Vermont Legislature SmartTranscripts:

[Sen. Alison Clarkson (Chair)]: And then we're gonna shift and go to Peter and Alex and talk about the pilot and the. We can if they're if one is complete, we can obviously print it out.

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

[Sen. Alison Clarkson (Chair)]: We're live. Welcome everyone to Southern Economic Development Housing and General Affairs. It is Tuesday, April 21. And we are on a Tuesday addressing housing, and we're gonna be looking at coming to resolution on h seven seven five and h seven five seven. And one is our rural financing bill, which has a number of interesting opportunities for us to expand housing finance. And the other is a bill that deals with some technical corrections and improvements for our manufactured home world. So, I believe our counselor Cameron Wood has a new bill that he or a new draft that he's gonna just at least explain the changes that we can anticipate. For

[Cameron Wood (Office of Legislative Counsel)]: the record, Cameron Wood, Office of Legislative Counsel. So four seven seven five, if you all recall, we did a walk through. It's been a little while, but there are certain provisions in seven seventy five that are very similar to what you all passed in S3 20 teens. And so what the House General and Housing Committee has done is taken those two bills and just combined them into one. And, madam chair, you had asked me to begin the process of doing that here for you all as well. There's just a few outstanding questions that I have before I want to share that with you all. But, ultimately, what I would be doing is incorporating those two bills together because there's a lot of language that you all passed that wasn't in July, and then there's some language in July that was not in your building. So for example, if you remember, we talked about a few weeks ago the special assessments and the ability to bond for those special assessments, and so that would be something that's in July that wasn't in your bill. Right. And so I haven't made any changes to those sections. There's a few pieces that Remember Michael Gone came and talked about blind bank that gives us another tool for our towns. Right. And so then there were a few pieces that were slightly different. So if you all remember, you made some changes in 03/28 about the municipal planning and requiring some changes in the housing element for a municipal plan. The July had a lot more language built into their version. Yours was a little more succinct and and approved by the the, you know, regional planning and VLCT, etcetera. In the house, they they in their most recent version of their offendment to your bill, s three twenty eight, they've decided to go with the language that you've all went with. And so, you know, whether their position changes at some point, I I can't say. But as of right now, they're they're comfortable with the language that you all drafted. So I would incorporate that into an amendment for seven seven five. So, anyway, what I'm doing is I'm just merging the two bills. One piece that I think you may want to hear from

[Sen. David Weeks (Clerk)]: And let me just put

[Sen. Alison Clarkson (Chair)]: a pin in that and apply. One of the bills is gonna be the final bill that we go with. Sort of it depends on our timing of how quickly we can get this passed. And a lot of our bill, our housing bill got sent to House Natural. So there are quite a few pieces that got sent over to House Natural. So in some ways, the hope is that this bill that will work again now will be the fuller housing bill and that we will end up merging the two of them together. So as much as they're in sync, the better in terms of whatever we finally end up merging together.

[Cameron Wood (Office of Legislative Counsel)]: Great example. So there were some of those pieces, madam chair, as you mentioned, that were currently have been stripped out of the house general amendment to your bill to S-three 28 because they're in house environment. I've incorporated them into your amendment here, so they're back in. If you pass them at three twenty eight, have to put them back in here. Great. One thing that you may want to hear from your witnesses this morning, if you're hearing from the commissioner and you're hearing from the treasurer's office, one of the primary differences between the bill as you passed, three twenty eight, and the bill that came over, seven seventy five, is in regards to the credit facility with the treasurer's office. Right.

[Sen. Alison Clarkson (Chair)]: We chose not to continue working on that and let the house finish their first,

[Sen. Randy Brock (Vice Chair)]: you know, the initial work

[Sen. Alison Clarkson (Chair)]: on it, then we would then look

[Peter Trondale (Office of the State Treasurer)]: at what they had done.

[Cameron Wood (Office of Legislative Counsel)]: And so what you all did was you increased the cap from 10% to 12.5, but you did not include the 1% credit facility for off-site constructed housing. That was the House bill. Here. I'm gonna try to pull it up real quick just so I can point you to exactly where it's at in the bill.

[Sen. Alison Clarkson (Chair)]: And this for everyone listening, let's remind ourselves because we have the treasurer's office here to testify. This takes 1% of that 12.5% amount and dedicates it to modular and manufactured housing opportunities, the eight zero two pilot, a couple of things.

[Cameron Wood (Office of Legislative Counsel)]: So this is on page two, the bond housing special fund. So right here on line 19 is increasing the credit facility from 10 to 12.5%. You will have that in your bill in 03/28. But what the House did further, moving on to page three here, is they authorized a credit facility of up to 1%. And it may be used only to facilitate housing development through the bulk purchasing of off-site constructed housing and to aid in the purchase of off-site constructed housing units. So that was not in your bill. And then corresponding with that, the House version has this off-site constructed accelerator pilot, which has ACCD working with BGS to work with municipalities to try to look at bulk purchasing, streamline regulatory processes, off-site construction, statewide procurement consortium for bulk purchasing modular units, and trying to move a pilot project forward to examine how that could work. And so this is a difference in the two versions of the bill, and you may want to talk to your witnesses today to figure out which one you would be more comfortable with. Do you want to amend seven seventy five to remove this, or do you want to make changes to it? Right.

[Sen. Alison Clarkson (Chair)]: And I think there are concerns both about sending money out of state on this issue and some of the risk involved. So, I think that when we have the Pressures Office testified, we want to listen to the, you know, address those concerns.

[Cameron Wood (Office of Legislative Counsel)]: Right. That was one of the recommended ads that was discussed

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

[Cameron Wood (Office of Legislative Counsel)]: your members who's back here, but about if you're going have this 1% credit facility to allow the state's money to purchase off-site modular constructed housing, do you want to require that housing be primarily developed in Vermont? And if you want to go that direction, I'd probably wanna work with the department to make sure the language is reflected accurately, because it's off-site We're just talking about the private facility,

[Sen. Alison Clarkson (Chair)]: off-site, and so Alex is coming down and Peter here.

[Cameron Wood (Office of Legislative Counsel)]: So maybe a question you want to ask him is if we're going to set up this credit facility, so this is one of the potential changes you had requested or recommended, if you're going to have this credit facility and allow state monies to purchase off-site constructive housing, do you want to limit that to off-site constructive housing in Vermont, that's primarily assembled in Vermont or somehow built in Vermont? That may be a question you want to ask the commissioner. But that's where I'm at, and I have a draft that just needs to put some final touches on it and Madam Chair speak with you about a few pieces that the House is also considering subsequent to this bill being passed, and then I'll have that ready to go. But Right.

[Sen. Randy Brock (Vice Chair)]: For just one of those maybe

[Sen. Alison Clarkson (Chair)]: I think just from the what I understand, given the pieces that have been taken out of our housing bill and sent to House Natural because their jurisdictions are slightly different than ours. This may end up being the final vehicle for housing given. But we're putting back some of our piece Yes. Return.

[Sen. Kesha Ram Hinsdale (Member)]: Okay. So we'd we'd hold onto it to get the house natural work. Yeah. I'm unclear. Yeah. I think that's all up to the house. Or, I mean, whatever house natural does, we put our work back in. We put our

[Sen. Alison Clarkson (Chair)]: work back in. Correct. So I think that the then the house is gonna have to figure that out. So and then we can figure it out further in conference if we need to. Thank you. I've texted Alex to let him know we have started early and that it would be great to have him. Thank you, Cam. And I think so before we dive into sections three and four or two two three and four. I would love I know I

[Peter Trondale (Office of the State Treasurer)]: could I could go from sections two to four. There's section of three They have such

[Sen. David Weeks (Clerk)]: a branch just says how do

[Peter Trondale (Office of the State Treasurer)]: Where can this section? Middle page four. Why?

[Sen. Alison Clarkson (Chair)]: Oh, it's deleted. That's why I'm having trouble finding it. Great, Alex. Good to see. If as we begin to sort of try and land some of these airplanes, other sections I know these two sections are of great interest to us in What's the deleted thing? I can't remember what section three was, but they Is this our bill? No. This is age of

[Sen. Kesha Ram Hinsdale (Member)]: seven seven five. Yeah. And they

[Sen. Alison Clarkson (Chair)]: deleted What was section three? Let me show the bill. Sure. Okay. Anyway, it came to us deleted. What can I tell you? Could find out.

[Sen. Kesha Ram Hinsdale (Member)]: I don't it's unusual to have it come to us as Unless they deleted existing statute.

[Sen. Alison Clarkson (Chair)]: We'll find out. But Albert, my question for you is other than sections two and four at the moment, which we have over a number, what other sections in this bill are are do we need to address further? Because I appreciate the the credit facility is one key to address and the pilot. Section four is key. Yep. Okay. Well, let's just dive in there, and then we'll I think we'd like Peter and Alex, you wanna come up together and discuss this? Because they they I think this work goes hand in glove. Pull your chair over. And if you would talk to a folks about the pilot and and the credit facility, let's address them. We have concerns about risk Yep. And putting state money at risk, and we have concerns about supporting in in state development and what an opportunity this is. So however you'd like to go, we're happy to you know, you're pretty clear on our concerns. So

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Sure. I'll I'll offer just sort of a blanket. As for the pilot, you know, whether we wanna layer on additional constraints or not, I I I caution us not to because, you know, we're, we don't know what it's gonna take to sort of get someone interested in doing this right now, you know, obviously this credit facility takes us cash. Some

[Peter Trondale (Office of the State Treasurer)]: did introduce yourself.

[Sen. Randy Brock (Vice Chair)]: Oh, it's my name.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Alex Merrill, Commissioner for Department

[Sen. Kesha Ram Hinsdale (Member)]: of Housing. Such a dad.

[Sen. Alison Clarkson (Chair)]: Yeah. She's a little guy. Fairwell. Her. I

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Teething baby. And so to to say layer on an additional constraint, it has to be, say, a Vermont producer. That could be, you know, factored into our criteria where it's, you know, a a preference that a Vermont producer, but I don't know what the pilot's gonna look like. Don't know what kind of developer would be able to tell you. So I keep it broader, just generally generally speaking, giving the treasurer's office the credit facility more flexibility than us the department more flexibility to execute.

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

[Sen. Alison Clarkson (Chair)]: oh, sorry. Just I wanna clarify. The pilot, as well as I understand it, is low primarily modular housing, is that correct? Because that is mostly an opportunity that exists in state already in a facility that has a huge capacity for growth.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Well, that's what's envisioned, is modular. There's some discussion of a parallel but distinct effort to be undertaken by the Boston Housing Authority that may contemplate other things like cross violence, but that's not being contemplated as a part of this.

[Sen. Alison Clarkson (Chair)]: The VFHAIP that we've heard about, that might have manufactured housing out of that piece of the pilot might be out of state. Absolutely, and that'd be totally distinct,

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: that wouldn't necessarily be part of our pilot. The Oh, lessons gleaned from it could be a part of a report back to the committee, but it'd be our intention to really focus on modular and, you know, pilot language in here still includes language that can be inserted regarding establishment of things like a statewide off-site code, so one code statewide that municipalities couldn't modify. This would give producers the opportunity to know whether they're in the state of Vermont or outside the state of Vermont, producers the opportunity to know they could produce and deliver units of Vermont or not have to worry that they're going to end up you know, having to make small modifications to these units or that it wouldn't comply, things like that. So that, those are reasons somebody would have a hard time scaling up on as it is. So, the purpose of focusing on modular would be to give us those lessons learned of what are the potential pitfalls of producing modular scale.

[Sen. Kesha Ram Hinsdale (Member)]: Right, thank you. Patient. So, you could take your feedback and go in a completely other direction, right? Which is, let's not be prescriptive about where we think we should carry the most risk right now. We just started CHIP. We a lot of our our housing policy work is just taking root. Do do you believe that we need to spell out this pilot for you to be able to do good work to to figure out where we're gonna get low cost modular housing, or can we do that without spelling out this pilot and just giving the credit facility?

