Vermont Legislature SmartTranscripts:

[Sen. Alison Clarkson (Chair)]: We're live. Earhart, welcome. Welcome, everybody. This is Senate Economic Development, Housing and General Affairs. It is May Day. Happy May Day. Happy first the May 1.

[Sen. Thomas Chittenden (Member)]: Your two favorite committee members are here on time.

[Sen. Alison Clarkson (Chair)]: Promptly I'm ready so proud of the three of us given all that's happening in the world that we are able to be here on time and two of our favorite legislative councils fell. And I am deeply grateful. Thank you. I would just like to say, as we begin to talk about the landlord tenant bill, that actually what is also being proposed and hopefully considered, and this is hopeful because it's not yet on paper. But the hope is to, at this point in session, pass out a much slimmed down version of a landlord tenant bill that we are looking at addressing the the most challenging tenants that are challenging both for tenants and for landlords. The the and and so that threatening tenants, would call them first. The second is no trespass. And the third is setting up a housing diversion court study to look at that and to work with the court to figure out what that would cost, whether we do another court like we do mental health court, drug court, or DUI court, whether we set up something more substantive or substantial. So those are the three big pieces we're working on trying to slim down the landlord tenant bill. I would be glad if we're able to do that. So I just wanted to fill people in. That's the hope sort of as we move forward to get that accomplished. But Earhart, I know you worked on these issues for a long time. We honor your work. Introduce yourself and take it away. You have ten minutes.

[Ehret Mottka]: Okay. Well, thank you, madam chair. I really appreciate the time on the committee's agenda. Morning, senators. For the record, Ehret Mottka currently retired but was the former director of the Vermont Affordable Housing Coalition and as Madam Chair mentioned, spent many, many years, probably twenty five years, at the state house and was involved in pretty much every change to, every substantial change to landlord tenant law, during during that that time. Also, as I think some of you know, I retired from my last job working for our esteemed senator Bernie Sanders as a housing policy advisor as well as outreach representative. I I, appreciate your, introduction, madam chair, with the update. I did, take a look at draft 2.1, that is currently in judiciary. Understand that your committee doesn't actually have possession of the bill.

[Sen. Alison Clarkson (Chair)]: I do not I would speak to issues, not the bill at the moment because a, we don't know what it looks like, and b, we don't have it in front us. So I mean, we're working through the bill, there's no particular version at the moment.

[Ehret Mottka]: Okay. And, yeah, what I I'm encouraged by what what you said by way of introduction, Madam Chair. I will say that what I saw in judiciary still had, from my perspective, a long way to go.

[Sen. Alison Clarkson (Chair)]: That's why I addressed what we're hoping for.

[Ehret Mottka]: Yeah, no, appreciate it. So just maybe for table setting, and I'm sure you've heard this from, some of this from others before, and at this point in the session, you're probably beyond, you know, broader broader statements around h seven seventy two. But I I just wanna make sure that it's clear that, you know, as it came over to you from the house, I find this, this bill seriously imbalanced in favor of landlord rights and, a bill that substantially erodes, due process protections for tenants and upsets what, has been a 30 balance between landlord, and tenant rights, excuse me, and responsibilities. And as I think others have noticed, would seriously exacerbate homelessness in our state, which already has one of the highest rates of homelessness in the in the country. So I'm encouraged that the senate looks to be drastically scaling back the bill because if not, I I would seriously hope with one major exception, which you mentioned, madam chair, that the bill would die in in the senate. Again, unless it is seriously scaled back. And that if it's not seriously scaled back, that you maybe take this up again next year and really engage all of the stakeholders from the beginning and really hear both sides because I think, you know, maybe not so much in your committee, but I know having followed this closely in the House, there was really a preponderance of landlord input into into the bill. So as I think you all know, to produce a bill that seriously balanced landlord and or further balanced landlord or tenant rights while you're increasing increasing protections and expediting evictions. There's a a whole number of other tenant, friendly protections that, I would hope that you would consider, in, you know, in the future. One, obviously, being the elimination complete elimination of no cause evictions, which is something that the city of Burlington has passed as a charter change and that I worked on, you know, locally, to, you know, to to get passed locally and then also, pass the state house, which unfortunately the governor vetoed, a couple years ago when the house was unable to to to override. There are many other tenant protection measures that I think would reduce evictions and reduce homelessness in the state, rent stabilization, legal right to representation of tenants in eviction cases, limiting one month security deposits to one month's rent in advance, more greater enforcement of minimum habitability inspections, and and so forth. I also am really encouraged to hear that you're, potentially looking at, creation of either a landlord tenant court or specialized court doc.

[Sen. Alison Clarkson (Chair)]: That is that is our hope. That is certainly one of the things we, the senate, would like to contribute to this bill.

[Ehret Mottka]: I I I've always argued that the timelines that are in current statute, you know, are they're not the problem. The problem is the court the court process gets gets delayed.

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

[Ehret Mottka]: And the court docket, especially, you know, still, I think, we're a couple years past COVID, but the judiciary really suffered from, you know, the the court docket just being overloaded and during COVID and just being further delayed. So I think, you know, some of what you may have heard from landlords about delays and the need for speedier evictions, I think could be resolved through a specialized court docket. So I'm very happy to see that you're you're looking at that. However, there are also, you know, landlords complain about problem tenancies and the need to evict folks. There are many measures and some of them you've already taken that could seriously help landlords that do rent to what, you know, for want of better term might be considered riskier or challenging tenants. One is increasing funding for rental arrears, increasing funding for state rental assistance, increasing funding for landlord tenant education outreach, which is provided by both CVOEO, Champlain Valley Office of Economic Opportunity, as well as by the the landlord association. Increased funding for landlord liaison services. I I know, you know, you're in a restricted appropriations environment. Once again, you've got, you know, property tax, education tax to deal with, but these are things that that really could help those landlords who rent to tenants that they might otherwise consider risky or or or challenging and help prevent prevent evictions. I think eviction prevention is really what what you want you want to focus on mostly.

