that you already passed, is that increase by two and a half percent to add the $30,000,000 of increased capacity for lending. That will have significant impact, and it does under terms of current law, it does leave the treasurer with discretion to make those investments in ways that are wise and prudent and also could be used under current statute, we believe, for things like manufactured housing, but also for the types of investments we've been we've currently been doing, which has been a wide variety of housing. With respect to the credit facility that is proposed here, I want to add a little context to how it was originally created as I think that'll help explain why it exists as it does in this bill. There was an additional piece originally that sent the interest earnings on LIAT loans back to the treasurer's office. That would add basically cash into the program. I wanna be clear, we're not asking for that back. The decision was made that that money was not able to be spared, and we understand that. I I I add that context only to explain that I think these provisions were put in. I know these provisions were put in because the concept was that with a cash backing, you could make riskier loans because if something were to go wrong, that cash could be available to sort of backfill to support it. Without that, I do want to note that we would need to that the credit facility that has stated here will need to follow all the same precautions and protections and risk mitigation that we use for all of the LIAD loans, and that is as it should be. We need to this is not the state's daily cat balance is not an appropriation for us to spend. They are investments that we need to prudently shepherd. Currently, we do that by making all of our loans through intermediaries, which are financial institutions. Those financial institutions guarantee repayment to the treasurer's office. In return for that guarantee, they do take a bit of a fee and, like, one to one and a half percent earnings off of those loans. But that means that the LIAC loans are essentially the same risk as putting your money at bay from from the perspective of the treasury or something. Without the sort of backfill of that other money, this credit facility, we still think, can be useful, but it will be lent out in essentially the same way as the LIAD money is currently lent out, which means we have to find an intermediary to or some institution to effectively guarantee repayment. We still think that this concept is the concept of supporting manufactured housing does have real value, and we are happy to work with the institutions that are interested in promoting that. Think for two reasons, one, there are potential cost savings, but really in the near term, the and and likely cost savings as you go down further down the road and the sort of capacity has increased. I think the real benefit in the near term is building, like, the increase in that capacity, allowing public supports to increase that capacity and increase the ability of manufactured home manufacturers to have a guaranteed market such that they can produce at a higher volume without having to accept the risk of not having those homes be sold. So it sort of is a market stimulus for a market that we do believe can be a piece of the solution to the supply problem that Vermont has. Don't wanna pretend that that's gonna be the entirety of the solution, but it's potentially a tool for us. The the language as it's currently written does leave the treasurer with discretion. It does say up to 1%, so it's not like we're walking away up to 1% that would be dedicated to this, but it does say that up to 1% can have this credit facility that would be focused on bankfactual assets. And purchasing lots of transportation.

[Speaker 6]: Are there other risks you might wanna take besides just purchasing a miniature power bank that support an increased infusion of housing dollars in the state?

[Speaker 3]: I mean, currently, we've done we have not invested in this yet. And so I think the answer is yes. We're happy to look at all sorts of ways to invest in housing, and that's what we've been doing. I think the this was originally created with the idea that there could be some higher risk associated with it. It is that won't be the case because we do have since this other cash isn't coming in, this will be invested in a very safe way.

[Speaker 0]: Yeah.

[Speaker 3]: But the but the answer is yes. Of course, there's other risks we can in in happening.

[Speaker 6]: Right. I mean, I just think this is the right time to take a reasonable amount of risk to revive our our housing market in all corners of the state. But it's not a great time to take on, like, additional unnecessary risk, especially making a big purchase from outside of the state while we are, frankly, still trying to get our in state manufactured housing manufacturers, you know, to be able to lower their price point and still pay people and hire people. We have lighted properties on our grand list that used to be manufactured housing facility.

[Speaker 1]: Is this is this the best use of our risk?

[Speaker 3]: I think that a couple things to note. One, certainly we could the funding could go to Vermont manufacturers. So I think this might something that owns as the the main manager as I understand the market right now that is based in Vermont. Certainly, that is a a place where this money

[Speaker 6]: could of I love 23 homes. Yep. Walk it's Webster as a constituent. They do I mean, is what worries me in general about this is they, design and by market, tend to make higher end manufactured housing. They have been rightfully critical of our state energy codes because every single requirement we add there adds 10 to $50,000 of cost for each of the homes that they build, and they keep trying to bring down the cost of their high end manufactured homes. So we're not from continuing to in homes, I think, based on their model going to get a significant number of very low cost manufactured homes for people, not at that scale, not at that price point. We love them. I would love to support them anyway because they are they they could scale up to some extent and provide very nice house single family homes that are middle class affordable price point. Is it the best use of our risk to send the money out of state to bulk purchase prefab panels of housing based on speculation at this point? I

[Speaker 3]: think a couple of things. One, just when we talk about risk, and this is my mistake too, think I misspoke. We we I do just wanna emphasize that we will do this lending in a way that really minimizes the risk. But I understand that there's a opportunity cost to keep using this lending capacity. So let me use the term opportunity cost instead. So should should the opportunity cost go to this? I do think that there is a there's opportunity here to change the market. I hear what you're saying about how predictive homes makes its money now. The hope would be that with a greater guarantee of sales that they could become a manufacturer or another. I don't wanna pick favorites in the market necessarily or another manufacturer in Vermont could become

[Speaker 0]: Well, or create a whole new one, which we're always hoping to do.