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: As a general rule, I never feel that we need anything spelled out. Hey, you know, two homes is evidence that we undertook that on our own.

[Jason Webster (Huntington Homes)]: Right.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: And, you know, the committee or legislature ever wants to sort of give us Well, a broad discretion.

[Sen. Alison Clarkson (Chair)]: Well, and require reporting back, and, you know, sort of some umbrella.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Sure, absolutely. I mean, I think that can be achieved, to the senator's point, giving us very broad discretion. Giving us a lot of leeway to figure out the best way to

[Sen. Kesha Ram Hinsdale (Member)]: I I'm I kind of don't wanna give this cover because I do worry about right now how much discrimination there is against modular manufactured housing and citing things on less than an acre. And so you've sort of still given me my answer, which is, I don't know if this is the best use of risky dollars when we just started to implement a lot of other housing policy that I just want housing to be built this year with this money.

[Peter Trondale (Office of the State Treasurer)]: If I may speak, Peter Trondale, officer of state treasurer, to the risk piece. I think when we had initially proposed, this goes to your question about what was section three, when we had initially proposed this credit facility, we were looking to be able to take on a greater degree of risk, and to compensate for that risk, retain our interest on our other loans to repay the credit facility for losses. Okay. The greater amount of risk we could take on, the more cost savings we thought we might be able to deliver through the pilot. Now that that interest section has been removed, our office would, in funding this pilot, be looking to take on no greater risk than we do with any of our other loans, which is to say work through an intermediary that guarantees the state 100% repayment.

[Sen. Kesha Ram Hinsdale (Member)]: But I guess, like, this being successful this year seems like not worth us writing in statute, you have to use some of the money at all for this.

[Peter Trondale (Office of the State Treasurer)]: Well, the way we would read this statute is that if we're establishing this sub credit facility to fund this pilot program, that sub credit facility funding would have to be used for off-site. But if we were to determine that the

[Sen. Alison Clarkson (Chair)]: pilot sub credit facility.

[Sen. Randy Brock (Vice Chair)]: The 1%,

[Peter Trondale (Office of the State Treasurer)]: we would think of

[Sen. Kesha Ram Hinsdale (Member)]: that So this is still a set aside?

[Peter Trondale (Office of the State Treasurer)]: Well, if we were to feel that we could not fund the pilot, either in the short term or at all, with an adequate degree of risk protection, then we would not be required to set aside that funding. Definitely, we could deploy that funding towards our

[Sen. Kesha Ram Hinsdale (Member)]: base But you can understand disagreement with any set aside. I think Like, what does that get get us?

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: My understanding is it's a may. Right. Yeah. That's a may. Right. Yeah. Right. So they don't they don't need to.

[Cameron Wood (Office of Legislative Counsel)]: Yeah. We wouldn't

[Sen. Kesha Ram Hinsdale (Member)]: So we don't need this. That's I could say. We don't need the language. You could, you may do it anyway.

[Peter Trondale (Office of the State Treasurer)]: I think it's perhaps arguable that existing statute would let us do this anyway, because from our end, it would look all the same as our other loans. I think when we had envisioned this greater degree of risk, the compensation from the interest, in that moment it was necessary, and I think a legislative blessing that's explicit in statute would be appreciated.

[Sen. Kesha Ram Hinsdale (Member)]: Blessing for a sub credit for 1% of the 12.51%

[Peter Trondale (Office of the State Treasurer)]: within the 12.5, so one percent of the state's average cash balance at our current calculations, we would consider that $12,000,000, up to 12.

[Sen. Kesha Ram Hinsdale (Member)]: So you want the legislature's blasting through this policy to to give 12,000,000 to a modular housing project that develops, helps us develop a statewide code for modular, for home maintenance.

[Peter Trondale (Office of the State Treasurer)]: I mean, we would be using up to $12,000,000 to buy the way it would likely be structured, and the details of this would be worked out, drafting of the pilot with ACCD. The way we probably envision it being structured is us using our money through an intermediary to provide the short term capital necessary to purchase homes as they are made available in the assembly schedule, so that they can then be redeployed through developers to individual tenants around the state.

[Sen. Kesha Ram Hinsdale (Member)]: What current parameters do you have on all the funds you authorize in terms of the area median income percentage that the home is ultimately rented or sold for, unless you only do ownership.

[Peter Trondale (Office of the State Treasurer)]: We don't only do ownership, and we do, the majority of our investment portfolio is in affordable housing, lower case a affordable. There's some There's strictly some

[Sen. Kesha Ram Hinsdale (Member)]: 80 to 24. Some is definitely affordable.

[Peter Trondale (Office of the State Treasurer)]: Yes. Some is workforce housing. Some is market rate. We're definitely leveraged into the affordable and workforce space more than market rate.

[Sen. Kesha Ram Hinsdale (Member)]: When you say market rate, meaning do you keep it at a particular AMI?

[Peter Trondale (Office of the State Treasurer)]: In our portfolio are at a particular AMI, sixty, eighty, 100%.

[Sen. Kesha Ram Hinsdale (Member)]: Okay. They don't go above 100%.

[Peter Trondale (Office of the State Treasurer)]: Some go up to 120, and then some there are some Most often what we see is a single development project will contain everything from market rate to affordable in order to make the project financed. Yep,

[Sen. Kesha Ram Hinsdale (Member)]: mixed. And do you feel right now like you're getting into every county?

[Peter Trondale (Office of the State Treasurer)]: We are in 12 out of 14 counties. There are two counties from which we have never received an application, which we would very much like to receive an application from if there's any housing development.

[Sen. Alison Clarkson (Chair)]: Give us a shout out. What's the

[Cameron Wood (Office of Legislative Counsel)]: project

[Sen. Kesha Ram Hinsdale (Member)]: in Orleans?

[Peter Trondale (Office of the State Treasurer)]: There is a project in Newport Town and a project in Newport Center.

[Sen. Kesha Ram Hinsdale (Member)]: Oh, great. So are those single family homes? Or

[Peter Trondale (Office of the State Treasurer)]: I believe they are multifamily buildings, but I would double check.

[Sen. Alison Clarkson (Chair)]: Yeah. Okay. Double check. So this might be a good moment to hear from Jason Weber who's Webster. I'm sorry. I'm thinking of grilling. You know, the weather is bad. I think it was like a grill. Hi, Jason. Jason, welcome back. It's good to have you.

[Jason Webster (Huntington Homes)]: Hi, Ben. Thanks for having me.

[Sen. Kesha Ram Hinsdale (Member)]: Yeah. I hear you had

[Sen. Alison Clarkson (Chair)]: a great tour last week with the house general.

[Sen. Randy Brock (Vice Chair)]: It's good

[Jason Webster (Huntington Homes)]: good to have him here.

[Sen. Alison Clarkson (Chair)]: As you can hear, we're in the in the process of discussing both the pilot and the credit facility because they go hand in glove, obviously. And I just appreciate your input on how this might be put to use fairly immediately with you and your Huntington Homes operation.

[Jason Webster (Huntington Homes)]: Yeah. Yeah. So well, for having me for the record. Jason Webster with, Huntington Homes. And yeah, mean, I kind of, know, with, you know, starting with the problem is that we we just don't we don't we don't see starter homes anymore. Right? So we when our company started in 1978 and, you know, through the eighties, you know we built primarily what we were building were starter homes right so we there are all there are bunches of neighborhoods in Waterbury and Montpelier and Barrytown and Northfield where, you know, we would go in and just build a whole neighborhood's worth of starter homes. I honestly can't tell you in the last twenty five years, I can't tell you the last starter home we built. And so we whether we we like it or not, right, we, you know, we kind of as much as we like to think that we pitch, you know, we drive the market, you know, we pitch. We we we more more we follow it. And all all we found, you know, lately in the last twenty five years, the only the only thing that we and I think all builders are building is the middle to the high end of the market. And we can talk about for various reasons of of how we got there. And what what I, you know, what I like about this program is that, you know, where where also is happening is that, you know, even though we as a as an off-site manufacturing company have probably standardized more of our buildings than anybody else has. Right? Each one is still a one off individual unique house. Right? So even regardless of the segment of the market, it it still it still is a custom build, where each contract is built under its own construction contract with its own clients, its own set of challenges, its own negotiation, its own personalities. Everyone has a father-in-law that's involved. Right? And so we we were really not able to share kind of we're not able to kind of get into cost efficiencies where we're aggregating multiple projects and then going back out to, you know, our vendors or buying, you know, equipment or scaling or anything, you know, for more of a more of a larger order of a standardized product. And so I like this. I like this concept as a way to try to aggregate an order for a standardized product. Right? So to make a distinction, and I think we know this, but to make a distinction, right, a 100 individual orders for a 100 houses is very, very different from a purchase order for a 100 of the same houses. Right? If we're if we have a 100 individual orders, it's very hard to kind of it's hard for us when it's hard for us to go to FW Webs or Granite Group and, you know, have them quote out, you know, 300 toilets because we don't have an order for 300 toilets. So I like this. We just we need and we, you know, we'd be more than happy to kind of, you know, look at those purchase orders and and the product to kinda build out a pack, you know, build out a whole bunch of these standardized units. We have a large parking lot where we can even stage stuff here. Right? We obviously have issues of cash flow. Right? Like, we I can't just we can't just build them and then just sit on them. So, you know, ultimately, I think the larger the the the I think the for us to build a bunch of units in a credit facility for us to do it almost seems like the easier problem to solve. I think that the larger problem to solve is where the heck are these things going?

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Thank you, Jason. Nice. Like,

[Sen. Kesha Ram Hinsdale (Member)]: Yeah. What are you hoping to answer? Somebody needs to

[Sen. Alison Clarkson (Chair)]: I think that's but if if the question is, but you're not gonna build them until you know that there's a place for them to go.

[Jason Webster (Huntington Homes)]: Well, I mean, so in our historic model, that that's correct. Right? In the historic model, you know, we have a hunt a 100 houses has a 100 unique clients. And so they they already have you know, maybe some of them are small developers, and they they have already subdivided, and they're working with us to provide units to their little development. Maybe they're, you know, one off on your lot clients that are coming in here and we're building for. And so that's what I'm saying. Each one of them is unique, and we can't really there isn't really cost efficiencies that we can kind of share between those things. And when I think back about, you know, what we used to build when we built starter homes in the eighties, you know, those were whole neighborhoods, right, that were you know, they were whole neighborhoods that

[Sen. Alison Clarkson (Chair)]: had efficiency and the cost efficiency made sense.

[Sen. David Weeks (Clerk)]: Correct.

[Sen. Alison Clarkson (Chair)]: But my understanding is the pilot, if the once the pilot is up and running, they will you will only be building those modular units once you have an order from a town that says, okay. We've chosen model three or whatever they've chosen or they've chosen a whole bunch, and that those would be built only after they've been identified where they were going.

[Sen. Kesha Ram Hinsdale (Member)]: How would the town choose models? Like, well, that this is

[Sen. Alison Clarkson (Chair)]: the interplay between the pilot and this proposal. So it's good to have three of you here. Thank you.