[Sen. Alison Clarkson (Chair)]: I agree we need to certainly work on prevention, which happily is one of the pieces in this bill and one of the pieces that's actually made it through the budget, the million dollars in the rental assistance to make sure we can cure rental challenges before they get to the point of being evicted. So I actually, one of the major pieces of spending from this from our committees has been that million dollars.

[Ehret Mottka]: And and that's that's that's great. There's there's certainly more that can be done, you know, appropriations wise. One of the things that was discussed for many years and has never really been implemented is a state statewide landlord risk pool, which I think would go a long ways towards enhancing some of the protections that landlords, you know, might be able to take advantage of when there's extensive damage to property and or, you know, many months of of rent owed. And I I should hasten to add that, you know, in my experience, it wasn't just, you know, as an advocate at the state house. I served for thirty years on the board of Northgate Housing, which is still largest affordable housing development in the state. And, on that board during my tenure, you know, we had to, unfortunately, evict, evict tenants. It is it is a reality that landlords face. So definitely seeing this issue from both sides. But like you said, madam chair, the the focus should be on on prevention. Yeah. The other thing that I would say, you know, we've heard from landlord complaints being a speedier eviction process that they might take units rental units offline, which, of course, we want to avoid during our, you know, continuing chronic shortage of of safeties and affordable rental housing or possibly convert them to short term rentals. I mean, think there are a number of measures that you could consider, obviously not this year, but in, you know, in in future years, you could increase or create tax tax or other incentives for landlords that keep their rent low, rent to low income tenants, households on section eight, measures that encourage long term tenancies and so forth. And I'll also note, you know, appreciate that you folks are not up totally up on the budget, but I know that there's been a consistent effort to increase the Vermont Housing Investment Program, which helps bring units back online that have been substandard or, you know,

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

[Ehret Mottka]: vacant in the past. I encourage that. I do have some some very specific comments and I'm mindful of

[Sen. Alison Clarkson (Chair)]: the time. Two minutes, Earhart. And if you want, you could also send those to us. We would all always appreciate your input. Yeah. And if you wanna email them to us, that would also be great.

[Ehret Mottka]: Appreciate that. And I'm I'm glad to see that you are focusing on, you know, situations that are extreme. I I know Chris Donnelly and other nonprofits have, you know, have been in to testify. I I I've seen these situations first firsthand from, you know, times when I've done property management directly. Also, you know, due to the issues that I'm sure you've read about at Decker Towers, the brilliant housing authority, you know, toured that and and understand, you know, met with tenants there and understand those I

[Sen. Alison Clarkson (Chair)]: would say Decker Towers was really was eye opening for many of us. We had a joint hearing with judiciary

[Unidentified committee member or staff]: Yeah.

[Sen. Alison Clarkson (Chair)]: Maybe three years ago, two or three years. That was that was

[Ehret Mottka]: When when I was still working for for Bernie, you know, I gathered the other housing the other housing folks from the other two offices and and we met with tenants there. We met with, you know, with management and serious you know, the problems were very, very egregious. So I encourage you to to work on that. I will say a couple things. One is

[Sen. Alison Clarkson (Chair)]: I need you, if you can, to incorporate those into written testimonies.

[Ehret Mottka]: Okay.

[Sen. Alison Clarkson (Chair)]: Because we have a legislative council on an extremely time, quite short time, short, short time frame. Yeah. And if you would be kind enough to send us your, those specific comments, that would be really helpful. Stay in

[Unidentified committee member or staff]: the As

[Sen. Alison Clarkson (Chair)]: you know, this isn't disappearing. And thank you for your comments. We're really grateful to have you weigh in. And I have to turn now to Cameron.

[Ehret Mottka]: Okay. I can do that. I can send you something early next I know you're in the waning days.

[Sen. Alison Clarkson (Chair)]: Would be great. And good luck with your dear spouse.

[Ehret Mottka]: Thanks so much. Appreciate that. Yeah,

[Sen. Alison Clarkson (Chair)]: yeah. Thank you Have so much,

[Unidentified committee member (possibly Sen. Randy Brock)]: a good day.

[Sen. Alison Clarkson (Chair)]: Bye bye.

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

[Sen. Alison Clarkson (Chair)]: Okay, Karen, we're gonna pivot from the landlord tenant bill, which we're gonna return to later in the morning. Are we returning to it late? No, we're not. We're now going to pivot to the housing bill, H. Seven seventy five, because we have not looked at the bill with all of its inclusions. And first, I'd like to say thank you to Daphne who's filling in for Kierra today. Really helpful to have you here today and very grateful. Thank you.

[Cameron Wood (Office of Legislative Counsel)]: Great. You like me to take it away? Cameron, it's yours. Okay. For the record, Cameron Wood, office of legislative council. I'm gonna walk through a draft 2.2 of a strike all amendment to seven seven five before I get started. I think this is the first time I'm doing a a full walk through of the amendment. I think I've mentioned this previously. Just as a reminder, what I've done is I've taken what you all passed in 03/28 and I've taken what the house general and housing committee passed in July, and it's just them. But the house passed at July, we've had to combine those two into this document. I've kept that's the request of the chair. I've kept certain sections that were in 03/28. You remember both bills were addressing housing targets and municipal plans, a housing element of a municipal plan requiring those municipal plans to include certain language about housing targets. We've gone with the senate version of that language. In some other instances, I've incorporated some of the changes that the house general committee has made 03/28 as president. So, will highlight those things as we walk in. Yes, sir.

[Sen. Alison Clarkson (Chair)]: Hold on.

[Sen. Thomas Chittenden (Member)]: Those meeting and questions. It's not much of 03/28. Are they now synchronized that same language? Here's Okay.

[Cameron Wood (Office of Legislative Counsel)]: Okay. So, I'm gonna start walking through, and, yeah, just send a request to share. And then I will try to piece the things but feel free to

[Sen. Alison Clarkson (Chair)]: Well, then it's not like this

[Unidentified committee member or staff]: is gonna be at the end.

[Unidentified committee member (possibly Sen. Randy Brock)]: Right. Right.