[Speaker 3]: Exactly. That's what I meant.

[Speaker 6]: But you're you're more focused on creating in state capacity.

[Speaker 0]: But that would be in state capacity if we could actually this might be an incentive to increase in state capacity.

[Speaker 6]: But this isn't narrowly focused on in state capacity.

[Speaker 3]: So it's not in the state that would

[Speaker 6]: We've been talking about I mean, if the whole

[Speaker 1]: conversation has been bulk purchasing outside of the state, I

[Speaker 6]: mean, Georgia and and Missouri are probably where you're gonna get a majority of the lumber and the bulk panels. Mean, we've talking about New England wide versus Northeast code. Where regions Should we should we focus our risk on building up the Vermont economy? I mean, it was investing Vermont or whatever.

[Speaker 3]: Right. Right. Right. No. I I agree. And I think although it's not in the statute, the treasurer has and would continue to focus on spending money to the greatest degree possible in ways that build Vermont capacity inside Vermont.

[Speaker 6]: I only see it as a liability for us to put this language in.

[Speaker 0]: So yes, Thomas.

[Speaker 4]: So I I should

[Speaker 0]: Sorry. Just no. We're we're gonna get to $7.05 7, but it's important that we while we have these two with Jeff and David here, we really need to sort of get at begin to appreciate these this this these pieces in the bill.

[Speaker 2]: I should

[Speaker 4]: mention many of the hesitations that senator Rutland has. It just seems like it's more risky than it wanna be. And I can just imagine the world where we're gonna somehow have these monies tied up, then those those houses just aren't gonna be able to be built in a time frame that's gonna return back the the resources in a reasonable way. And so it's gonna expose us to more risk. That doesn't mean I'm against this program. I think we're gonna be absolutely it should continue to move forward. But when I think about other needs and capacity and demands in the state, I would love to see as much of our lending capacity focused on school construction need and so on. And that's what I think I raised with Peter Trombley that that's where I would rather a limited capacity risk that the state could take on, which could affect our bond rating where I I have to work on the dollars over non tested.

[Speaker 0]: Is is it an either or? Is there an this I

[Speaker 3]: Yeah. I mean, we have

[Speaker 0]: I mean, you you I assume

[Speaker 3]: you have been in active conversation about school construction too. We have been on the bonding side of things, the space bond capacity. We haven't been talking about it in relation to the LIAC capacity, which is, at this point yeah. But the current LIAC capacity is mostly expended. The extra $30,000,000 does provide would provide if it wouldn't pass some additional capacity, and that's something that you can have more discussions about. I, you know, the treasurer has identified housing as the top priority, but that is something that we're happy to have discussions about.

[Speaker 0]: David, do you have a question? Sure. Repeat.

[Speaker 4]: But I also heard you say that if this language specifically calling out this program wasn't in there, still have the prudent capability of applying or using these funds for projects that might meet those of existing standards, that this call out is not necessary at all?

[Speaker 3]: We believe that we would have the discretion under current statute to make those decisions.

[Speaker 0]: And I also see this as Jeff, you want to weigh in? You have a thought.

[Speaker 5]: I think one thing that's important to just remember, if I'm remembering the bill language, it only authorizes up to 1% to be used for the revolving fund. So I think that's closer to 10 to $12,000,000 is that correct? As opposed to $30,000,000 which is the full 2.5 increase. So what we're talking about essentially is using a very small amount of money, frankly, for a revolving facility that will pay for itself in order to lower the cost of housing. I mean, here we have a state that's put tens of millions of dollars into workforce housing programs, etcetera, and that was subsidy that you never get back. Is a loan facility, it's going to be lent under very safe mechanisms. I'm sure we're going have to meet all kinds of requirements to mitigate risk. So I just want to emphasize, we're not talking about $30,000,000 we're talking about $10 to $12,000,000 There ought to be enough money to do all of the things you want to do, but you really have a choice. You can subsidize it, or you could do what we're talking about and find a way that doesn't cost you anything to actually move it forward. That's what we're really talking about is a way that's low cost to the state. It's a very modest investment rather than just using subsidy.

[Speaker 0]: So this is helping clarify for me. This is 1% of the total 12.5%. That's correct. Thank you. That helps clarify this for me. Sorry. Is everyone else clear on that?

[Speaker 5]: I'm sorry. It's not 1% of the 12.5. It's 1% of the whole of the entire budget. Is that right, sir? Or is it one Yeah.

[Speaker 3]: Yeah. That is correct, Jeff, mister Lavelle. But I think that's what I sent the chair to me was that it is 1% of the hey. Just one of us. Yes. It's 1% out of the 100%.