[Jason Webster (Huntington Homes)]: Yeah. I mean, I I yeah. Ideally, that's that is, you know, how it would work. But it you know, at that point, I think you're oh, you know, I I think about a recent project we did that that actually worked really well. And maybe maybe it's maybe I'm just coming at it, you know, looking at the same thing from a different angle. Right? I think about a a project we just we're we're we're just finishing in West Lebanon, which was 22 single family units. There were three building types that went into that development. And what made that project successful was that it was financed in one batch. Right? So it was and so there was and that was backed that was backed by Dartmouth by Dartmouth. And so what that allowed us to do is once the building types were figured out and the site was permitted, there were there were some efficiencies of the entire building team to essentially run through the project as fast as we could. Right? So so site work, everything gets installed. Right? The full road gets installed. All the infrastructure is brought in. The sidewalks were built. The foundations were put in the ground at one time. Right? So that was a that was a general contractor being, you know, leveraging scale to get contractors to to build their pricing. And then we just essentially went all the way around the neighborhood just in a sequence, timing sequence, dropping the almost the same house over and over and over and over and over again. And because I knew what that was and we were able to share engineering, I definitely pushed. There was definitely cost savings that went, you know, to that project, because I knew I was gonna build I knew I I knew in one purchase order,

[Sen. Kesha Ram Hinsdale (Member)]: there were

[Jason Webster (Huntington Homes)]: 22 houses to build. Yeah. Versus versus the way that we see a lot of other development going, and I'm not gonna I won't name names, but it's another project we're working on right now where that one is tied even though there's funding, I think, that's been committed to the whole project, the project is still very much on the construction side in limbo tied to presales. And so there's a lot of, like, design changes that are happening mid project. Not all units have been committed yet, and so we're not I'm not as inclined to push as deep of cost savings to a project that isn't committed in one batch.

[Sen. Alison Clarkson (Chair)]: No. I I appreciate. And just Thomas has a question I know also, but I just love that Alex, I respond to this because I think the pilot isn't the pilot my understanding of the pilot is that that's exactly what you're hoping in a different way, but hoping to have talents commit to that you would be doing exactly sort of something similar

[Sen. Kesha Ram Hinsdale (Member)]: to what he's do. Before we move on, I wanna know what the listing price was for the West Lebanon home.

[Jason Webster (Huntington Homes)]: Well, so the West Lebanon not got some real pushback on that. That went into that that was not what anybody would consider workforce or affordable housing. That went into Dartmouth's rental pool. And so what what Dartmouth did, is they essentially funded a private developer to build out the project, and then Dartmouth at the end agreed to buy the units and bring them into their rental pool for, you know, faculty and graduate students. And they were not you know, I think they're I think they're renting for over $4,000 a month. Right? That was not

[Sen. Alison Clarkson (Chair)]: A whole house. Wow.

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

[Sen. Alison Clarkson (Chair)]: That's good. And and do and did you negotiate a price per house for with Dartmouth? What do you know what the price was?

[Jason Webster (Huntington Homes)]: Yeah. I mean, my so my involvement as the manufacturer in that that project was just as manufacturing and providing the module components for But did you want And so when I bid that project, there were certainly discounts that I was bidding because I knew I was probably up against other manufacturers, and I wanted 22 houses worth of work. And so we were pretty aggressive in in how we bid that project.

[Sen. Alison Clarkson (Chair)]: So but you don't know the final purchase that

[Jason Webster (Huntington Homes)]: I don't I don't know what I don't know what the final is. That was the that was the owner.

[Sen. Alison Clarkson (Chair)]: Alex, how does your pile how does the eight zero two Homes pilot fit into that kind of cost efficiency in terms of

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Well, let me create a couple distinct things So first, let's just talk about the pilot because Jason raised the question that is the entire point of having a pilot which is where? That that's the point of the pilot is we would identify a parcel then a developer would come in with with a master plan for that parcel so that Jason would know what an entire order is. A town's role could be, maybe, if they own the land, a town's role could be that they own the land and they're donating or contributing the land to the cups. Township could be that they're okay with the state utilizing lands from the state owned lands inventory at a reasonable cost. That's the town's role. A developer would come in and place a master order to Jason and and for fairness to Jason, there's no reason he'd be aware of this pilot language. So that would be the only point of having a pilot, and that pilot can only work with capital. So, as some might recall, there was contemplation of could there be a pilot with, say, a slug of money that would be the incentive to make this happen. You need a reason for a developer to come and do it this way with this delivery model rather than on-site. Once that is established, then we can do the other things like, alright, pick from a catalog of designs. Either that the producer of that developer's choice has or perhaps it's from the eight zero two Homes catalog but it it needs to be more flexible so that the developer and whoever the producer is like Huntington Homes could decide what what is the slate of units in this order. So, it's one bulk of order placed in this project.

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

[Sen. Thomas Chittenden (Member)]: So this credit facility would be used exclusively by the Jason Huntington homes out there, it's not by the developer. And they would only engage in this credit facility using this risk opportunity, risk subsidization when they have a contract in hand with developer that's already worked through all the permitting with the town and so on. Is that correct?

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: I defer to treasurer's office. Would actually I would envision it being the other way that developer would access it, then the the Huntington Homes is sorry, Jason, if you use me as the example here, would, there's now that slug of capital that the developer can offer, and that gives Jason the assurance that, okay, I can go ahead and produce these 35 units because this builder has this guaranteed capital.

[Sen. Thomas Chittenden (Member)]: So look at that. And

[Jason Webster (Huntington Homes)]: I think that's the most important part right there. I'm not you know, when a product going through our assembly line, right, we don't that we two by sixes are two by sixes. Right? Like, we can we can I don't think that the whether it's one of our predesigns or whether it's the eight zero two Home Designs, whether, you know, it's a 20 unit project that has eight different building designs, that doesn't matter to us as much as the commitment to the project does? Right? So that the financial commitment to the project to know that when we start it, we're gonna finish it. And and that's not that's just not the way most developments currently work. Right? Most developers, bless them, they just shed risk. Right? They're trying to take as the least amount of risk as they can, and so they they're not committing to an entire project upfront because they have financial obligations. Right? Their deck behind them that they have to satisfy. They have benchmarks that they have to satisfy. And so they're not just releasing all the contractors at once to bill, you know, to come in and bang the thing out. There's a lot of us kind of like it's false starts, right, where we think we have it and then we don't have it. And then we get asked to, like, stand on our heads and come back. And it having a project fully committed is the most important thing.

[Sen. Alison Clarkson (Chair)]: Right. Well, we have one of those developers in Killington who would would conceivably have the have have that kind of capital investment ready with us, ready to do at least a portion of them all. You're getting

[Sen. Kesha Ram Hinsdale (Member)]: stopped by the land use for people to try

[Sen. Alison Clarkson (Chair)]: to bounce around. And that's what you tell us. That's that's a different issue of the where. It's not. So we begin with the where. I mean, for example, the Windsor Prison Site, the former Prison Site.

[Sen. Thomas Chittenden (Member)]: It depends on the developers. Yeah. They they it's not that they don't wanna do these things. It's that they get stuck with appeals and local permits and all these other things that's calling things out. So my my fear is as they shed risk, they're shedding that risk to their treasury and that's where I'm worried that we're going to take on risks sitting on homes or contracts or lending these facilities out, development projects go sideways.

[Sen. Kesha Ram Hinsdale (Member)]: Without just getting them in Galloway.

[Sen. Thomas Chittenden (Member)]: Yeah. Right. The pit in Burlington, other cut So I just don't know why the state is get venturing into subsidizing this higher degree of risk without having more confident reform to our regulatory landscape, making it easier to build an area that we should be building that I just don't see us having done this by any of them. So that's why I'm pausing on this because I just don't

[Cameron Wood (Office of Legislative Counsel)]: know if this is the right use of our risk.

[Sen. Alison Clarkson (Chair)]: Right, yeah, I think the question is, yeah.

[Sen. David Weeks (Clerk)]: If you were doing

[Sen. Thomas Chittenden (Member)]: the RONAT two fifty reform this session, I'd probably be more supportive of this. But since I haven't seen that, I just I anticipate these developments going sideways, and that's gonna leave the state coffers holding on to these notes for houses that aren't gonna get developed because developers have shedded that risk onto us.

[Sen. Kesha Ram Hinsdale (Member)]: And municipal report, to be fair, because the two projects the two projects I can envision that would be good case studies for this are Montgomery and Orleans. Two case studies where they've come into committee and, you know, wanted to build 30 single family homes essentially. And in Montgomery, it was Act two fifty that has stopped that even though they have a huge wastewater bond that they work to approve for exactly this reason. And Orleans, where the municipality doesn't have to follow our municipal changes because they don't have zoning and land use bylaws or something. They said, we we want half acre plots instead of quarter acre plots, essentially. Kill that project. You tell me where this would happen. Like, say the name of the town out loud so we can bring that town in and make sure it's going to happen. Otherwise, it's going to take two years to even identify a site that will work, and I'm not ready to say this is the best use of our money when I just want housing built right now. And and Jason could speak to Arby's. Like, I love to pilot something that says to us, how do we get all of the risk out of the way? But Or this project, we could say, you can't go through you do you're exempt from the permit process. No. I I But appreciate that would be an interesting pilot. How do we build it cheaply when we don't have three layers of regulatory processes in the way? I'd love to know that answer, but I don't need to know how hard this would be to make it affordable. I know that. We already know.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: So what

[Sen. Kesha Ram Hinsdale (Member)]: I know, answer says about

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: this pilot? Senator, thank you for mentioning that we probably still have a long way to go on I-two 50. Obviously, encouraging signs at S-three 25. We get to see what that will look like at the end of the session, but components of that as proposed by the RPC do alleviate things like the killing to be lutro, divorcing this National Register, you know, historic eligibility from land use lending. That's nonsensical, right? So S-three 25 achieves that in part. So it would make one A and one B areas more attainable for more areas 19 a little bit larger. So, that's that's one piece. Do I think that's not far enough? No. You're never gonna hear me say that that is is quite right because I think it's so nuanced. We've got so far to go but it's heading in the right direction. This, I'd say, on a related note, there's concern over is this the right time, is this the right use, the sort of, the combination of the May in the credit facility and pushing out any dates in the pilot to say, this doesn't have to happen right now. If if say there were 26 acres in Saint Augustine that were included in the interim exemption and that we were a willing property owner, and we could move right now because it is incorporated in the interim exemption, I'd say that would be the right person. I don't know that that property owner who's paying all share would be interested in moving forward right now. So if we push the date out, and again, this is, I'm just giving you your If thoughts to we push the date out, then as we see where things like S-three 35 and further legislation in accession go to alleviate some of these constraints, then we're not forcing the treasurer's office or my department to to act on something before we know that there's some regulatory certainty. On Arby's, good news that Elkhart did choose not to unwind what was done as as a result of the executive The and the rulemaking that followed. So there is now some relief to Harvey's, the learnings of that. See, again, I think making these flexible sort of may use 1%. The pilot can go forward. You know, I think adding language if an appropriate site is identified and if regulatory constraints are not a concern and pushing updates. I share the concerns. Let's not force something to happen if it doesn't make sense to happen right now. The sense I get is Jason would say the same thing. What we want to do is see if we can demonstrate a model that could be a new delivery system going forward. We don't want to force something that's going be inefficient. Right.

[Sen. Kesha Ram Hinsdale (Member)]: I'm not gonna die on the hill of the May, like, I don't I'm not necessarily blessing this, not because of the lack of compelling testimony, but because the legislature itself is on the one hand saying, here's money to do something, and on the other hand, making it very risky and expensive. So Yeah. I'm this you're the messengers for a larger problem that we have where we keep driving up the cost per unit and then saying we want all these wonderful things to happen. I want you, Jason, to be able to do all the wonderful things. I want us to listen to you when you say, it got more expensive for this reason, it got delayed a year for this reason, etcetera. And I want you to bring that back to us because that's the problem. But you figuring out that you could buy widgets and bulk for cheaper, great. I think Jason made this point too. Us identifying that we have a real problem with discrimination against creating a newly developed neighborhood that's affordable for people is the information that would be valuable to gather if we're going to do this. But I in all fairness,

[Sen. Alison Clarkson (Chair)]: I think that's part of what the pilot is about is identifying the wheres. Working with, Is that correct? I mean, my understanding to be. I mean Well, obviously. So the the wheres already, Alex, I believe, is working with our building and general services to identify state lands where where this might be appropriate. I think you're working on the wheres, and there's no green light on using the credit facility until you have the agreement with the developer and the town and the where. Is that that's my understanding.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Yeah. That's all correct. And and I wouldn't be so prescriptive as to choose any single course of identifying a study. If it happens to be something that's owned by BGS right now, we can go that route, right?