[Cameron Wood (Office of Legislative Counsel)]: Sorry. So first piece we have, the Service Supported Housing Advisory Council. This was in 03/28. It was not in July, so we brought that in. Not much has changed. If you recall, this is the council created for identifying how to, here on Sub A, increase alignment between human services programs and policies serving individuals who receive Medicaid funded development disability services. This is kind of building upon the work that your study committee did just

[Sen. Alison Clarkson (Chair)]: this And actually, good news is the money has got flown from the House to the Senate to the House. The

[Cameron Wood (Office of Legislative Counsel)]: change here, A, we've added in, or the House is wanting to add in this section, it's at the request of the advocates, and it's a section that says, When VHCB, requests, then the advisory council that's being created here would provide advice to VHCV regarding the expenditure of funds for the production of permanently affordable housing units for individuals who are eligible to receive Medicaid funded development disability services, so just allowing the HCV request the advisory council's advice on expenditure of their funds to support this population. And then in the annual report, there's an annual report from this advisory council. There's the inclusion of recommendation for future legislative action. This is gonna be on page three. Yeah. Adding in and funding sources. So my understanding from the advocates, this is one of the the most challenging pieces is how do you find dedicated funding sources? And so this is adding in to say, if the advisory council wants to recommend a dedicated funding source or funding stream, then that can be included in the annual report. And then line seventeen and eighteen, who are eligible to receive Medicaid funded development disability services. It's just a cleanup from the version that came out of the Senate to make sure that it's using the same terminology that's used above. And then lastly, I added in this provision of two. It's an annual report from the council. There's no sunset on the council, so ensuring that the report will not sunset or forward is expected to go right on.

[Sen. Alison Clarkson (Chair)]: And they are hoping that their work will be so well incorporated that they will be able to dissolve after 600 at least units of housing and service supported housing are built.

[Sen. Thomas Chittenden (Member)]: Did they leave that section, the three twenty eight that's going back to us?

[Cameron Wood (Office of Legislative Counsel)]: That language, everything that's there is in 03/28 as it passed the House General Committee. Four, the

[John Gray (Office of Legislative Counsel)]: state's

[Sen. Alison Clarkson (Chair)]: And if critical you'll also remember that VHCV, as we go through this, VHCV is a critically important partner on this. They have also found, as you may recall, some additional money that may be able to be used this year as a result of changes in the HUD eligibility requirements. It liberates some money that could be spent on exactly this kind of housing. So we're looking at actually being able to continue the pilot and working with that, which is great.

[Cameron Wood (Office of Legislative Counsel)]: Page four, moving into section two, we're talking about the state treasurer's credit facility now, and what you have here is this version is what passed out of your committee in 03/28. So it only includes the increase to 12 and a half, It doesn't include the 1% for off-site. It doesn't include the off-site pilot program that was in July. Those provisions are in 03/28 as it was passed out of House in general. It includes that 1% and off-site accelerator pilot program, but they're not.

[Sen. Alison Clarkson (Chair)]: So we have, and it may, those, we'll see what happens in the house because as you know, it's in ways and needs

[John Gray (Office of Legislative Counsel)]: Yes, ma'am.

[Sen. Alison Clarkson (Chair)]: This after and I can't remember if Alex spoke to this on the record, but a couple of things have happened with that off-site accelerator. First of all, no one owned that pilot. No one really that wasn't any one particular person's baby or department. It was a little bit of an orphan. And as we looked at it, it just struck us and that it was maybe not ready for prime time. It's a great idea, but it needs to be owned. And the other piece was that Alex Farrell's department, the Department of Housing and Community Development just literally give it didn't have the time to take this on. And given the cuts, sadly, and staffing, I would point that out as well, just lost capacity. They are working, as we all know, on 802 Combs, which is also a pilot. And that work, look forward to seeing the results of. But this I'm so naked without my earrings. The that is what is that is what's also led to pulling the off-site accelerator and the additional 1% facility. And Peter may speak briefly to this, but I believe that the treasurer that if if needed, if something came up that the that the funds are flexible enough so that they could be applied to some whatever kind of project might prop up in the intervening eight months that we're not meeting.

[Cameron Wood (Office of Legislative Counsel)]: There's nothing that stops the treasurer's office from utilizing this credit facility to purchase off-site insurance. Right. Okay. Thanks.

[Sen. Alison Clarkson (Chair)]: Are people okay with that? The pulling off-site accelerator and that you were a lot of you weren't very concerned about the risk with the 1%. Yep. Okay. Great.

[Cameron Wood (Office of Legislative Counsel)]: One other quick technical change on page five, it's highlighted here. When you look at this section about the credit facilities in D, it says that annually the treasurer shall submit a report detailing activities of the credit facilities established in sub section c, which is credit facilities regarding climate resiliency, climate infrastructure and resiliency projects. So we're just striking that. So now they would be required to provide that information on all of the credit facilities. Right. That what they're doing. Right. This is more just So a technical this was flexed reality. Right. Okay. Now we're moving into the Vermont Economic Development Authority. This language was in 03/28, believe me.

[Sen. Alison Clarkson (Chair)]: What was in Artville too? Oh, it got amended for Right.

[Cameron Wood (Office of Legislative Counsel)]: I believe it was in 03/28. Yeah. I believe it was in Vogue, but there was Oh, we've seen some concern about making sure the language was articulated exactly what the parties wanted. This is for VITA and the Jet Bay working together to allow VITA to utilize their funds to support multiunit housing development. So we've tweaked the language a little bit here to clarify the intent of those two entities. So what you have is with deference to BHFA, on applications that are eligible for financing from both the authority and the agency, The economic development agency can fund multiunit housing developments of five or more units when requested and jointly financed with a financing lender, except they cannot finance portions or phases. That's an inclusion there. Portions or phases of a multi unit housing development that VHFA determines is being primarily developed for occupancy by persons and families of low and moderate income. The point here was to make it explicitly clear that if it is an area that is being developed that's designed for low and moderate income individuals, that's the purview of VHFA and not the Economic Development Authority. So the authority shall not finance those portions or phases of multiunit projects. That should be under the purview of DHFA.

[Sen. Alison Clarkson (Chair)]: This is we just remind people that this is an additional housing opportunity for all housing,

[Unidentified committee member or staff]: particularly more for money. Right.