[Speaker 0]: Of the 100% once we've added in the two and a half percent.

[Speaker 3]: Yes. Yeah.

[Speaker 0]: So that's that's what I meant.

[Speaker 3]: It's yes. But it is not 13 and a half percent that we're talking about here. This

[Speaker 0]: is one and a half percent. It's 1% of the total amount that we can now use based on this addition of two and a half percent. That's correct. Yeah.

[Speaker 3]: I think we're I think we're all saying the same thing there.

[Speaker 0]: Yeah. Okay. So I'm reading

[Speaker 4]: the language now. I almost interpreted as if we leave this language in there, then it's going to restrict these dollars to only be used for this off-site construction and and to aid in the purchase of off-site constructed housing. That's actually, I I don't think that's a good idea at all because if you gain more information later on and take this out, you still have the capacity, the prudent ability to invest in different projects. I would need to just tie it up and just focus on this one project. I'd like to how are you gonna be

[Speaker 3]: able It is a bag. Is there? It's an up chance.

[Speaker 0]: So Yes. Up up to one.

[Speaker 3]: Clarifying pencil. Paragraph.

[Speaker 0]: See the two. What page? Page three. Page three. Line three. Does that work? Where are you then? There were other things too. Out

[Speaker 6]: that might have risk or might not have risk that that build housing faster for people. And that's I don't know.

[Speaker 3]: I mean Yeah. I would say we do think there is a real potential value here. I would also say that I think your point about discretion, we do think we do have discretion on the current Right. Language to make a revolving fund in outside.

[Speaker 6]: I'm just not gonna molest it in 2026. But when we have so many permits pulled and we have so little time for certain housing exemptions we've already put in place, then I I just can't see how this creates a lower price point in the next three years for a significant number of new homeowners.

[Speaker 3]: I think your point is valid about the larger regulatory landscape challenges we face. I think that's true for any

[Speaker 6]: Exactly. So But we do have permits pulled for for existing projects. We do have a backlog, and we're trying to bring down the cost per unit for every single one of those. Right. And you know that because those they're coming to you. Right.

[Speaker 3]: Right. I mean, I think that I just wouldn't wanna expand that argument. So the same shouldn't have low and low cost loans to support housing.

[Speaker 1]: No. I think that that's That would be

[Speaker 6]: so can we make it so that you can use some of the money for low cost loans?

[Speaker 3]: Well, that's what the right Yeah. That's how it is.

[Speaker 6]: That's So then yeah. I mean, course, we should

[Speaker 0]: be close to loans. This is just an a modest addition from what I am appreciating to pilot these two programs, which may add a significant number of lower cost terms.

[Speaker 6]: They will not. I mean, how does that happen? Just because we bought them out of state?

[Speaker 3]: I think the hope is to and and Jeff was moving to this too, is to change the market. That's sort of the subsidized

[Speaker 1]: Not if you don't have

[Speaker 6]: the not if you have not cleared the municipal and state hurdles, then the land cost is much too high for this to significantly have an impact, especially on ownership. If if, madam chair, you wanna remove the owner occupied retirement I

[Speaker 0]: don't think it's just of

[Speaker 6]: that housing. Otherwise, this has absolutely zero impact in our municipalities that have infill development opportunities. I'm not

[Speaker 0]: sure we all agree on that. But, Jeff, you have a thought, and then we're gonna shift.

[Speaker 5]: Yeah, I know you need to shift. I really appreciate everyone thinking about this. I would say this, we have a huge housing need. We need housing at all price points. We need housing at the very low end. We need housing for modern income working people. I live in the Upper Valley, and there are lots of businesses here who would love to hire more people if there were housing. If we could build housing, we're proposing to put housing in the ground and sell it for $250,000 to $300,000 through the Move In Vermont program. That is well below the market rate for housing here in the Upper Valley. I imagine it is true in Burlington and in Montpelier and a lot of other places. And so with a very modest little or no cost to the state, we're going to do something really exciting. And it's a pilot. And at the end of the day, we're going to learn things. And maybe we're going run into obstacles and we'll figure them out. That's the goal of a pilot. And I would say similar with the state's program, that pilot will not produce housing that is quite as low cost, but it will demonstrate the capacity to use pre approved designs and work with municipalities that really want to make this happen. It will start to flex the muscles around bulk purchases that will ultimately lead to lower costs. That's not going to be necessarily on individual lots. They're going to find a parcel of land and develop it the same way the housing is being developed now. So I think they're both really exciting, and I think they have little or no cost to the state. We just really encourage you, among all the other things that you're doing, to authorize these, let them move forward, let's see what we can learn, and then we'll come back to you in a year, and we'll share what our learning is. Really excited. I appreciate your consideration. Thank you so much.

[Speaker 0]: Thank you, Jeff. We were are gonna pivot because this is a we're gonna continue this conversation. We're gonna pivot to 757 just because we've kept those witnesses grading for a bit. Ham has still not joined us, but we have the secretary of state in the room, and we have Rachel from the future of the Trump, I believe, on deck. Oh, just as we saved your house again. Madam chair,

[Speaker 6]: happy to work on an amendment to get rid of the owner occupation requirement in our communities in order to if you really care about this.