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

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: That's right. But Senator, I'm just hearing your point, which is do we want to do a project, fund a project, and then come back and say, here are all the regulatory constraints that drove the costs are being hard to deliver. I'd be wide open to the legislature granting some blanket waiver- Yes. Of certain regulations for the sake of this-

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

[Sen. Kesha Ram Hinsdale (Member)]: Pilot. I'd like to see how inexpensive it can be if it actually just happens, as Jason said, because it, it, it is presumed to meet all our existing exemptions, period, the end. It's a permitted use. Whatever we need to say, that it does happen quickly.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: I think that's, I really like that framing, Senator. I mean, know, one way to approach this is we could go about it, right, utilizing what clear exemptions from everybody who can get out of the home act, what clear exemptions you need now as a result the interims or the longer term of what A1B and design something to fit those, but

[Sen. Kesha Ram Hinsdale (Member)]: Or any other exemptions that I mean, I really think it's

[Sen. Alison Clarkson (Chair)]: laid The question

[Sen. Kesha Ram Hinsdale (Member)]: for me is why aren't the laws we passed working to build new neighborhoods? And if we pass CHIP, CHIP the goal of CHIP is to build literally new neighborhoods. Right. Period. Have that

[Sen. Alison Clarkson (Chair)]: in your neighborhood.

[Sen. Kesha Ram Hinsdale (Member)]: It's something that we we try to accomplish in three bills, municipal reform, act of 50 reform, and infrastructure investment. If that isn't enough to get something built plus this credit facility, then then that is us getting in our own way, and we should make it clear in the language that nothing else can come in and get in our way if those if those criteria are met.

[Jason Webster (Huntington Homes)]: Well, I think I think I think that

[Sen. Kesha Ram Hinsdale (Member)]: Just wanna build a neighborhood. Yeah. Please. I think, let's make it like, god knows. Right. Right.

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

[Jason Webster (Huntington Homes)]: that I think the financing piece the financing piece of where the money is coming from is a major problem for developers. Right? So I have a meeting this afternoon with somebody that has a very large community block grant already awarded to them, but they still need to go I haven't had the I I haven't caught up on the entirety of the details yet because I've met with them yet. It's this afternoon. It is a it's 28 units of housing for Montpelier. And I think that that developer is gonna disappear for months, not because of permits, because the the there are towns we are starting to find that are actually Morrisville's been doing this for years. Right? Where you walk in and they're they're basically like your they're a guide service to say, how do we get you through our permitting process as fast as possible? We desperately want and need new housing. I'm starting to see it in other towns. Right? Their their towns themselves are reaching out. Montpelier is one of them. Here's a I think this developer is gonna disappear for months as they go try to figure out their financing because the conventional financing isn't you know, they there's another whole level of group out there that's just right. You think you're trying to shed risk, they try to shed more. Right? So it's not gonna happen because they're they don't have the money behind it.

[Sen. Kesha Ram Hinsdale (Member)]: Or the permits, but I would like I think I know who you're talking about, and I think we've had them testified before. And it would be really great to check-in because one of the barriers, if this is the same project or a different 28 unit proposal about Peel York, one of the barriers they were facing is they wanted to use all the financing available to them to build the infrastructure for 28 units, even if they only had approval for under 10 at the start. But they were told that Act two fifty people might frown upon them trying to build infrastructure for more units without the full approval for those number of units. I do wanna make sure they are slated to be able to bill 28 units per our last three bills. And I I I want a case study that we think is gonna be built and really test because I've heard this morning they were important.

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

[Sen. Kesha Ram Hinsdale (Member)]: I just want this project to get I just if we don't look at the case studies of where things get stuck, then I end up feeling like, you know, a Cassandra here just saying like, every single one of these projects is stuck for years. Right.

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

[Sen. Kesha Ram Hinsdale (Member)]: And we're not getting them unstuck through policy, and I need us to do that while we commit dollars.

[Peter Trondale (Office of the State Treasurer)]: If I may briefly speak to the level of risk that the state would be taking on in this pilot, you know, we'd be looking to undergo the same risk protections we do for any of our live loans, which is to have an intermediary that can collect our financing. So we would envision us providing the capital through an intermediary. So which intermediary? We would have to have, know, find a willing intermediary in the construction of the pilot. And I think the idea is that there's an aggregated list of orders from individual developers that are bundled by said intermediary, that order is placed, and our capital is used by that intermediary to make sure that the homes are purchased as they are being made available by the producer of the homes and holding them until such time as the developers finish signing them and sell them to the final consumer or bring them to the final consumer. And that if there is so I think you would be looking for there to be sites and and orders worked out as part of that order activation process. If there is a delay, someone needs to take on that risk. We would not do that as the state's role, we would do that as the intermediary's role, the order budgetary's role, and they would be marking up our money and compensation for them as all of

[Sen. Kesha Ram Hinsdale (Member)]: our I think what you're missing is just that we don't, we're trying to get that risk minimized because it's still state money going to something that is a risk will be created. Absolutely.

[Peter Trondale (Office of the State Treasurer)]: But from the state's perspective, we would be guaranteed repayment, just as we were guaranteed repayment for any

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: live loan. Right, there are two distinct things here. There's concern for the state's investment, and I think Peter's speaking and to then there's sort of delivering the evidence and which is what

[Sen. Kesha Ram Hinsdale (Member)]: And thoughts to the consumer, who is the Vermonter,

[Cameron Wood (Office of Legislative Counsel)]: Yeah, we absolutely.

[Sen. Kesha Ram Hinsdale (Member)]: The more, like, somebody carries the risk and usually it's the end consumer or the project doesn't happen. And that's where we're not getting, we've talked about a density algorithm. We've talked about ways to say, Permits cannot drive up the cost per unit and then be impugned, like, for, you know, like with- Right.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Yeah. And I think for that reason, it's good to have those concerns distinct. If there's more concern about the state's investment and recouping that investment, that is a

[Sen. Kesha Ram Hinsdale (Member)]: valid concern.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Is a concern that is valid and be considered by the operators' opposition. If it's a concern for, just broadly, the delivery of units Yes. At an affordable price. Then they're Right, right. Then that's a separate conversation about our regulatory systems. I don't think anyone would promise that the switch to modular or the use of modular would alleviate regulatory barriers. It's really trying to establish whether or not this different delivery system in a state like Vermont, I mean, we're trying to learn from Scandinavian countries, Canada and Japan, who they haven't delivered modular at a lower cost per unit, that's really not what's being promised here, it's that with a short instruction, can be reduced in time delivery of units, and does that bear out in front of at what scale. So, that's really what's being sort of investigated

[Sen. Alison Clarkson (Chair)]: here. Delivering more units in a time low way. But I

[Sen. Kesha Ram Hinsdale (Member)]: think you're getting to another concern that Jason has raised for years, which is if we try to make our manufactured housing perform energy wise, etcetera, at like the highest net zero level of a stick built or what, you

[Cameron Wood (Office of Legislative Counsel)]: know- Yeah.

[Sen. Kesha Ram Hinsdale (Member)]: Then we we know the second we do that, we're increasing the cost per unit by tens of thousands of dollars. So, if this pilot is also going to tell us these are the building code changes, Well Then, I mean, why I'm being so stuck on this is because those of us who are here next year, I just hope we listen. If we like, I'd love to move forward with this and learn really hard lessons that are shared between the natural resources and the economic committees about how much more expensive we're making housing the same time we're trying to say we need to make it more affordable.

[Jason Webster (Huntington Homes)]: Well, I appreciate that for sure. I think that's something that's been and I say this, you know, insert foot straight in mouth. The I think one of the things that has been kind of an issue with all of the, you know, big a or little a affordable housing projects are the number of seats at the table. And that every single seat, every single interest adds costs. Right? And so we we have some of the most expensive, you know, affordable housing projects, workforce housing projects in the Northeast because we try to solve every problem other than affordable housing with our new construction. And that at some point, if the goal is affordable housing, the decision tree needs to put affordable housing at the top. Every single thing that's underneath that that doesn't deliver affordable housing says no. And we next. No. Next. And and if you go back and just visually, if you look at these developments that we were building in the eighties, that is exactly what they are. Right? These are single family homes, not multifamily, which this is a whole another discussion about what what do people want, what should we be building kind of things. Right? Developers went to multifamily because that's what started making financial sense. No third grader, when you ask them what their ideal house is, is drawing a picture of a four unit building. Right? It's a little teeny house with a smokestack and the sun and a crow flying by. Right? And so if you go back and you look at these projects that were built in the eighties all over the place in Central Vermont, it's what I'm most familiar with. These were all developments where everything was done because it was the least expensive way to build houses. Right? You go back, like, split entry houses that we built by the thousands in that time period. There was never a design award for a split entry house. Right? That was not an architectural gem where somebody was like, this is the most beautiful thing we could ever build. Right? That was builders chase allowing to and chasing the most cost effective thing that they could possibly built. And then we built thousands of them. And so I love the idea of a pilot pro project, and I do agree that there needs to be that there needs to be it's bigger than the pilot program of saying every other like, we need to minimize the seats at the table. Right? That that if this is not about affordable housing, it's not gonna be part of this project. I also, in terms of the risk, I can't imagine building this until it had permits. Right? And so I don't and so now

[Sen. Alison Clarkson (Chair)]: I can't imagine loaning the money until it had.

[Jason Webster (Huntington Homes)]: Yeah. Like, I can't like the I can't imagine building anything until it had the permits. And so now it's about find a partner town. There are plenty of them out there that are like, would you build me a neighborhood of 1,400 square foot houses affordable? You know? Absolutely. They support it. Let it get its permits. Remove the seats at the table and make it a driven to affordable construction only and then finance the whole thing and let it get built.

[Sen. Kesha Ram Hinsdale (Member)]: So just give it an Act two fifty exemption, basically. Give it an Act two fifty exempt so that if that's just not a question we have going into it and we do know there are municipalities who would get their Yeah.

[Jason Webster (Huntington Homes)]: Yeah. I mean, I I don't know. Maybe act two fifty exemption. I think the bigger thing is is remove the ability of neighbors that shouldn't have an opinion to have an opinion.

[Sen. Kesha Ram Hinsdale (Member)]: That's act two fifty appeals. I mean, yeah, that appeals we write it. Could it be?

[Jason Webster (Huntington Homes)]: By by right. Right? By right.

[Sen. Kesha Ram Hinsdale (Member)]: Permitted. Apparently, we're supposed to say permitted because by right still gets

[Sen. Alison Clarkson (Chair)]: in court. So I have I have two questions here. One is you've alluded to discussing and and taking out a statewide building code. To go to Jason's point and what Kesha just said, we have had for the last two years an energy code, which looks like it's only gonna add more cost. So if we if you I don't see the language in here about a statewide code. I think one of the things the pilot could be exploring as you look is actually coming back to the to the legislature with conceivably a statewide COVID that would keep housing affordable. I mean, to address all the things we've just been talking about. The question I have for you is if we proceed with this ballot, what is the time frame? If it's twenty not twenty thirty, what is it? How many years do you need to make this happen, do you think? Or at least have enough information to come back to us and say, these are the hurdles that were we got in the way. These are what we still have to solve. This is the statewide code that we probably need to enact to make this happen or to make it more affordable. What are?

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Well, I think there are two things. There's there's a date that deals with the the delivery of a report, right? I mean, we can deliver a report at almost any time even Yeah. That could have the lessons learned that Senator Rutland still has spoken to. That that could really happen at any point, say.

[Sen. Alison Clarkson (Chair)]: But the demonstration project is 30 and you have a report on the '20 in '28.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Sure and and so 2030 may be reasonable. Wouldn't Let's say you push the data out to 2035. We wouldn't delay the delivery of a project just because we've been given the next three years.