[Sen. Alison Clarkson (Chair)]: Yeah. More money in terms of bit more loads Yep. And but in partnership with what the HFA is doing. So this is what they have worked out together.

[Cameron Wood (Office of Legislative Counsel)]: This is the language that is now in both bills because it's been supported by both VITA and. So Okay. On to page seven, these next two sections are entirely new. We haven't discussed this or you haven't seen

[Sen. Alison Clarkson (Chair)]: this language at this point. We have heard the testimony from Mark Collins about why this is needed.

[Cameron Wood (Office of Legislative Counsel)]: Yeah. So this is about the Vermont Housing Finance Agency's Rental Housing Revolving Loan Program. This was a program that was created back in 2023. At the time it was created, it was put in session law. It was not put in statute. And I think the reason is that you there's the the language in the field that's created the program about they're not required to implement the program if funding wasn't provided. So I'm assuming at the time, there was a question about whether or not the program is actually gonna be funded. Right. And that's why it was in session law and not put in statute. At this point, the program has been funded. They have issued loans out of the program, and it is a revolving fund. So it is intended to go on presumably into perpetuity. So it was amended last year in Act 69. Yeah. And the request is to amend it again this year. So the first thing that I'm doing here is I'm putting the program in statute. Right. Because at this point, that's where it needs to be. Yeah. And so section four is articulating that it is the intent of this next section to codify in statute the Rental Housing Revolving Loan Program. Right. And then last sentence, loans issued through the program prior to 07/01/2026 when the language would go in statute shall remain in effect in accordance with the executed terms and conditions. We're not trying to, you know, question anything that's been done. We're simply transitioning everything over into statutory language. So then you get to section five, where I'm adding this under the Vermont Housing Finance Agency chapter entitled 10. All of the language remains the same as the program was created except the two minor amendments, it's not minor, the two amendments that were requested by IMORA last week.

[John Gray (Office of Legislative Counsel)]: Right, which

[Sen. Alison Clarkson (Chair)]: as you'll recall enables housing developers to use tax credits, which will be they can access. Well, they'll be eligible if they how great this is better. That they will be able to extend more drop the income eligibility and create more housing for more lower income for monitors with this tax credit.

[Cameron Wood (Office of Legislative Counsel)]: So what you see here on page eight, line eight, Currently.

[Sen. Alison Clarkson (Chair)]: That was really clumsily. Sorry.

[Cameron Wood (Office of Legislative Counsel)]: That's right. Currently, the the program is designed where it

[Unidentified committee member (possibly Sen. Randy Brock)]: has to

[Cameron Wood (Office of Legislative Counsel)]: be two or more units. At least 25% of the units have to be affordable to a household earning. Current language is Where you now? Page eight, line eight. Yeah. Affordable to a household earning between 65 Right. And a 150 percent of the applicable area median income, so you have a floor there, a household that's earning 40% of area median income. The program wouldn't be designed to build housing for those individuals. It is intended more for the phrase in the program is middle income housing. You look up here at sub A, it says the purpose of the program is rental housing developments that serve middle income households. So you are changing that to to say instead of between sixty five and one fifty, it just says up to one fifty. Right.

[Sen. Alison Clarkson (Chair)]: So it was between 65 then?

[Cameron Wood (Office of Legislative Counsel)]: Yes ma'am. And so then later, and when you get into sub 4A here, the bottom of the same page, This is what is the maximum amount of the loan that will be authorized and shall not exceed the lesser of, and then you have different calculations here. One of the calculations is a 150,000 per unit for each unit that is affordable to a household, and it was earning between 65 and 80, so you're removing that lower threshold again. So it would be So we're enabling Yeah. You are enabling them to fund projects that serve Lower income. Lower income individuals as opposed to the floor where it was designed for middle income.

[Sen. Alison Clarkson (Chair)]: Well, it still can be for middle income, but it opens up more opportunities for lower income. Yes, correct.

[Cameron Wood (Office of Legislative Counsel)]: Okay, those are the two changes that were requested by BHFA. There's another change, everything here that you see that's not highlighted, this is all keeping the language as it currently exists, as the program currently was designed. Right. And then you get to the very end of this section on page 11, subsection E, there was a requirement for an annual report, and what we've done is we've simply Incorporate it. Incorporated that into the annual audit report that they're required to provide to you every year. As opposed to two reports, let's keep it all together, consolidated Right. Into their That's the change there. Now we get to VHIP. There were changes in July as it came out of the house. This was not in 03/28. It allows the department to advance funding at the beginning of a project. When a project is being renovated through the VHIP program, currently, it's on a reimbursement basis. This would allow them to upfront the money for the project. That was in July. The change here, and this is in 03/28 as well, is last year, you all added in an annual report for the BHIP program. We did not put a date on when that annual report needed to be submitted. So, we're simply adding a date. November 15. Okay. So that's the bottom of page twelve and thirteen. Page 13, we're moving to special assessment bonds. This was in July. It was initially not in 03/28. I think John has walked through this with you all. Right.

[Sen. Alison Clarkson (Chair)]: And we had to do a a fix that we remember. We had John and Michael gone in last week, or was it earlier this week?

[Unidentified committee member or staff]: It's earlier this week. It's just the blade. Yeah.

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

[Sen. Thomas Chittenden (Member)]: So page

[Sen. Alison Clarkson (Chair)]: That's what this is, just to remind everybody.

[Cameron Wood (Office of Legislative Counsel)]: Page 13, section seven is the bonding piece. No changes to that section. When you get to the next, there's a section seven a and a section seven b where I've incorporated changes that John and mister Gone were discussing the other day.

[Sen. Alison Clarkson (Chair)]: And recall this enables us to use special assessment funds for sort of more sequentially so that we don't exclude the opportunity if you use a special assessment fund. It doesn't exclude your ability to access Chittenden or TIFF. So this enables it to be either more sequential or possibly all at the same time. So it's, yeah, we never envisioned it being an ex one or the other.