[Speaker 1]: That's the only I really care about this,

[Speaker 0]: and I'm happy to chat with you about that because I'm not sure I agree that that is a big barrier that you think it is. So I'm happy

[Speaker 6]: to I'm not I'm not using my email. I'm I'm looking at projects all over the state. I am.

[Speaker 0]: We are happy to explore this further. But right now, we're gonna ship to seven fifty seven, which is the Manufactured Home Unlimited Equity Cooperatives. And we are going to begin with Rachel back from the Pew Charitable Trust to sort of just give us a high level on this. You spoke to us about the benefits of manufactured housing, which we appreciate, and we've you've split with this conversation. And we have and we welcome you and take it away. Rachel, are you there? Rachel?

[Speaker 7]: Apologies. Yep, I'm here. Thank you. Good morning. Can you see my screen okay?

[Speaker 0]: Yes.

[Speaker 7]: Okay, great. So thank you, Chair Clarkson, Vice Chair Brock and members of the committee for the opportunity to testify today. We know each other, but my name is Rachel Siegel and I'm a senior officer at the Housing Policy Initiative at the Pew Charitable Trust. Pew is a five zero one(three) nonprofit, and I've been researching manufactured housing at Pew for over five years. So I'll talk through some of our key takeaways regarding zoning, titling and access to mortgages. But certainly as I go through the slides today, please, feel free to tell me what's most helpful, and I'm happy to answer questions as we go.

[Speaker 0]: Great. Well, we're working at still seven fifty seven, which Yes. And I think there are sections of it that you're particularly interested in or having

[Speaker 7]: Yes. So there were sections in there on zoning and titling as well as changing language.

[Speaker 0]: Go ahead. I think if you could speak to those, that would be great.

[Speaker 7]: Sure, absolutely. So first I just want to make sure we are all on the same page in terms of sorry, I'm having trouble with my slides here, in terms of what we call these homes. So factory built homes are often confused and the semantics get challenging for folks. Broadly factory built housing is any kind of home that is built in a factory, but that can include manufactured homes as well as modular, panelized or even container homes. But the difference is that modular, panelized, container homes, anything that is not manufactured housing has to conform to local building codes, whereas manufactured housing conforms to the federal HUD code standard, and that's the only type of housing, that conforms to that. So I wanted to just, bring this up and ensure we looked at it. Mobile homes are no longer made. These were any, homes built whole in a factory on a chassis pre 1976. And the reason that these were updated to fall under the HUD code, and when that change happened, they became what's known as manufactured homes, was to improve the quality and conformity of how these are built. And so the home on the right, though they're both single section homes, was built to that federal head code with significantly higher standards. That doesn't mean that you couldn't have a good mobile home, but that there just weren't good standards in place at the time. Sorry, my computer is fighting me a bit. So to give a sense of manufactured housing in general, because I've seen some confusion across the country in this space. These are all different types of manufactured housing from a pretty, typical single section or double section all the way to what you see in the middle of the brown is cross mud, which is built to higher standards, more energy efficient often with porch or garage and also in the blue, a duplex version. But the thing to keep in mind here is that all of these types of manufactured homes all fall under HUD code and all fall under any state policy that affects manufactured housing.

[Speaker 0]: Correct.

[Speaker 7]: So looking at this map, in Vermont, manufactured housing and mobile homes make about 6% of the overall housing stock. And the darker yellow is where manufactured housing makes up between 611.9% of the stock. What we find is that manufactured housing is far more affordable than site built homes. And this is true across the country and bears out in Vermont as well. So a couple key ways we found, from our research to improve access to manufactured homes is updating zoning, ensuring that manufactured homes can get access to financing, mortgages, as well as, ensuring that lot sizes aren't too big, so that affordability can be retained.

[Speaker 0]: Right. It's a concern early.

[Speaker 7]: I'm sorry, what was that?

[Speaker 0]: Oh, we just were having a discussion of lot sizes earlier, which is critically important.

[Speaker 7]: Yes, absolutely. So I wanted to mention that, 10 states have reformed their zoning policies on manufactured housing over the last six years. This includes Maine, New Hampshire, Kentucky, and Maryland, but notably in 2026, the governor of Virginia has signed a new manufactured home zoning bill into place. And that one had really strong bipartisan support. Mostly these tend to require very similar single family have very similar requirements as any other single family homes and attempt to prevent any extra overlays. Sorry, skipped ahead. So I'm going to transition to talk about titling and financing.

[Speaker 1]: Specifically

[Speaker 0]: This is what we're dealing with in this bill significantly is the difference between real

[Speaker 7]: estate

[Speaker 0]: property and personal property. David, do have a

[Speaker 3]: If I could, could

[Speaker 2]: you go back one slide?

[Speaker 0]: Oh, sure.