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

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: But it would prevent us from having to keep coming back and saying, We've been booked that data, and we've been in. So, I'd say an additional number of years is welcome because development's complicated. 2030 is reasonable for now, but

[Sen. Alison Clarkson (Chair)]: How close are you to having the talent that would be ready to go?

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: We haven't necessarily To go to the where to be? Sure. We haven't necessarily explored a demonstration project to check the box of full modular neighborhood at this point. But to give you a sense, sort of a parallel but distinct effort is eight zero two Homes. We already have at least one municipality which we're sort of tangibly taking steps towards advancing a demonstration project where there's a developer that is eager or see utilizing either two homes designs and then a municipality that's on board ready to to advance that project. So, when, I mean, in that case, we're not even bringing capital to to to deal what we have is a developer who's just interested in advancing some of these initiatives with Kvahn. You can't always count on that. So, in this case, we we do have capital to bring bring to a deal. It's more likely that within a year or two, you could have an interested developer and then development takes a while, right? Two or three years. So, I'm I'm sure if we were if the treasurer's office were able to bring capital to bear, if we were given authority to advance this, even maybe as Senator Ram Hinsdale says with certain preemptions of of local or state permitting, we could likely come back next session to talk to you about possible developments.

[Sen. Alison Clarkson (Chair)]: Who advances the conversation about the statewide building code, which would make it simpler and less expensive, hopefully?

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Well, would likely be, I

[Jason Webster (Huntington Homes)]: I don't think so there is I mean, right now, there is no less expensive building code than what we currently have, which is none.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Right.

[Jason Webster (Huntington Homes)]: Right? So Vermont, there is no building for single family residential, there is no there is no there is currently no building code in Vermont for single family residential. All we have is what nationally is is a bolt on energy code that the bolt on is supposed to bolt onto building codes, and that's the way that every other state operates. The administration sits in their building code program, and then energy, plumbing, electrical is all a component of the larger scaffolding. Vermont in 1997 decided to go down its own path of, well, let's have a standalone energy code, which here we are however many years later and we're it just doesn't work. It's it's just not the way that it works. So I I don't think that there's I think what I think that I wouldn't use the word code necessarily for what we're trying to develop. More, it would be a, specification. Right? So, like, what are we what is the specification for the homes that are gonna be built under this program? Because to stand up a a true code is an enormous project. Right? It is an it is a dedicated agency.

[Sen. Alison Clarkson (Chair)]: Jason, I I appreciate that, but I also know and have heard, and we have heard this constantly, is that until we do a statewide code and then even a regional code, that we will never be able to build enough off-site to really make it much less expensive. And that and to that we need those pieces in place in many ways to make this happen.

[Sen. Kesha Ram Hinsdale (Member)]: Well, or if we adopt a code that is a base standard, but then don't layer everything else on top of this bolt on.

[Peter Trondale (Office of the State Treasurer)]: Well, I

[Jason Webster (Huntington Homes)]: think you But but but yeah. But, again, like, when I think of, like because we we certainly build in other states where we have to build under codes, right, where there's energy codes. And, I wouldn't say that the the code is actually it's establishing the minimum baseline of safety. It's right? The codes are the codes come out of the police protections, you know, and it's and you're you're creating a you're creating a minimum line of safety. I think we're I'm not necessarily a standard. And so codes are you know, they're doing things like counting nail spacing to make sure that, you know, that sheathing was installed and you have the proper sheer structure of a panel. Layering that on right now when we currently have none is gonna go the other direction. So I wouldn't I wouldn't ever look at establishing a building code in Vermont as a way to lower pricing. The only because it's probably not going to. I think that what what the conversations in me with my other hat on for the Home Builders Association and why we've been advocating for codes is that, I don't think it's gonna make building less expensive. But what codes are gonna do is they're gonna make it safer looking forward. Right? Like, for Monters, we've been lucky to date that we live in a small state and, you know, my grandmother probably knows your grandmother. And, if we as a builder did something, then Graham's gonna come and be real mad at us. Right? And I think as we look and so we builders kind of had their own, there was an honesty to our construction because we didn't we didn't want your grandmother to be mad. I think that as we go as we look forward and we're we are losing that, that I think it's gonna be it's gonna be important to create a a baseline of construction so that Vermonters don't get taken advantage of by by some contractors.

[Sen. Alison Clarkson (Chair)]: Right. So that's our other hat is consumer protection.

[Sen. David Weeks (Clerk)]: We would

[Sen. Alison Clarkson (Chair)]: want a standard specific standard to which to build to, obviously.

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: Yeah. Madam Chair, I think and and after this, if I may be excused, have to get to another engagement. But well, I think I think Jason pointed something interesting that's a good distinction and and what would likely come out of us report on this is maybe a good clarification is what we would be seeking to establish is I'll put it as bluntly as sort of reducing municipal discretion. So, establishing certain standards that municipalities can't alter or reducing municipal discretion to alter certain, whether it's standards or energy standards or any other standards so that, say, wetlands and other Can you think of any municipality?

[Jason Webster (Huntington Homes)]: Could example, Alex, exactly. Example, Hinsburg. I'll pick on them for a little bit. Hinsburg requires that all new construction be set up for you already wire for an electric car charger and all new construction, regardless of that, whether or not that client has that buyer has any intention of ever buying an electric car. Right? There's a there's a $600 you know, prep for a car charger that has to go on to every single house. And this would be you gotta don't require those.

[Sen. Alison Clarkson (Chair)]: So given that Alex has to leave, Peter looks like he is ready to leave. Have we what might we add to the I think we need to consider what we might add to the pilot to make it work for all of us. And have you answered the risk concerns you have, Thomas?

[Sen. Thomas Chittenden (Member)]: Yeah, I

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

[Sen. Randy Brock (Vice Chair)]: a little bit for me.

[Sen. Thomas Chittenden (Member)]: I worry that if I'm lucky enough to continue to serve in this role five years, I'm not gonna regret allowing for this and we're sitting on a lot of lost revenue from defaulted development of sitting on houses, but I'm comfortable enough with trusting in the testimony that you guys have said so far that there's enough safeguards for it. So I don't think to be an obstacle for this. I think it's an infill point possibly limited to Vermont building makes a lot of sense that need for us to subsidize New Hampshire homes.

[Sen. Alison Clarkson (Chair)]: Peter and Alex, last parting thoughts, Jason, and

[Peter Trondale (Office of the State Treasurer)]: then we're gonna turn to another building. We're happy to

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: keep engaging offline. Okay, great. Sure.

[Peter Trondale (Office of the State Treasurer)]: It's the same.

[Sen. Alison Clarkson (Chair)]: Great. Jason, thank you very much. Really, this was very helpful. Thanks, Jason. Good to have all of you in the same room talking about the same thing at the same time.

[Jason Webster (Huntington Homes)]: Thank you. You. You. Thank you for your work.

[Sen. Alison Clarkson (Chair)]: Yes. Thank you for yours.

[Sen. Thomas Chittenden (Member)]: Alright. Bye.

[Sen. Alison Clarkson (Chair)]: Very grateful.

[Sen. Thomas Chittenden (Member)]: I only spoke for stuff that's walking to H2. Do you have concerns?

[Sen. Randy Brock (Vice Chair)]: Yes. Okay. Listen.

[Sen. Alison Clarkson (Chair)]: Did you have a question? I'm sorry.

[Sen. David Weeks (Clerk)]: I'm gonna No. I I get it. I'm not in favor of

[Sen. Alison Clarkson (Chair)]: the section. Oh, you're not in favor of the credit facility at all?

[Sen. David Weeks (Clerk)]: We'll talk about that, but the pilot project was, I'm sure I

[Sen. Randy Brock (Vice Chair)]: was gonna have Okay, a

[Sen. Alison Clarkson (Chair)]: well let us see if we can address it in the next little bit. Great. I think Okay. Great. Jason, thank you so much.

[Jason Webster (Huntington Homes)]: Thank you.

[Sen. Alison Clarkson (Chair)]: Yeah. The off-site construction long term. I need to I think it's good. I read a

[Sen. Randy Brock (Vice Chair)]: lengthy article over the weekend about Levittown. Yeah. You said that And you it's just so applicable to what we're talking about here. What? I'll bring it.

[Sen. Alison Clarkson (Chair)]: Yeah. That would be great. Or email us the link to it or the where was the article? Okay. Great. That would be helpful. That'd be great. Cameron, let us shift to a bill that I think we're maybe ready to be close to voting out. I am not sure. I think our I'm not sure what additional work we wanted to do on seven five seven. I think most of us are pretty are pretty supportive of the efforts in this bill. And, Pamela, I just thought it would be good if we haven't talked about if we if we addressed any concern that we'll have, none of you raised any concerns with it, and I'm just thinking that maybe we could get this bill out and I'd love to just sort of walk through it again. We haven't talked about it for quite a while. And

[Cameron Wood (Office of Legislative Counsel)]: Just be happy to to walk through the bill one more time. So for the

[Sen. David Weeks (Clerk)]: record, Cameron Wood, obviously, we'd rather use the term to talk about specific concerns as opposed to just.

[Sen. Alison Clarkson (Chair)]: Well, I should yeah. Both. I just love to have you do sort of walk through with a summary view view of of what it's only 12 pages long just to do a sort of summary on what it does and what the sections do, and then then let's just chat about it. Because I think I think we I mean Yep. That that'll be great. Yeah.

[Cameron Wood (Office of Legislative Counsel)]: I have to okay. So the first, this is seven fifty seven added past that house.

[Sen. Randy Brock (Vice Chair)]: Right. The first Well, we

[Sen. Alison Clarkson (Chair)]: have not yet had any proposals for any change inside of it. And that's all we have. That's what passed.

[Cameron Wood (Office of Legislative Counsel)]: So section one, which is gonna be from pages one all the way through about half of page six, make very minor technical changes to the statute governing the transfer of ownership of, quote, a mobile home. And currently, the definition, when you look at both title 10, which governs mobile home parks, and then title nine, chapter 72, which governs the transfer of ownership of a mobile home. That's the phrase that's used both ways. Right. However, at the federal level, these are defined as manufactured homes. After the federal government came in in the mid seventies and put in place regulations on the building of these types of homes, They are at the federal level called manufactured homes, and they have a specific definition, and that definition exists in title 10. And so what this first section does, it goes through the chapter related to selling of those homes. Right. It makes very kind of small lowercase s substantive changes. So for example, on the definition of permanently cited, it states that here on line three, page two, factors that show a mobile home is permanently cited includes one or more of the following to indicate that not all of them are required. Then you get into the next section, section two six zero four, which is about when you're going to sell a mobile home and it's being financed as real estate, it has to be transferred via a deed. And so there are some small, you know, additions to the language here. So in the

[Sen. Alison Clarkson (Chair)]: sub So it's then being transferred. It's becoming real property as opposed to how the thought had personal property. Right.

[Cameron Wood (Office of Legislative Counsel)]: So just to take a step back. Yeah.

[Sen. Randy Brock (Vice Chair)]: I was reading this thing off, and the first thing I hit is what permanently excited feeds. And one or more of the following, having real difficulty with finding out how that becomes permanently exciting, is these characteristics of how mobile homes are often installed in mobile home parks, set up on blocks so that the wheels don't floor, but wheels typically are still on the mobile home even though it's up on blocks. Right.

[Cameron Wood (Office of Legislative Counsel)]: So just to take a quick step back and and talk about these things in general, you know, if an individual purchases a manufactured home, you can purchase it either from a dealer, which, you know, would be a new home, or you can purchase it from an individual who owns one and they're selling it to you. Unlike typical situation where you're buying a stick built home, where you're buying the property that goes underneath that house, you can move these things.