[Cameron Wood (Office of Legislative Counsel)]: So those are the two changes based on the testimony to the request that you all had earlier this week. Right. Now we get into section eight on page 15. This is regarding municipal plans, these next few sections. Municipal plans, municipal zoning. You recall this is where in the housing elements of a municipal plan, looking at page 16 here, housing element of a municipal plan shall include an analysis of regulatory physical constraint, preventing the development, redevelopment, or rehabilitation of sufficient housing to meet

[Sen. Alison Clarkson (Chair)]: the housing needs and targets.

[Cameron Wood (Office of Legislative Counsel)]: This is the version of the language that you all pass in three. Seven seven five pass language as well. There's what's different. This is the version that you passed three twenty eight and this is the version that currently exists three twenty eight now. Yeah, they incorporated them. They went with your language. And this was the language that was supported by the Regional Planning Commission to be. Right. Perfect. Thank you. Municipal zoning. Now, I will just pause here and say, these are not my areas. These are Allen's areas but I I can just at least comment on what they are because it's all of the language that you passed in 03/28. No changes. Right. So, first off, on page 17, this is the amendment that you all did on the floor regarding areas served by municipal sewer and water infrastructure. There were some changes to that definition that you made. Taking out the word state regulation or permits. That remains. It was in 03/28. It was not in July, so you were incorporating that back in. No changes from what you passed earlier this year. Then when you move to page 19, we have in section 10, this is where where there are year round residential development. You're adding in manufactured housing into the list of, you

[John Gray (Office of Legislative Counsel)]: know, kind

[Cameron Wood (Office of Legislative Counsel)]: of, you know, permitted housing types, if you So that was in both. It was in I believe it's in actually July, but it was also in 03/28, so we're keeping it here.

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

[Cameron Wood (Office of Legislative Counsel)]: Then you get to the next page, page 20, where you made some additional changes here, changing an allowed use to a permitted use, and then where there's a district served by municipal sewer and water infrastructure that allows residential developments striking the ability of the municipality to require more than four dwelling units. So this is all just bringing back in what we've done in 3.28. The highlighted language here on eleven and twelve is new. So this is, scrolling up to page 19, this is notwithstanding existing law, the following land development provisions apply in every municipality, and this is a restriction to say that no bylaw of the municipality shall require a duplex or multiunit dwelling with three units to be constructed on owner occupied bond. Where did this come from? This was a request of senator Rutland District.

[Sen. Alison Clarkson (Chair)]: So this is new to this bill? Yes, ma'am.

[Sen. Kesha Ram Hinsdale (Member)]: Do you want me to

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

[Unidentified committee member or staff]: Yeah.

[Sen. Kesha Ram Hinsdale (Member)]: So actually, I first when I first read this, I was worried it was like the opposite of what I was trying to do. It's like it's a little hard to read and and understand the intent. Can you hear me? Am I okay?

[Sen. Alison Clarkson (Chair)]: We're we're hearing you back.

[Sen. Kesha Ram Hinsdale (Member)]: Okay. This essentially says we want more ADUs and duplexes to be built in densely populated areas, regardless of whether or not the owner occupies the property. Many ADUs and other types of ancillary units that are affordable tend to get built by the owner when it is owner occupied. But it is an encumbrance for them to sell the property if the next purchaser does not plan to live in one of those units. So we I have been in ADU meetings in Burlington and have heard about the same phenomenon in Brattleboro where half the people walk out of the room. I literally experienced this. Half the people walk out of the room when they learn that if they want to build an ADU, they have to have it be owner occupied into perpetuity. That's almost impossible to achieve. So this would essentially allow more of the units we hope would be built through VHIP and ADU permitted use to be built without an encumbrance.

[Sen. Alison Clarkson (Chair)]: The I'm sorry. But ADUs using tax public taxpayer money do does at the moment require an ADU to be owner occupied. This is three units or less, but three units or more, which is slightly larger than just being adding a a single ADU onto a onto a house or into a house or on top of a garage apartment. And so maybe we could work on language that separated out three, less than three units would be required with public taxpayer dollars. Because we're trying to create long term housing, there's no guarantee that that'll be primary housing. And that's very important, I think, all of us, it's protectors of the public tax of the public purse to ensure that any units that are created using VHIP money are used for permanent residents, our long term long term rentals. But so

[Sen. Kesha Ram Hinsdale (Member)]: what we could say is into the We could either say into the perpetuity of the grant or loan, or we could say through the first owner, but it becomes a problem, a liability when they go to sell that property if the next person is required to live under the same condition.

[Sen. Alison Clarkson (Chair)]: Right. And I think we have competing goods there, though. And I think we could figure that out and think we just need language with Cameron to clarify that because this is in the VDIP section, yes.

[Sen. Kesha Ram Hinsdale (Member)]: But for example, in Burlington, where a lot of these ADUs might be built or even a duplex ADU, which is why we get up to three units, the Burlington requires that a rental be thirty days or longer. They already meet our existing definition of a long term rental. More communities could layer on top of our building incentives, their own municipal regulations about short term versus long term rentals. And then we would achieve our policy goal.

[Sen. Alison Clarkson (Chair)]: Right. Well, let's work on this because I think if we need to clarify if they're using VET money that they're they're it's limited to the length of the the lien or the loan repayment or the grant, I think if there's Forgiveable loan. We need to limit limit, we can certainly put a timeframe in, but I think it needs to be, I think we need to clarify that. So let's just keep working on that piece, but I think on the whole, is a good idea.

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

[Sen. Alison Clarkson (Chair)]: thank you. Keep going, because I know Cam, we're losing Cam in three minutes.

[Cameron Wood (Office of Legislative Counsel)]: Yes, okay, so the next section is the Reader Assistance Heading State Community Investment Program, this is making accreades to the downtown and village centers under this program. If you'll recall, this was in 03/28, it was not in July, so we're bringing this right back in with no changes.

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

[Cameron Wood (Office of Legislative Counsel)]: Now, common interest community report, this was in 03/28, so it's still here, and it would require the the two two amendments to the report overall.