[Speaker 2]: 10 states. Do you

[Speaker 3]: mean Hold by on,

[Speaker 7]: I'm going the wrong way. Why is it going forward?

[Speaker 2]: This will overlends.

[Speaker 1]: Yeah I don't know why

[Speaker 7]: it's only going forward not backward.

[Speaker 0]: Have it in paper and we can.

[Speaker 7]: Okay This one? Okay. Nope. There we go.

[Speaker 6]: Yes. Okay.

[Speaker 2]: Great. Additional overlays. What does that refer to? So

[Speaker 7]: what we've seen is that some municipalities actually require additional steps or extra things in addition to what single family homes require. So this could be foundation requirements, extra inspections that really make it even more challenging and expensive to use a manufactured home as a substitute for single family homes.

[Speaker 0]: Creating more barriers.

[Speaker 7]: Exactly. Yeah.

[Speaker 0]: Okay.

[Speaker 7]: Yeah. So the step we've seen taken here is this tendency to require, if it's okay for single family home, it should also be okay for a manufactured home.

[Speaker 0]: Right. Okay. Thank you. Consistent. Exactly. Yep. Okay. Let's keep going.

[Speaker 7]: Okay. So financing and titling, I think the the first thing to keep in mind is that outside of manufactured housing, all other types of homes are automatically owned as real estate across the country. And that includes things like condos, co ops, trusts. But manufactured housing is treated quite differently in many states, including Vermont, than other single family homes. And they're often more typically titled as personal property with sometimes options to convert in certain scenarios. So the reason this is a really big deal is because real estate ownership is necessary in order for a person and a home to be eligible to apply for a mortgage. So of course, there's still gonna be the underwriting process, but if a home is titled as personal property instead of real estate, there's no option to use a real estate mortgage. So the reason this matters is because mortgages have the strongest consumer protections and the lowest interest rates with the longest repayment terms, which keep them especially affordable. In addition to that, there are several, maybe more than several federal programs and often state programs for homes that are owned as real estate. So when a home is titled as personal property, it's often excluded or always excluded from those real estate programs. Our research shows that Vermont conversion policies are working pretty well for landowners with the majority of home and landowner borrowers getting a real estate mortgage. But when we've talked to lending experts in Vermont or who are working on trying to do more in Vermont, they've noted that conversion to real estate for non landowners can be challenging and isn't happening as often as is maybe hoped for. So I noted that mortgages are possible, but when a mortgage isn't possible, a manufactured home owner or buyer has a couple of other options. So the next best thing is often this home only also called chattel or personal property loan. They're they're the next best thing to a mortgage because though they have higher interest rates, shorter terms and fewer consumer protections, they do still have federal and state level protections in place and home ownership transfers when the loan is made. So at the beginning of that loan, so a person does become a homeowner at the beginning. The other thing we see in manufactured housing, especially for when people own their home as personal property, is that a very large, a surprisingly large percentage of folks, and this is across the nation, of manufactured home borrowers actually turn to some form of contract financing like lease purchase, contract for deed or rent to own. And the reason this is a big challenge is because there are very few if any protections at the state or federal level. Often, contracts aren't even recorded. And notably, homeownership only transfers at the end of the contract, even though borrowers are often required to maintain the home. And what our research found was that 28% of manufactured home borrowers who own their home as personal property report that they're using some form of contract financing.

[Speaker 0]: And can you share the differences in those interest rates versus the mortgage rates? So mortgage rates now are, let's say 6.5%, let's say. The interest rates for personal property are on average what?

[Speaker 7]: So the current rate was more in the 9% range in Vermont. But on this next slide, I'm comparing Vermont with New Hampshire, and so that might be useful here. So this is let me back up to say, New Hampshire, the difference is that any home that's connected to utilities, any manufactured home that's connected to utilities is treated as real estate and allowed to get access to mortgage financing. And so it it's not to say that that policy is the right fit for every state, but it does provide a useful tool to be able to look at what it looks like if you only owned your home and you were in New Hampshire where all those homes are treated as real estate and the mortgage and the loan is a mortgage. When we compare that with Vermont, interest rates are a little bit higher in Vermont and the number of payments are, a hundred and eighty months compared with two hundred and forty months in New Hampshire. So as a result on the monthly payments in Vermont, if you were looking at a $100,000 loan compared to a $100,000 loan in New Hampshire, what we see is that the monthly payment would be about 16% higher for someone if they were using a home only personal property loan in Vermont. And I should note that these are the rates, the median rates for 2018 to 2023. So they're not like exactly what was happening yesterday, but just to give a sense. I do want to note that when you have so many fewer payments, this example shows that over time in this scenario, a Vermont borrower with these interest rates and number of payments would pay less over the course of the loan. But it's worth saying that a low to moderate income borrower and honestly, most home borrowers as well, Paying more monthly is often just not feasible. And our research shows that when people are a little bit more cash strapped, they compensate by buying smaller or older homes. And when times are tough, we see them reporting that they're keeping the temperatures of their homes at what they feel are an unsafe range, or they're not paying other household expenses to try to make those payments. Any questions on this before I move to the next?