[Sen. Alison Clarkson (Chair)]: Now Less than 1%. Your testimony that less than 1%

[Cameron Wood (Office of Legislative Counsel)]: are ever moved. And that's what I was about to say. I understand that there is some pushback when I make these comments from other members of this body and from the, you know, external stakeholders. I'm not saying that they do move. I think in most instances, they probably don't. Upon them saying that they can. Right. And I also understand it's been pointed out to many people who say, yeah, we also move stick built homes too. Right. Yes. Significantly less number percentage of the time. Your statutory framework is set up to recognize the fact that these homes can move, and they do. And that's why you actually have in this chapter, you have sections that talk about if you're going to move the mobile home and you're selling it via a bill of sale, what you have to do, you have to get sign off from a town clerk on the bill of sale. You then have to transfer it to the new municipality where you're moving it to, file it with that town clerk. So the statutory framework is set up to recognize the fact that you can move them, and and so historically, they have been movable. And so that's what I was saying. You buy a it dealer, and then the dealer is going to give you either a bill of sale or a deed, and it's dependent on how you're financing it. And then how you're financing it, the lender is going to look at whether you own the land, the house is going, whether you lease it, and then they're also going to look at whether it is permanently cited. And so I'm just trying to pull up the statute, the statutory chapter real quick. Alright. Give me one second.

[Sen. Alison Clarkson (Chair)]: So what we're looking at here on page two are the factors that identify that it has been permanently cited It has you know? And and it has all these things, which means it's un it's not intended to be to move.

[Cameron Wood (Office of Legislative Counsel)]: Right. Right. That's so good.

[Sen. Alison Clarkson (Chair)]: When it's sold, it hopefully, with this bill, we'll be able to be sold as real property, which means it'll have a mortgage. It'll be much less expensive to borrow that money and make it more affordable for people. We're also keeping the avenue open if they wanna do it. It's a personal property sale. If they can, it will be more expensive for them upfront, but perhaps less expensive long term, although I'm it sounds like it's a because they won't have to hire a lawyer to do a deal.

[Cameron Wood (Office of Legislative Counsel)]: So I want to get back to the Senator Brock, your question about this definition. That's why I went to the title real quick, because I wanted to pull up this specific language. So permanently cited is used in two instances in the chapter. So a mobile home that is or is intended to be permanently sited shall be financed as residential real estate if the owner owns the land where the house is going. Right. So kind of two conditions have to be met there. It's if you own the land where the mobile home is going and it's going to be permanently cited, then the bank has to finance it as a real estate transaction, as with a mortgage. Okay? Then the second piece here, the two, is if you lease the land where the home is going and it's gonna be permanently cited, it may be financed as a real estate. And that's the distinction, madam chair, you were just referring to. You had some parties come in and say, keep this distinction because it gives the banks the flexibility if the person doesn't own the land to finance it as a mortgage or to finance it as a personal property loan. They wanted that buyer. They want that some flexibility. Right.

[Sen. Alison Clarkson (Chair)]: And for the buyers who may not be able to afford a lawyer.

[Sen. David Weeks (Clerk)]: Well, we're not talking about the

[Cameron Wood (Office of Legislative Counsel)]: bill of sale right now or the deed, just how it's gonna be financed. Right. Right? If it's gonna be financed as real estate with a mortgage, it has to be transferred via a deed.

[Sen. Alison Clarkson (Chair)]: Right, exactly, and so we had discussion about that. Right. And so keeping this option is important.

[Cameron Wood (Office of Legislative Counsel)]: Right, the Chris Delia's of the world will come in and say, Please, yes, please keep the sub two, Allow our members to finance them as a personal property if certain conditions are met, if it makes sense to do so. And so Senator Brock, back to your question, permanently cited is relevant when you want to get that mortgage. Understood. Right. And so what the House General Committee wanted to do was there was some concern about do all of these conditions have to be met? So for example, you may still have the wheels on the house, but it's connected to utilities, you have a skirting on it, and so in that It's got a concrete pad that's belted down. In that event, are you, is a bank requiring that every single one of these things be met, and the House General Committee felt that one or more of them could be indicative of it being permanently cited, and they

[Sen. Randy Brock (Vice Chair)]: wanted to clarify that. But just as a matter of fact, how mobile homes are done in a mobile home park, they virtually all have one or more of these things. Yes,

[Sen. Alison Clarkson (Chair)]: sir. Right.

[Sen. Randy Brock (Vice Chair)]: And they are It's obviously done. Intended to be there perfectly.

[Cameron Wood (Office of Legislative Counsel)]: That's where I get into the distinction with people, which is, many of them don't move once they have been cited. But at the end of the day, your statutory framework, as I mentioned earlier, is set up on the understanding or on the basis of the fact that it can move. And so then the question just becomes, going back to the language we were just looking at, you have this dual flexibility where it's really dependent on where the property's going and is it gonna be permanently affixed when it gets there. Mhmm. And then at that point in time, at that stage, the bank is determining, okay, it's gonna be permanently fixed where it goes and you own the land, now we have to finance it as real estate. Right. Even though you may move it later, if it's gonna be permanently fixed when it gets to the location that it's stay gonna there.

[Sen. Randy Brock (Vice Chair)]: No. But at at at that point, if it's moving let let's say you have something, a mobile home that you purchased at a dealer, you take it to a mobile home park and install it in the mobile home park. At that point, whether it has a skirt around it or not seems to be determined whether or not it's classified as real estate or as a business It self-site could be either at that point. It is factor that is considered. Yes, sir. Right. And so if, let's say, it is placed at that location and it's treated as personal property as opposed to real estate. Then two years later, it's picked up, moved to another location, and set up the same way. This time you decided, well, you want to do it as real estate because of order cheaper for the grid, and so you do it in real estate. Then you pick it up a third time and move it someplace else. It could revert back either way, is that right?

[Cameron Wood (Office of Legislative Counsel)]: This is a key thing to understand how the current statutory framework is and then how the House General Committee was making some proposals which ultimately were removed. Currently, when you purchase the home, if it's being financed as real estate, it has to be transferred via a lease.

[Sen. Randy Brock (Vice Chair)]: Even though it's not going to go to a place that has, where we'll have one or more

[Cameron Wood (Office of Legislative Counsel)]: of the permanent lease kind of being insured. Correct. Just, it's how it's being financed. So let's just take the scenario you were outlining a second ago. I'm purchasing the home from a dealer, and it's going into a mobile home partner. So I don't own the land that it's going on. I'm leasing it, leasing that lot rent, right? If I can't find a bank that's willing to finance it as a mortgage because they're not obligated to Mhmm. Going back to the statutory section we were just looking at, if it's on leased land, then it may be financed as real estate. So if I can find a bank that's gonna give me a mortgage for it, then the dealer has to transfer it to me via DD. And then I have a DD, then we're good. If I can only find a bank that's gonna finance it via personal property, and I'm putting in this mobile home park, then it gets transferred to me via a bill of sale because it's a piece of personal property. Right? Then I'm going to sell it five years later, and the person's going to move it to a new town, or they're going to move it to their location where they own the property, Mhmm. And it's gonna be permanently cited there. Well, now the bank has to finance it as real estate if it's going to be permanently cited on land that you own. So I'm selling it to somebody, but I have a bill of sale. K? I have to convert that bill of sale to a deed because you're financing it as a mortgage. The statute says if it's gonna be financed as real estate, it has to be transferred via a deed, If I don't have a deed, I have a bill of sale. There is a statutory section, it's further down here, which talks about how you convert the bill of sale, this is in 2605, how you convert the bill of sale to a deed. And so one thing the House General Committee looked at was they wanted to allow more flexibility because there was some concern, A, once you transfer it or once you convert it to a deed, it can't go back to a bill of sale. Can't go back

[Sen. Alison Clarkson (Chair)]: to personal property, has to

[Cameron Wood (Office of Legislative Counsel)]: remain real. It has to continue to be transferred via deed. Can't write up a bill of sale afterwards. And so then there was also some concern about, so there was concern about the conversion process itself. And then there was also concern, as you were mentioning that, Jerry, you were kind of alluding to, the concern of individuals having to go through the deed process, typically involves an attorney having to write it up, as opposed to a bill of sale, which is a little more, I would say, flexible in its And so there was some language at House General that was basically saying whether it's been financed as a real estate, whether it's been transferred via deed in the past, doesn't matter. You can transfer via bill of sale even if it's been transferred via a deed previously. The House Ways and Means Committee was not supportive of that language, and so they removed it. I think the argument being there's

[Jason Webster (Huntington Homes)]: kind

[Cameron Wood (Office of Legislative Counsel)]: of been a trajectory or a history of statutory language moving in the direction of treating manufactured homes as real estate. Right. As you mentioned, Madam Chair, you'll hear testimony from others saying, you know, how, you know, I don't know I've it directly, but you know, a small amount or a small percentage of these homes are actually I don't know. Removed once they're actually set in place, then let's treat them as real property. Let's stop treating them as personal property. And so you have the statutory language here that basically says, currently exists, if it's ever treated as real property, it has to be given a deed. That's a contingency fee. Can't go backwards to a bill of sale. It needs to be transferred via deed from that one

[Sen. Alison Clarkson (Chair)]: of those forward. Purchaser so this just gives purchasers of manufactured housing options.

[Cameron Wood (Office of Legislative Counsel)]: This bill, what it this bill doesn't make any changes to the current system that exists, which is it allows people to finance them via personal property. Right. It says it has to be financed via a mortgage if the person owns the land and they're going to be permanently cited, But it also says that once it's been converted to a deed or transferred to a deed, it has to stay that way. Mhmm. There was some testimony now in general from people who were saying that banks require them to initially deed them to themselves in order to transfer it, take the bill of sale, deed it to themselves in order to then transfer the deed because the conversion process is somewhat cumbersome. That may or may not be the case. I'm not here to say that things are wrong in what they're doing. I'm here to tell you there is a conversion process under the statutory framework that allows you to take a fill of sale and convert it to a PD. Right. What about the situations in which you transfer this to a D, and you pick it

[Sen. Randy Brock (Vice Chair)]: up and you move the mobile home, which still has its wheels on it, to New Hampshire? What happens then? Then you would have to go by what New Hampshire law is as Or far as they not be able in other states, for example, to take a deed on something that traditionally is not deeded. I don't know if it's not deeded anywhere else, but I suspect if that's the case.

[Cameron Wood (Office of Legislative Counsel)]: Yeah, process of property ownership and transfer of property is pretty much exclusively a state law matter, and so it would be whatever New Hampshire's law is in regards to how you go about reporting that instrument.

[Sen. Randy Brock (Vice Chair)]: Yeah. I'm just I'm just thinking about the fact that, you know, there are many mobile homes that are mobile and do, in fact, state lines of speaking who and, frankly, this is particularly true years ago and also like today, people in military groups, you know, who get reassigned and their home goes good.

[Sen. Alison Clarkson (Chair)]: Actually, the testimony is that it's not very many. People then tend

[Sen. Randy Brock (Vice Chair)]: to We don't have very many military people in Vermont in comparison to the states that have large numbers. I'm really just trying to answer the question. Is there a process by which a person who's got a deed in Vermont for Mobile Home can move with it. In Vermont? Yes. Outside of Vermont. In other words, what's going to happen to that person who has a mortgage on a movable asset that they want to take out of state?

[Cameron Wood (Office of Legislative Counsel)]: That's where I think you would have some of the banks coming in and saying that's why they want that flexibility regarding permanently cited. You could have a bank saying, hey. You don't own the land. It may be permanently cited, but you don't own the land, so we aren't willing to give you a mortgage because of the higher risk associated

[Sen. Randy Brock (Vice Chair)]: Well, maybe higher risk if the bank decides, but I'm just looking at only one of these conditions applies, and those are conditions that traditionally exist in movable mobile homes, such as skirting. Mobile home parks typically require skirting, but it doesn't mean that the home is there with any degree of permanence whatsoever. And what I

[Cameron Wood (Office of Legislative Counsel)]: would say is the banks currently, they're not obligated to finance it as a mortgage unless you own the land. And so in that instance, yes, you could potentially move the home, like there's a risk there, but the bank would still have, they would be able to foreclose on the land itself if you were to default

[Sen. Alison Clarkson (Chair)]: Oh, on no, no, let's take

[Sen. Randy Brock (Vice Chair)]: an opposite that I'd be concerned about. For example, does this provision limit someone from moving his mobile home? No. I don't think so. Because the bank has a deed on it here in Vermont, and they move to a state that doesn't recognize Let's

[Sen. Alison Clarkson (Chair)]: get an answer to that question. A very specific question. So let's get an answer to that question about about the out of state sale. So I I can't answer the question.