[Sen. Alison Clarkson (Chair)]: Go ahead, what page are

[Cameron Wood (Office of Legislative Counsel)]: you on? I'm on page 22. Yeah. The bottom of page 22. So the report requires our office, it as it came out of this committee said, outlining it's on line 18, outlining any legal issues related to requiring common interest communities to authorize the same authorized commercial purposes, etcetera. On the house side, there was a request to add in to outlining legal, conventional financing, and funding compliance issues related to requiring common interest communities. And so I'm okay with that language, but, you know, to be clear, I'm an attorney, not a banker. So I'll be reaching out to externals to ask them what are some of those financing limitations, and then I would just be incorporating those into the report the best I can. So I'm wanting to make sure I'm clear on what the end product is gonna be

[Sen. Alison Clarkson (Chair)]: Hopefully, you have lots of experience.

[Cameron Wood (Office of Legislative Counsel)]: No doubt. And then on the line excuse me, page 23, lines three and four, incorporating in the the bill five thirty seven. If you remember, it came over to you. It was about common interest communities and requiring the installation of vegetable gardens. You've incorporated that into the report here.

[Sen. Alison Clarkson (Chair)]: It's another common interest community discussion and we thought would that CAM could incorporate that.

[Cameron Wood (Office of Legislative Counsel)]: So this report is in 03/28 currently it just doesn't include this subdivision report. Right?

[Sen. Thomas Chittenden (Member)]: I'm not sure. Yeah. But okay. That's to go. But were we comfortable with that vegetable bill requirement?

[Sen. Alison Clarkson (Chair)]: Weren't I don't think we were comfortable with it as a standalone. And so because we knew he was undertaking this study of common interest communities, that fit into that study.

[Cameron Wood (Office of Legislative Counsel)]: This is just adding into the report.

[Sen. David Weeks (Clerk)]: Yeah. His thoughts may be positive or negative. Yeah.

[Sen. Alison Clarkson (Chair)]: Yeah. But I think it belongs in as we're looking at all the issues that this is one of the issues, and thank you to the house for identifying for them.

[Sen. David Weeks (Clerk)]: Yeah, we can study vegetable gardens. We can't study limited access highways. It's just a no. Did they

[Sen. Alison Clarkson (Chair)]: strip that? Yeah, just, just.

[Sen. Thomas Chittenden (Member)]: Was that a back end?

[Sen. David Weeks (Clerk)]: Yep. Are these vegetable gardens in one

[Sen. Alison Clarkson (Chair)]: foot? They're all important because you

[Sen. Thomas Chittenden (Member)]: have to

[Sen. Alison Clarkson (Chair)]: get what you grow in your vegetable garden to market on 22A.

[Cameron Wood (Office of Legislative Counsel)]: Okay, the last one is the farm worker housing report that you all included and there were some changes requested by the Vermont Housing Conservation Board on the house side, so I've incorporated this here. They're highlighted. So it's on or before January 15, the Vermont Housing and Conservation Board shall submit a written report to the general assembly with information on the progress made towards meeting the goals identified in the farm worker housing needs assessment. I think their concerns were, as the language initially came out, they were concerned that they would have to do the report again or somehow, you

[John Gray (Office of Legislative Counsel)]: know, while, you know, kind

[Cameron Wood (Office of Legislative Counsel)]: of an amended report. And the request here is to submit information about progress made to the recommendations that were in the report that they initially did. Right. Certainly a unique reason why we

[Sen. Alison Clarkson (Chair)]: have to-

[Sen. Kesha Ram Hinsdale (Member)]: And so this-

[Sen. Alison Clarkson (Chair)]: Wait a minute. Wait, David's asking a question. Okay.

[Sen. David Weeks (Clerk)]: Why we have to call out this specifically? Can we get an annual housing report that has multiple categories?

[Sen. Alison Clarkson (Chair)]: Yes, but this, and I don't remember why this was called out, but we'd have to have GHC.

[Sen. Kesha Ram Hinsdale (Member)]: It was natural resources. Yeah. So Okay. Do you want me to answer that? So when Natural Resources amended our bill on the floor, they originally wanted to have the farmworker housing piece in to get the update as well. I mean, don't know. I think it should probably go to agriculture and us, but they wanted to focus on that language, I honored that. But I think VHCB understands my intent that I explained in our committee, you know, as this was first passing, that going forward, we also we look at all on farm housing as a public good. There were a lot of farmers who do not have farm workers and need to build an ADU or a small dwelling unit for themselves or their family. We should also care about that because farmers often don't make a lot of money. So I think they understand my intent and what I'm trying to make sure I understand is in the past, going looking at the past, we'll keep using the farm worker language for what is coming to us, and in the future, we will start to use on farm housing as our description.

[Cameron Wood (Office of Legislative Counsel)]: That's the last change I will comment, why farm workers highlight. It initially said on farm and housing analysis, farm worker housing. Right. And, madam chair, with your permission Yeah. I will vacate the chair because

[Sen. Alison Clarkson (Chair)]: that's Yes. So more to follow, and we're gonna shift gears. Thank you, Cameron. We gotten through it. Effective date, it's the only thing we didn't get to, and that is twenty twenty six, July one. Yes, ma'am.

[Unidentified committee member or staff]: Thank you. And back later this morning. Right. Thank you. Thank you.

[Sen. Alison Clarkson (Chair)]: Who's this from? Like, I'm looking at the.

[Unidentified committee member or staff]: Thank you. Yeah. I mean, everybody tries to Yeah. So

[Sen. Alison Clarkson (Chair)]: I sent gave you the sister state.

[Unidentified committee member or staff]: Thank you. Okay.

[Sen. Alison Clarkson (Chair)]: So that gives you all the countries, the sister cities, if you feel like mentioning.

[Unidentified committee member (possibly Sen. Randy Brock)]: One of the issues, of course, is whether Blue Water arrangements will constitute sister states in the same term, and were they actual cholesterol to me.

[Sen. Alison Clarkson (Chair)]: I I wouldn't agree about it. I'm never worth I would just say

[John Gray (Office of Legislative Counsel)]: I don't think that one issue is But just back to one form of language.

[Sen. Alison Clarkson (Chair)]: Thank you. Okay. Kesha, are you able are you coming in, or are you are you staying remote?

[Sen. Kesha Ram Hinsdale (Member)]: You will see me walk by the window in a second. I'm here.