[Speaker 0]: Okay. Yeah. It's not preparing for me the real property mortgage versus a personal property loan. I don't really see that here if it's supposed to be nine if you thought it was on average 9%. I guess I'm just not seeing that in this chart, but that's okay. Why don't you just keep moving in because our time is

[Speaker 1]: Sure. Sure.

[Speaker 7]: Just to clarify, that's what was happening in this most recent data in 2025. So because interest rates have gone up. So just to give a sense of approaches to various state policies, I wanted to note that the Uniform Law Commission put out information intended to help states try to think about and navigate how to update manufactured home titling policies because this is a challenge across many states. And in addition, Washington, Maine and York have all taken steps to try to expand who could title their home as real estate and expand access to mortgages.

[Speaker 0]: And that they all landed in sort of a similar place?

[Speaker 7]: Washington specifically expanded who could title their homes as real estate to expand to resident owned communities specifically with long term leases. Maine took a different tactic. So in 2025, they set up a working group to study the challenges and they currently have a bill in process that they're working through to think about how to expand because both Washington and Maine, when they started the process, didn't allow anybody but land owners to title as real estate. So they were looking at how they might expand to other than land owners. And New York was very different because they actually didn't have a statute. So this passed in December 2025 and we'll put a statute in place where there wasn't any before, but that one will allow both landowners and those who don't own land as long as they get landowner permission and the home is on a permanent foundation. So, that one doesn't go into effect until December 2026. Some of the differences here are really driven by where the state started out because there's just wide variability, to be honest. Sorry. So just to flag, there are several policies at the federal level. Fannie Mae and Freddie Mac, as well as USDA have fairly new programs to look to expand access to mortgages. But one of the most important things to keep in mind here is that these only work if a person actually does own as real estate. And so this really hinges access to these programs really hinge on whether, state policy allows and it's realistic people to own their home as real estate. A couple of key takeaways. States have been updating zoning to try to encourage municipalities to allow manufactured housing the way they allow any other single family home.

[Speaker 1]: In addition,

[Speaker 7]: titling oh, I'm sorry. What's that?

[Speaker 0]: No. That's certainly what we're attempting to do.

[Speaker 6]: Yeah.

[Speaker 7]: Titling policies and access to mortgages are really key to retaining maximum affordability. And it's worth repeating that there are stronger consumer protections when a home can be owned and financed with a mortgage. Mostly this is especially true in default because when a person owns their home as real estate and has a mortgage, they can go through standardized foreclosure proceedings with all of the standard loss mitigation requirements. And in a home only personal property loan scenario, this is often a repossession scenario that happens much faster. So mortgages can also help people stay in their home and recover if there is a challenge in paying. Vermont already allows manufactured homes to be owned as real estate regardless of land ownership. And so the key question here is how to help make it easier for those who don't own their land to be able to title as real estate and gain stronger access to mortgages. And with that, I just want to thank you for having me, but I'm happy to answer extra questions.

[Speaker 0]: Great. Thank you. This was helpful. Anybody have a question for Rachel? Good. Really helpful. Yeah. Helpful. Thank you. I guess one question I have is, manufactured homes to be owned as real property. You don't necessarily need to own the land underneath because sometimes in some of our manufactured home communities, the land is owned. You lease the land, but you own the home. So I think, Pam, I don't know if we that you're so allowed in this bill to have a mortgage and have real property if you own the manufactured home even though you may lease the property. Right.

[Speaker 8]: Yeah. For the record, Cameron's Wood listed a council. Current Vermont law says if you own the land where the manufactured home is going to be located and placed then it shall be financed as a mortgage. Right. And then it says if you do not own the land where the manufactured home will be placed it may be financed as a mortgage. Right. So it's a it's a permissive, but it's gonna be up to the lending institution of how comfortable they would be based on the facts and the circumstance. So in Vermont, different from New Hampshire, as was mentioned in the testimony in New Hampshire, if you're hooked up to utilities, then it has to be financed as a mortgage regardless of whether you own the land where the house is gonna be located. So there's a slight difference there. But in Vermont, the distinction is if it's not going on a land that you

[Speaker 3]: own, you own the home,

[Speaker 8]: it's going in a mobile home park, for example, or you're buying a home

[Speaker 3]: in a mobile home park,

[Speaker 8]: then it's a permissive that maybe finances real estate or maybe finances a personal loan. Ultimately, it's gonna be what the financial institution is comfortable doing, and the person would have to seek out

[Speaker 0]: options. Right. Thank you. So thank you Rachel. Any other questions for Rachel? This was this was good. Thank you very much.

[Speaker 1]: Thank you.

[Speaker 0]: I think we're gonna move to and then end the morning with Rachel with Rachel McLeod. Rachel. You had another one. Rachel. Yes. Very interesting spelling of Rachel. It is. From East Bryce Credit Union, welcome. Yes. Hi to have you. Were you here when we introduced ourselves? I don't think you've ever been here before. I have not testified here before. Okay.