[Cameron Wood (Office of Legislative Counsel)]: It's going to depend on what the other state's laws are. Right. You have a home. You have it deeded to you because you finance it as real estate. So you And now I'm wanting to take that home, and I'm wanting to move it to another state, or I'm taking it to another state to sell to someone else. Does that state recognize the deed that was executed in It's gonna depend on that

[Sen. Randy Brock (Vice Chair)]: state's we can't recognize that. Well, would they? What's this?

[Sen. Alison Clarkson (Chair)]: I don't know how to answer that, I don't know, but we can Well, I'm

[Sen. Randy Brock (Vice Chair)]: wondering just what kind, I'm trying to determine what kind of exposure do we have of people who make a deal like this in Vermont,

[Sen. Alison Clarkson (Chair)]: and they wanna move their mobile home. So can we investigate that? We can also ask Chris Dahlia in to

[Sen. Randy Brock (Vice Chair)]: Chris might be able to get to get some picture. This is an in state issue as much as it is in state issue.

[Cameron Wood (Office of Legislative Counsel)]: Yeah, I don't think there's a What I would say is the bill, the changes here, there's nothing that is in this bill that's going to significantly alter current practice that exists. Don't see anything is Current practice in Vermont. Correct, yes.

[Sen. Alison Clarkson (Chair)]: Right, but we need to answer the out of town, out of state question. Mobile homes move across state lines. They can, very rare. Still think it's

[Sen. David Weeks (Clerk)]: very The whole scenario is very rare. When they say 3% of all homes are mortgaged, we're talking about a very, very small subset, even smaller subset that go across the board.

[Sen. Alison Clarkson (Chair)]: So let's find the

[Sen. David Weeks (Clerk)]: But they have to be, we have to understand what, you know, looking for

[Sen. Alison Clarkson (Chair)]: Let's find the answer. We need

[Sen. Randy Brock (Vice Chair)]: to find the answer. Right. And that maybe bringing Cristina is a first step. But it's a legal question as much as it is real estate.

[Sen. Alison Clarkson (Chair)]: But Pam is also gonna look at what we do out of state. It's a good question. So the same thing with personal property, we have you could take your car and and become a resident of another state, and

[Peter Trondale (Office of the State Treasurer)]: you just have to register it there. So the question is But they don't have two process, one being a property tax and one being personal personal property. Like, personal tax.

[Sen. Alison Clarkson (Chair)]: Well, state is different. So, anyway, let's keep moving. Let's put a pin on this and answer the out of state question, please. Okay. So high level.

[Cameron Wood (Office of Legislative Counsel)]: Again, high level.

[Sen. Alison Clarkson (Chair)]: Takes us through the first whole section to

[Cameron Wood (Office of Legislative Counsel)]: page sorry. You keep going. Yeah. So, again, the the first thing I said, it was six pages, five and a half pages or making some very minor technical changes to the process of when you sell a mobile home in the state and how it has to be financed. So for example, page three, this is where it says that this section is, if you're financing it as real estate, it has to be transferred via the need. Sub C, we're just clarifying that this section is related to a warranty deed. Sub D is related to a quick claim deed. And so this is the form that I need, you know, to follow, technical amendment of nine, changing wife and husband to spouse, so again, very, very kind of minor stuff here. When you get to section two on page six, we start talking about limited equity cooperatives. And so what we've had, a limited equity cooperative is a type of corporation In Title, it was Title XI, Chapter 14, you have cooperative housing organizations. These are organizations that you can create, you file them with the Secretary of State, and it is a form of collective house ownership. Right. And so within that subset, you have things that are called limited equity cooperatives, and these are corporate housing corporations, cooperative housing corporations that are designed for individuals of low and moderate income and that is defined in the chapter as low, I believe it's 80% AMI, Middle is, I believe, at the 100 and maybe 120% AM. 120. But these are corporate structures designed to serve individuals of low and moderate income. Now, who owns the units that are in these? And typically, it is the corporation that owns it, and you as a member of the corporation have a proprietary lease to live in the unit. The unit itself, not the property, etcetera. Yes. The actual. And so one thing to keep in mind with these is they're limited equity cooperatives. Not all limited equity cooperatives are a mobile home park. Could be an apartment I mean,

[Sen. Alison Clarkson (Chair)]: aren't these not even even associations, too?

[Cameron Wood (Office of Legislative Counsel)]: I wouldn't think about it in the sense of every condo association is a cooperative housing organization. These are not common interest communities.

[Sen. Alison Clarkson (Chair)]: Yes, these are key to remember. Right.

[Sen. Randy Brock (Vice Chair)]: This is

[Cameron Wood (Office of Legislative Counsel)]: a corporation owns the owns the housing. Could be a mobile home park. Could be an apartment building. And the members of that corporation typically have a proprietary lease to live in one of the units. But the corporation owns the housing itself. In some mobile home parks that are registered as a limited equity cooperative, the individual owns the mobile home. Right, the corporation owns the land, and they pay in their proprietary lease, it covers their lock rent essentially. So a whole lot of different possible scenario types that could exist under this umbrella here.

[Sen. Alison Clarkson (Chair)]: And so what do we do to, I mean these exist, what do we do to further enhance or improve the life of people living in these?

[Cameron Wood (Office of Legislative Counsel)]: Well, so what this bill does when you get to it's gonna be page eight. It says, for a mobile fund art that is organized as a limited equity cooperative, The articles of incorporation shall Pass. Prohibit the subleasing of the units unless a member demonstrates a hardship, in which case the Board of Directors may, by an affirmative vote, grant an exemption. And the unit has to be subleased by an individual of low or moderate income. And then they have to require that a unit owner cannot subleasing units for a higher amount than necessary to cover the cost of the unit, including cost of the monthly payment provided by proprietary lease, cost of the mortgage, cost of utilities, etcetera. What is all this here for?

[Sen. Alison Clarkson (Chair)]: This is to guarantee that the affordable housing opportunity remain an affordable housing opportunity.

[Cameron Wood (Office of Legislative Counsel)]: I think that's probably the best way to articulate it, but to get into a little bit of the detail here, so you have a cooperative housing corporation. The members have a share in that corporation. The corporation has to give them a proprietary lease that gives them the right to live in one of the units, and then they pay a set amount that the the corporation has determined that they charge to live there. As I mentioned, the limited equity cooperative model is for people with low and moderate income and so, the section currently says in sub seven that the articles for a limited equity cooperative shall require that no sublease shall provide for monthly payments by the sub Lucy in excess of 110% of the monthly payments for the unit provided in the proprietary lease. That means that if we're all living in a limited equity cooperative apartment complex, we use that as a scenario and it's a five unit apartment. It has to be designed so so that our monthly proprietary lease costs are available to us as low and moderate income individuals. Right? So it could be a thousand dollars a month that you pay. That's your proprietary piece. If I'm gonna sublease that apartment to someone else, I can only charge them a 110% of that monthly payment.

[Sen. Alison Clarkson (Chair)]: So $1,100 you go in there. Right. Charge 1,100, let's say. So the design is to keep it affordable because as we heard testimony from, I think, Brett Donnelly, you don't want these formal housing units then being subplot and and and and substantial. The the point is it's supposed to

[Cameron Wood (Office of Legislative Counsel)]: be designed for low and moderate income people. So you don't want them turning around and charging other people being able to make money off that. But then the issue that the house general committee was trying to address, my understanding anyway, is this is difficult in the scenario where let's take the same people here. We all live in a limited equity cooperative mobile home park where you own your own home, but the park the corporation owns the park. Ah. Right? So now I have a mortgage on my own potentially, or at least have a personal property loan on my home, and I'm paying the lot rent to the corporation who owns the property, but I own the home. So now I'm limited because let's say my proprietary lease cost, which covers the lot rent, let's say it's only a few $100 a month. This section would limit my ability to sublease for greater than a 110% of that lot rent. That's because you Which may not cover Right. My mortgage loss. It may not cover my overall personal property loan on the home. That's the issue that they were trying to address. So that's the issue they're trying to solve.

[Sen. Randy Brock (Vice Chair)]: Yes, ma'am.

[Cameron Wood (Office of Legislative Counsel)]: And so that's why you get into this page eight, which says, A, you can't sublease the unit unless there's a hardship. Why are you putting that limitation on them? The committee felt that these are designed for the members of the corporation, and therefore, you know, they should only be subleasing those units under limited circumstance. So they put in there, you can't sublease unless there's a hardship, in which case the board of directors can grant you an exemption. If you get that exemption, you can only sublease it for basically the cost that that unit is to you. So that's where you get it, including the monthly payment for the unit, cost of any mortgage, cost of any utilities, apping the amount you can sublease it for to simply cover your costs. David,

[Sen. Randy Brock (Vice Chair)]: I think you had a

[Sen. David Weeks (Clerk)]: question. Limited equity cooperatives, So the members have shares. Are you required as a member of a limited equity cooperation? Is it required that you're low income or moderate income to get in to

[Cameron Wood (Office of Legislative Counsel)]: be a member? Yes, sir.

[Sen. David Weeks (Clerk)]: It is Everyone stated about whether it's an apartment or a mobile or

[Cameron Wood (Office of Legislative Counsel)]: For the limited equity cooperatives, let me get to the statutory language.

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

[Cameron Wood (Office of Legislative Counsel)]: So this is the section in Title XI that governs a limited equity cooperative that says a cooperative housing corporation may organize as a limited equity cooperative in order to fulfill the public purpose of providing and preserving housing for persons and households of low and moderate income at the time that they purchase their membership. In addition to safeguarding the foregoing public purpose, a limited equity cooperative shall meet the following requirements. The articles of incorporation shall require that cooperative interests be sold at not more than a transfer value determines to maintain long term affordability of cooperative interests for persons or households of low and moderate income. And so So it's really all designed. And then it's defined. The low and moderate income has the definition of 80% or 100% of A-one. Second question

[Sen. David Weeks (Clerk)]: is what you alluded to. In this limited equity cooperative, the lease the you have an owner of a unit, but he's leasing the land. That's possible. Right? Yes, sir. That's fine. Okay. But to be to have that mobile home stationed and to remove to a limited equity cooperative, they have to be low income or moderate.

[Cameron Wood (Office of Legislative Counsel)]: Yes, sir. To be able to so when you're thinking about these cooperative housing structures in the mobile home park scenario, In some instances, the corporation owns all of the mobile homes themselves. I get

[Sen. David Weeks (Clerk)]: that specifically about where the mobile home, the asset itself is owned by? Yes, sir. Okay.

[Cameron Wood (Office of Legislative Counsel)]: It can be owned by the cooperative, but by the individual.

[Sen. Alison Clarkson (Chair)]: Yes. A cooperative owns the land underneath. Correct. In any account.

[Cameron Wood (Office of Legislative Counsel)]: In which case the proprietary lease should be covering your lot rents, which would, should ultimately be covering whatever costs to the corporation to maintain the the overall property itself, pay taxes. Right.

[Sen. Alison Clarkson (Chair)]: Sewer, the water, the roads Right. Common or cool or whatever. You have it common.

[Sen. Randy Brock (Vice Chair)]: Correct. Yep.

[Sen. Alison Clarkson (Chair)]: So that is So that's that section. That is the sub, that's the subleasing restraint.