[Sen. Alison Clarkson (Chair)]: Great. Good. Okay. We're going to start. We've had Kesha has asked that we consider amendments to CHIP. As you know, I have challenges with this because our process had been in agreement with Betsy who asked for this in January, testimony from Jessica asking for no changes. The House and Senate agreed to no changes to CHIP for the first year of its operation. It's only been alive for three months and the guidelines have only been in place for five. So this this is a request to open up a chip and to make these amendments. So I think we are reviewing at least listening and hearing what the amendments are and what their implications are. Here she is. So if you wanna just begin with an overview of what these amendments are, and then we'll have John walk through them. Yes. We have until 10:00. Okay. And so if you begin with what they accomplish and who they're accomplishing them for

[Sen. Kesha Ram Hinsdale (Member)]: So that would be great. Yes. So on my way in, I think I heard there was already a CHIP slash TIF

[Sen. Alison Clarkson (Chair)]: technical No. There's a special assessment. There is a special assessment improvement. That is not opening up the CHIP program. So so don't build on that. That's not being

[Sen. Kesha Ram Hinsdale (Member)]: Well, it now makes any technical fixes germane. So that I I don't necessarily feel the compunction to talk about why it's relevant in a housing bill to make the kinds of changes to CHIP that allow housing to take housing project to take advantage of CHIP this construction season. I I hope Jessica will confirm or Betsy I asked Abby Duke if she would come. Do we have the for John's language? These are known technical issues to the rollout of the Chittenden program that when the dust settled on the conference committee at the end of last session, it was very clear that we had incongruency in the law that would make it hard for large housing projects to take advantage of the CHIP program. The attorneys involved, the developers, the municipality have all been relaying this to Betsy since last summer. I respect Jessica and Betsy greatly. They did herculean work to get the guidance out and follow the intent of our final conference committee agreement, but it left some technical holes that if not addressed, will stop large housing projects from taking advantage of CHIP this construction season. So with that, I'm I'm happy to have John walk through them. I I can't think of my goal with any housing bill is to get housing bill as quickly as possible with under the intentions that we have. The other thing I would say is I've been I started a conversation with Senate Finance about the definition of a non primary residence and the definition of a long term rental because those need to be congruent everywhere in the law. We can't constantly change what those definitions are in different places and expect people to comply. And that's exactly what would be happening if we passed the house waits and needs version of h nine fifty five. Yesterday, we voted on h nine thirty three. It has largely the definition of non primary residence that came out of this committee with one technical change for bona fide landlord relationships for the one that LLC, we think, might have rented to itself. But that is the definition that we created for what a non primary resident is. If we keep getting changes in other areas of the law for what a non primary resident for long term rental is, our laws become incongruent and hard to follow, our nation care about that. So with that, these are the technical changes to Chittenden that are now germane to the bill.

[Sen. Alison Clarkson (Chair)]: Maybe that is a decision for this committee. Special assessments are something we approve and work on. Special assessments

[Sen. Kesha Ram Hinsdale (Member)]: are are different. It's a decision for the whole set of

[Sen. Alison Clarkson (Chair)]: different it's a decision for the community. So, John, take it away.

[John Gray (Office of Legislative Counsel)]: Hello. John Gray, opposite of legislative council. It is a beautiful Friday morning here. It is.

[Sen. David Weeks (Clerk)]: Let's do it. My daughter's

[Sen. Kesha Ram Hinsdale (Member)]: bed. My son came back. It's very cute.

[John Gray (Office of Legislative Counsel)]: It is very nice this morning, Fabienne. Okay, I am going to walk through three short pages with some changes I'm gonna try to describe, what I take them to be accomplishing. I will also try to remind you to fix it that I can of how Chitt works. I hope that much of that is fresh in your mind because of how recently Chitt was passed, but I also know that this has not been a subject of discussion up to this point, so I realize that a lot of this may be unfamiliar. Or just need to be reminded. Exactly. CHIP broadly is a special kind of tax increment financing program, and you can think of it, TIP districts are a larger geographic area. Chip proposals have an analog to TIF districts, which is the site in which you set the OTV. You determine the growth in property value, and then you retain an increment that, the revenues from that growth particular percentage, some because of the ad fund. You retain a particular percentage, and you use that to finance improvements. That's the definition you see here. Chittenden, which is what we are looking at. The analog to the TIP district is the housing development site. It's the parcel or parcels on which a housing development that is stimulated by the construction of infrastructural improvements happens. The housing development site is the discrete site where the OTP is set. You have the increase in property values, hopefully, and you receive an input on that basis to finance the cost of the improvements. You may recall that the improvements themselves, which are infrastructural improvements, may occur off the housing development site, but the idea is that they stimulate the growth of that housing development mechanism. That is high level what SHIP does, and we can talk more about some of the details as we go through, but it's particularly relevant to the first change that you see here. So this is the definition of improvements, which is a definition in chip. It's also a definition in tip, but this is specific to chip, and you can see that the first line of this, improvements means the installation, construction, or reconstruction of infrastructure, I'm just gonna pause there. Improvements are infrastructure, right? There is sub B, which speaks to a technical piece related to funding debt service interest payments. That's because at the start of a project, you might have insufficient increment to actually cover those first financing costs. That's not touched here, just reminding you that that's in this piece.

[Sen. Kesha Ram Hinsdale (Member)]: Can I pause to make is this online?

[John Gray (Office of Legislative Counsel)]: It is now. It is now.

[Sen. Alison Clarkson (Chair)]: It is now. Okay.

[Sen. Kesha Ram Hinsdale (Member)]: I think a lot of

[John Gray (Office of Legislative Counsel)]: people wanna I think Daphne posted three minutes ago or something, so it just improvements under CHIP has a particular purpose of requirement. I'm gonna talk about the existing law, so that'll be me ignoring the strike through and the underlying. Under current law, there's a purpose constraint, the installation, construction, or reconstruction of infrastructure that will serve a public good and fulfill the purpose stated in section seventeen seven. So the purpose, you'll recall, CHIP that's stated in 19 o seven is to encourage the development of primary residences for households of low and moderate income across both rural and urban areas of Vermont that would not be created but for the. So put simply, encourage the development of primary residences for low and moderate income for renters. The thing to note about that existing law definition is that it requires a two part check. It's not just the check on section 19 o seven. It's also this broader construct of that will serve a public good. That's why you have an and between the two right. It's that will serve a public good and the purpose, centered in section 19 o seven. This was certainly a subject of discussion during the conference committee last year, and this was something that came up during the guidance. So if you are interested, I can flip to the guidance that Chitt released that speaks to so you can maybe see part of some of

[Sen. Alison Clarkson (Chair)]: the thinking around this. Why don't you do that after we go through all the amendments, and then we can go look at the guidance as it currently exists?