[Speaker 1]: But I I feel like I know every everyone anyway from watching test test Oh, okay. So Then

[Speaker 0]: just dive right in given we have only ten minutes.

[Speaker 1]: Okay. Rachel McLeod. I work at East Rice Credit Union. I've worked in the mortgage department for about twenty three years. I started at New England Federal Credit Union, but we've since merged with Vermont State Deploys Credit Union and are now East Drive. Yes. We we do financing of manufactured homes on owned land and in parks and cooperatives. 2,025 production manufactured homes were 3% of our closed pipelines, and about 50% of those were on owned land, 50% were on in parks and cooperatives.

[Speaker 6]: Can I ask a question? Yeah. Yeah. About the parks, do you have further conditions for the permanence of the parks or the location of the parks to We don't.

[Speaker 1]: We have not we do not dig in at that level. Okay. No.

[Speaker 0]: So 3% of your mortgages that you provide are right? Real property mortgages are for manufactured homes. 50% of those are on leased land, 50% are on owned land.

[Speaker 1]: Yes. That's what we closed in 2025. It will vary from year to year, but that's what we had for production. And I guess out of that makeup, that 3%, only 20% were saleable to Freddie Mac or Fannie Mae, and we can get into that a little later. So you're holding the mortgage? Yep. Yes. So 80% were held in our portfolio. So

[Speaker 0]: And that's got pluses and minuses for you from what you can earn.

[Speaker 1]: Right. So you need to keep a balance sheet. Right? And so we can only keep so much in portfolio at any given time. I think with our overall pipeline of loans, we keep about 50% total in our portfolio and sell about 50%. So

[Speaker 0]: For for normal For everything. For entire So for to keep 80% is a significant policy choice, basically.

[Speaker 8]: Yes.

[Speaker 1]: Yep. And it's something too that we budget for every year for us going into the year and might make changes along the way. But yeah. And so we finance those ones and perks and cooperatives as real estate. It's hard to say how many other lenders do them that way. I think we might be one of one of two or three. And if you'd like, I could get into how we arrived at that conclusion because it was quite the journey, actually. So sorry. Just sorry. Repeat that because I was just trying to

[Speaker 0]: you were keeping 80% of your portfolio. So go sorry. When?

[Speaker 1]: So Well, what was the journey? Well, So we when we merged the two credit unions, Vermont State Employees Credit Union was originating homes and parks and cooperatives. We wanted to maintain that program as a combined institution. And when we kind of looked at all the programs between the two credit unions that we would offer and wanted to continue to offer, we also went through kind of like a vetting or a revamp process of how could we do this the best we can, most efficiently, that sort of thing. And so, originally, we were financing them as personal property, and we shifted to financing them as real estate. And there were some some reasons for that, but they were mostly because of kind of system strengths and regulations more on the federal level. So for instance, you know, we do mortgages. A consumer loan or a personal property loan is not really supported by a mortgage loan as well loan origination software nor are the documents. Right. So it felt a lot like putting a swear peg in a round hole trying to originate a a personal property loan in our mortgage loan software. And there were different disclosure requirements too for a personal property loan versus a mortgage loan. So, anyway,

[Speaker 0]: so all manufactured homes now in mortgages of that are real property, not as personal. Correct. So Yes. Yep. Because you think of actually, I think of personal I know this is probably not the case, but I think the personal property loans being done through the company you're purchasing things from. Could we do them I don't you tend to do them with the car company. You tend to do them with the mobile home manufacturer, I would think. So how many of those are done outside of that of the company that's producing?

[Speaker 1]: What was tricky for us starting out doing them as real estate was our buyer, our borrower would come to us with a bill of sale and with a purchase and sales agreement between you know, from the seller. And we would have to redirect them and say, no. We actually instead of that bill of sale, we need a warranty deed. And the reason we need a warranty deed is because statute says Vermont statute says, in order for us to finance it as real estate, we need a warranty deed. So we kind of So a warrant deed? Warranty deed. It's it's a warranty deed is a is a standard conveyance document for real estate. So stick built homes, when you're selling your home, you, the seller, have your attorney draw up the warranty deed. And then and and that's what we weren't seeing. Right. And that's

[Speaker 0]: what you need to do a a real property.

[Speaker 1]: Yeah. So it's kind of been straining, redirecting loan by loan as we went.

[Speaker 6]: What what's challenging about that is it does that cost.

[Speaker 0]: Mhmm.

[Speaker 6]: Like, it has the closing cost. So is there is there any way to try and reduce that closing cost given it's probable, like, it's So

[Speaker 1]: Yeah. So for one thing, the seller takes on that cost by doing the warranty. Right? Because their attorney would draw it up. And, that's standard for real estate, but it wasn't so much standard for these Right. Parks and cooperatives specifically. Mhmm. And so a previous version of this bill before weights and means had weighed in was to allow either a bill of sale or a warranty deed to be used interchangeably and still finance it as real estate. So you could do either or. Regardless of bill of sale or warranty deed, finance it as personal property for real estate. That is no longer

[Speaker 0]: And then why does he strip that opportunity and just consolidate it into warranty?