[Cameron Wood (Office of Legislative Counsel)]: So it is, it is addressing only limited equity cooperatives that are mobile home parks, prohibiting subleasing, and then tapping what the sublease for and then you have this D one which is a mobile home park organized as a limited equity cooperative shall be treated for the purposes of state funding and grants as if it were incorporated as a nonprofit corporation for a public purpose and public benefit. What are you trying to solve here? This was the issue that was raised by one of your witnesses a few weeks ago. At one point in time, certain mobile home parks that were being organized as limited equity cooperatives were being registered with the Secretary of State's office as nonprofit entities. And then at a point in time, the Secretary of State's office stopped doing that because just because you are a limited equity cooperative doesn't automatically mean that you should be treated as a nonprofit. And it is a separate corporate organization type. And so the advocates will come in and say, if our limited equity cooperative wants to go after certain state funding and grants, if we're registered as a nonprofit, then most times it's easier for us to access that funding capital. They look at us, they see that we're registered as a nonprofit, we can access those funds. If we're not registered as a nonprofit, then it becomes sometimes difficult. They have to jump through additional hoops to potentially access those dollars. And so what they're trying to address with this section is just to state that all mobile home parks that are limited equity cooperatives should be treated as if they are nonprovince. They are organized in the statute similar to a nonprofit. What do I mean by that? When you go, again, to the limited equity cooperatives language, it says that it is in order to fulfill a public purpose of providing and preserving housing for individuals of low income. Low income, right. And then later on down, there is a limitation on what the limited equity cooperative can do with the property if it ever dissolves. So you know that nonprofits, if they dissolve, they have to you know, there's a limitation on what they can do with their assets. They typically have to transfer them to other nonprofit entities. Okay? Similarly, there's this subdivision six here, which says that if a limited equity cooperative dissolves after the corporation pays off its debts and distributes the members back their membership shares, then any assets that remain have to be transferred to a nonprofit or another limited equity coauthor. So you're capping and limiting what the for profit can do similar to what you do in the nonprofit world. So they are somewhat treated like a nonprofit in statute, but they don't automatically get a nonprofit Yeah.

[Sen. Alison Clarkson (Chair)]: Benefit of being a nonprofit. Right.

[Cameron Wood (Office of Legislative Counsel)]: And so what that language is designed to do is to basically say in statute For purposes. Yeah. That we should be treating them as a nonprofit entity. One thing I will point out to you is this is limited to mobile home parks that are organized as limited equity cooperatives. I'm not sure why the committee wanted that distinction because in theory, a limited equity cooperative, whether it's a mobile home park or not Serving low income. Are the same thing. Right?

[Sen. Alison Clarkson (Chair)]: So I would entertain, actually, a a thought that we could expand this to include, I mean, I don't know how many limited equity corporations there are that are not mobile phone cars, but I assume there's state question.

[Peter Trondale (Office of the State Treasurer)]: That's a question for the secretary of state.

[Sen. Alison Clarkson (Chair)]: I don't know can to back. So we need to get David Paul to come back and

[Cameron Wood (Office of Legislative Counsel)]: talk to us back. And you may want I think David was doing a great job in the House General Committee of explaining to them why some of these are registered as nonprofits, some of them may not be, and what the distinctions why there are certain distinctions between the entities with the Secretary of State's office.

[Sen. Randy Brock (Vice Chair)]: Okay. Okay. And let's try to finish off. Yep.

[Cameron Wood (Office of Legislative Counsel)]: Finish off, should be able to do this quickly. Page nine, municipal zoning. This has a similar amendment to what you had in s three twenty eight. So this is about ensuring that you can build mobile homes or manufacture brands in districts that allow year round residential developments. I'm not gonna walk through that in detail. Then you get to the the remainder of the bill It

[Alex Farrell (Commissioner, Dept. of Housing & Community Development, ACCD)]: doesn't undermine any of zoning or ordinances.

[Cameron Wood (Office of Legislative Counsel)]: And then you get the ten eleven as well. This is about sales and use tax, and so this is to expand the sales and use tax exemptions for tribal homes to try to get the sales and use tax exemption and how much an individual would pay in sales and use tax on the purchase of a mobile home to be roughly equivalent to what the property transfer tax would be. When it was initially coming out of House General, House General wanted to treat the purchase of every mobile home, manufactured home under the property transfer tax, and the Ways and Means Committee said, wait a minute, you're wanting to treat them as if it's real property by putting them on property transfer tax, but you've made all of these changes to make it easier to transfer them via bill of sale. Those two things don't align in the ways and means committees' eyes, so that's why they removed all of that language to allow you to go back and forth between transferring via deed versus bill of sale. They kept the current statutory framework that exists as it does now, and they took away treating them under the property transfer tax, and they said, if you're going to purchase it via a bill of sale, we're gonna keep treating you under the sales and use tax, but we will give you a higher exemption to try to make it on par with the property transfer tax as far as how much you would pay. These are John Gray's sections, so if you want more detail, we'd probably have to defer.

[Sen. Alison Clarkson (Chair)]: So just trying to not lose any benefit by the change of this

[Cameron Wood (Office of Legislative Counsel)]: opportunity. So whether a manufactured home is subject to property transfer tax or subject to sales and use tax depends on how it's financed. Is it being transferred via the deed and being financed as mortgage, or is it being financed as personal property? The sales and use tax exemption that you currently get from purchasing a manufactured home equates to the individual paying a different tax amount depending on whether it's property transfer or sales and use.

[Sen. Alison Clarkson (Chair)]: So, sorry, and use is only applied if you buy this personal property? Correct.

[Cameron Wood (Office of Legislative Counsel)]: And what this amendment is intended to do is to expand on the sales and use tax exemption to make it such that if you're buying it via a personal property loan and you're paying sales and use tax, the tax that you ultimately pay is going to be more in line with had it been treated as transfer tax to try to make the tax amount that you have to It's more equivalent. So they're trying to achieve some kind of parity between

[Sen. Alison Clarkson (Chair)]: the sale as personal property and or the sale as real property.

[Cameron Wood (Office of Legislative Counsel)]: Yes, ma'am. Whether it's subject to property transfer, whether it's subject to sales and use, the individual who's purchasing it would ultimately be paying the equivalent amount regardless of which category they're having to pay to. That is the goal of that amendment. And to do that, you increase the exemption that's subject to sales and use tax. Whereas you increase the exemption, it would not be subject to sales and use tax, thereby making the tax amount lower. That's what that those last few sections are included.

[Sen. Randy Brock (Vice Chair)]: Okay. Smells like. And then

[Cameron Wood (Office of Legislative Counsel)]: the last piece, my apologies here on the line, excuse me, the bottom of page 11, top of page 12, it's informing revisions. This is our office, the direction, and the authority to go in and change in statute where it refers to mobile home and change it to manufactured home. So it would be in line with the federal definition

[Sen. Alison Clarkson (Chair)]: for these housing types moving forward. And that would be in ah, that's confirming that in section eight.

[Sen. Randy Brock (Vice Chair)]: Yes, ma'am.

[Sen. Alison Clarkson (Chair)]: But the secretary of state business registration, they aren't they currently required to register with them? So

[Cameron Wood (Office of Legislative Counsel)]: so as I mentioned, and this is really a question that you need to ask David Hall as to why the Secretary of State's office did this and why they changed practice. Again, at one point, they were registering these manufactured, owned, part limited equity cooperatives as nonprofit organizations. At one point they stopped doing that. Right, okay,

[Sen. Alison Clarkson (Chair)]: this just goes back to

[Cameron Wood (Office of Legislative Counsel)]: the nonprofit. And what this section does is it says that if a limited equity cooperative organization goes to the Secretary of State and asks the Secretary of State to update its business organization status within the Secretary of State's system, that the Secretary of State would do that. I don't know why an organization that's listed as a nonprofit would go to the secretary of state and say, hey. Don't list us as a nonprofit because they get value by being a nonprofit arguably, but that statutory section would allow them to do so if

[Sen. Randy Brock (Vice Chair)]: they so choose to do so.

[Sen. Alison Clarkson (Chair)]: Okay, and that's good, think, doesn't

[Sen. Randy Brock (Vice Chair)]: it? Yes. Okay.

[Sen. David Weeks (Clerk)]: Now that's my question. This section A is line nineteen and twenty on page 11. So the whole bill starts out by clearly finding what mobile homes are. This section said all mobile homes their names are now replaced with manufactured homes. Right. Manufactured homes is one of three subsets to their mobile, prefabricated, or modular. So what's this, why do we need, why do we need section eight?

[Cameron Wood (Office of Legislative Counsel)]: So I haven't been able to find an actual definition of manufactured home for module. So this question has come up in this committee and others about ensuring that when you're referring to these things, what are we referring to when you're talking about off-site construction, modular, panelized, etcetera. I'm not aware of any definition in the statute for any of these terms, including manufactured home. At the federal level, a manufactured home is a home that's built on a chassis that meets certain dimension requirements is what you would kind of historically refer to as a mobile home, and the House General Committee wants to go away from calling them mobile homes and to call them manufactured homes so that they are in line with how the federal government referred Right. To This is a hotbed. And so if you're asking, well, throughout the bill, we're referring to it as mobile home, why are we not making changes? We felt that it would be best to keep it listed as a mobile home in the statute, and then we will go in and make all of the necessary revisions at one point in time. If the fact they've got corrections, Bill. Potentially, through stat rev or something like that. Right. It would be difficult if either A, if I went in and changed every reference in Mobile Home in this chapter throughout, this becomes a 100 page bill, know, give or take, or if we're only making the changes where the words appear on the page as it currently exists in the sections that we're amending, then you're going to have some reference to mobile, some reference to manufacturer, and that may be confusing and problematic. So the statutory authority would allow us to do it all at once. Senator, I don't know that I'm I'm answering your specific question. The house general committee wanted to call the manufactured homes to align with the federal government. There isn't a definition of manufactured home currently in statute, but I do think this is something that you all would potentially want to take a look at and address if you're moving forward and referencing these things, manufactured, modular, panelized, off-site construction, They don't have any sort of definition in the statute. Correct. And

[Sen. David Weeks (Clerk)]: this you would, for these So this is

[Cameron Wood (Office of Legislative Counsel)]: not required. You basically define mobile manufactured home moving forward, and so you all would then need to be careful because, you know, obviously, you could refine the same things differently in different statutory sections if you want, but I would posit that if you make this change, if this bill becomes law, then a manufactured home in in Vermont moving forward would probably be what we would historically consider as a mobile home. Right. And we would probably need to ensure that that is the

[Sen. Alison Clarkson (Chair)]: power of phrasing that. This is important for a bunch of hunt related reasons, as I recall. But

[Cameron Wood (Office of Legislative Counsel)]: I would not say it's necessary. It's just it's a state's question of whether you want to continue calling the mobile home or

[Sen. Randy Brock (Vice Chair)]: whether you want to align with

[Cameron Wood (Office of Legislative Counsel)]: the feds and call the manufacturer.

[Sen. Alison Clarkson (Chair)]: Just because we're over time. The pieces in this bill we need to land still are the out of state question about a deed and what else do people feel they have to land further. I mean,

[Sen. Randy Brock (Vice Chair)]: it it probably would make this conform to federal law.

[Sen. Alison Clarkson (Chair)]: Yeah. No, no. Think So, we will

[Sen. Randy Brock (Vice Chair)]: take it back at home.

[Sen. Alison Clarkson (Chair)]: Unless we So, let's get some testimony on the out of state deed, what happens with the deed as it goes out of state. I assume we've had there's somebody who can give us an answer on that. And we'll try and land that and then see if we can get this out. And what are

[Cameron Wood (Office of Legislative Counsel)]: you gonna hear from? David Hall or not?

[Sen. Alison Clarkson (Chair)]: Yeah. We have to hear from David Hall. We have to hear from Chris Delia and anyone else, anybody who has a brainstorm on in terms of out of state sales. Thank you very much. We'll go offline. See you tomorrow.