[Speaker 1]: Now you still have the option. So my process today at East Drive is status quo. Nothing has changed. We've kind of reverted back to, I think,

[Speaker 0]: where we were on that.

[Speaker 6]: But for the larger question, there it could be someone wants to choose to lower their cost, their attorney cost, and that right has been taken away from them by Yeah.

[Speaker 1]: I think, you know, I work in mortgage lending, so I think selfishly, would say or personally, I would say, you should always have a seller's attorney. Mhmm. Sell the home. It's in your best interest.

[Speaker 6]: We've we've done and I'm saying this about when Bill Botso was chair of commerce. Mhmm. And we took away angel investing, and it meant we had to pay the property transfer tax twice when we became first time homebuyers. Sometimes we think we're doing consumer protection, and giving people the choice still allows them to make a choice that is meaningful for them economically.

[Speaker 1]: I mean, maybe I we don't see it very often, but maybe a seller could drop their own warranty deed and they'd have to get all the property transfer tax return paperwork, that sort of thing.

[Speaker 6]: Maybe we shouldn't take that choice away from from people because these are these costs can add up, I think, when someone's trying to afford a low cost home. Mhmm.

[Speaker 4]: It's regressive. I'm pretty sure it's gonna cost a thousand bucks for a $100,000 home. It's gonna cost a thousand bucks for a $300,000 home. So I would love to give more affordable homes, which I guess generally are the the choices.

[Speaker 6]: So I might add another

[Speaker 0]: I think we actually we just look at the language. It already exists from the from the bill that was originally the the way the bill left house.

[Speaker 8]: I will want to clarify some of the stuff that's saying anything that says Okay. Incorrect. The waste of beans committee shut up the current statutory framework that exists, which says that if you sell a mobile or manufactured home and it's being financed as real estate, it must be financed or it must be transferred via a deed. That's not new. That's current law. Okay. So there's a question about there was at a stage in the process, the bill allowed an individual to transfer a manufactured home that was being financed as real estate via a bill of sale. It's ways and means took that out to keep the status quo. So that was a question that you all

[Speaker 0]: may want to explore. Let's put a pin in that for further discussion. Anything for can you send us, Rachel? You'd be kind enough to send us your testimony Mhmm. To Kiera and so that we have it on record. Okay. Thank you. There anything else you needed recovered before we

[Speaker 1]: No. Nothing I can put in writing.

[Speaker 0]: But no. Your last thoughts.

[Speaker 1]: Last last thoughts. Well, if we could get back to what he just mentioned, then we can avoid the bill of sales conversion process, which also

[Speaker 0]: is tough and more cost on on a homeowner. And So it sounds like if we go back to the way it left house general, we could save money for our for constituents who are interested in purchasing.

[Speaker 2]: Give them the choice.

[Speaker 1]: I'm all gonna give them a choice. And they don't have to they so right now, if you convert it to real estate, you can't go backwards to personal property. And so down the road, that homeowner, homebuyer, or homebuyer. Now homeowner wants to refinance, and they can't find a lender who does real estate or want to use a lender who does

[Speaker 0]: because that's another reason to do a mortgage is that you

[Speaker 6]: can refinance. No. But it's also another reason to give people the option because you can refinance other things as well if you can find them out there. They wouldn't have access to that product, actually.

[Speaker 1]: I think that's

[Speaker 4]: run, but do we have another witness?

[Speaker 0]: Oh, we do. But we're gonna ask the other witness to come back because they we are gonna need to have secretary of state to come

[Speaker 6]: back. That's the quickest testimony possible.

[Speaker 0]: Then let's hear it. But there's not for your husband. Okay. Lauren Hinrich, welcome. Thank you.

[Speaker 6]: For the record, Lauren Hinrich, deputy executive. Thank you very much Our for having most relevant section of this bill is section seven, which allows us to change gives Us authorization to change how a business entity is organized. Right. Understanding it's Right. Primarily a barrier in financing and grants, and we wanted the express authorization to modify how a business entity is.

[Speaker 0]: These are the equity cooperative. Exactly. And so so important. Yeah. Awesome.

[Speaker 6]: And so we wanted to make sure that they have the right business type for the type of loan, grant, etcetera, that they are trying to pursue. And this gives us the authorization to change that type of entity, and we support this language, and

[Speaker 0]: I'm grateful for working through it

[Speaker 6]: on the outside. And that's all I have.

[Speaker 8]: Well, that's for any changes?

[Speaker 6]: No changes. We like it.

[Speaker 0]: We like it. It is great. Thank you, Lauren Hibbard. That was the shortest testimony of the day. Got a big gold star. Thank you. Thank you. And with that, we're gonna go offline, and we'll see you tomorrow at 9AM.