[John Gray (Office of Legislative Counsel)]: So that's existing law. The change that you see here is to strike that and fulfill. Right? It it removes the and condition, and basically what this is saying is I'll just read it through and then say what I take it to do. Installation construction or reconstruction of infrastructure that will serve a public good by fulfilling the purpose stated in section nineteen oh seven. The way you can think of this, instead of having the dual check, it encourages development of primary residence for low and moderate income and fulfills some public good. It says the public good is served, is met by fulfilling purpose of the section. It makes it a single check. You just look to nineteen oh seven, you say, did this encourage the development of low and moderate income housing? Then you're satisfied. It removes a double check and says, Just look to the purpose. That's the only purpose. It needs to be long lived proofless. That is the first change.

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

[John Gray (Office of Legislative Counsel)]: Okay. Scrolling down to related costs, and before I read this again I'm going to try to remind you of what we're talking about here. Under tax increment financing programs, increments can only be applied to certain kinds of things. The classic thing you would most expect is the financing. You're covering the cost of financing. You take on debt. You cover that with the increment. But it can also cover some other things. So one is if you could make a direct payment to the project to just outright reduce the cost and therefore potentially lower the cost of financing. That's something you could do with the increment. The last thing that you could do with the increment, so financing, direct payment on the project, the last thing that you can use increment to cover are related costs. So related costs are the sorts of things that you might expect not to be captured by bonding for capital purposes, right? And I'm just gonna read through what you see here. Related cost means, and again, I'm gonna ignore the new language I've just talked about existing law, means expenses incurred and paid by a municipality exclusive of the actual cost of constructing and financing improvements that are directly related to the creation and implementation of the municipality's housing infrastructure project, including reimbursement of some supremacy advanced. So we can talk about the other pieces here, but basically, it's things outside of the direct cost of constructing and financing, but they are directly related to implementing the project itself. It could be personnel costs, maybe design, you know, certain other things you might not expect to be captured in the indebtedness. Yes, Tom.

[Sen. Thomas Chittenden (Member)]: Thank you for doing this language. I definitely like all the emails I'm getting. This one, I have a question about concern about approving self healing. Is this, gonna open the can of worms that if a sponsor developer can charge whatever they so want, then submit that bill to be reimbursed from these public funds without a controller or check by the municipality? Do you see an opportunity for exploitation? I think you Let me first say what the language does, and then I will try to

[John Gray (Office of Legislative Counsel)]: answer your question. So the language change is related costs means expenses incurred and paid by a municipality sponsor or developer, so it's adding to the bucket of related costs that could be covered by increment, those incurred by the sponsor or developer. This does expand what you can apply the increment to. It does expand it to include costs that those sponsors or developers, it could be the same person, incur outside of the actual construction cost. I can't anticipate what sorts of things they might try to charge as related costs. Again, at the end of this I can flip to the CHIP guidelines, which I haven't thought through a lot, but we can just pull them up to see the sorts of things. They have a list of examples of kinds of related costs, and maybe it will be helpful to look at that list just to see what might be covered. Approve it. Right?

[Sen. Alison Clarkson (Chair)]: Let's just, yeah, I just guess we'd finish this and then let's do that because then we can compare.

[Sen. Thomas Chittenden (Member)]: I just wanted to who would approve the sponsor developer related costs. Would they be municipality, FC, or are they just self approving whatever they spend on the project?

[Sen. Alison Clarkson (Chair)]: That's a good question.

[John Gray (Office of Legislative Counsel)]: The municipality is not approving these in any I independent have not had a lot of time to think about this, but I would hope, I guess hope is maybe a bad word to use, the tax increment financing plan that you have to submit to create the project should account for the sorts of things that you're applying the increment to. Right. And so I think you might reasonably expect that the tax increment financing plan, which does need to go out at least on notice to the public, they wouldn't have a as you know, the vote provisions are a little different for CHIP than for CHIP because for CHIP districts, it's always the muni bonding, and so there's always a vote on the bonding here. For CHIP, because the sponsor can take on the financing, that doesn't require a public vote, but there are notice provisions including that the tax increment financing plan would go out, and you might ex I think you would expect that these sorts of costs to show up in the tax increment financing plan. I don't readily know how it would work in practice, but that is just my quick guess as to how it would

[Sen. Kesha Ram Hinsdale (Member)]: And when I think of, like, the auditor coming into finance and saying funds were commingled or pulled from the raw pot, etcetera, I think this would make it more transparent, and they would have access to more information about who's incurred while hot. It wouldn't have, like, a lump sum happening in El Municipal. They could

[Unidentified committee member (possibly Sen. Randy Brock)]: potentially add additional costs, so.

[Sen. Kesha Ram Hinsdale (Member)]: Is that correct? They could add additional costs to the project.

[Unidentified committee member (possibly Sen. Randy Brock)]: And presumably, are requirements will be

[Sen. Alison Clarkson (Chair)]: We could always have Tim Ashe come in and weigh in.

[Sen. Kesha Ram Hinsdale (Member)]: Well, I think, and what it's saying is, you know, if it was just the municipality, often they have to do a public engagement process or something like that. And this could mean that the developer pays that cost instead because the whole credit accreditation of Chittenden is that we finally have developers who will partner with the community when there's no capital upfront.

[Sen. Alison Clarkson (Chair)]: Right. But this enables the expenses that would normally be incurred by the municipality to be The whole Chittenden. This up considerably to allow related costs to it means that the developer will and the sponsor will be able to keep more of that and No. Keep more of that. Use more of it. We'll talk talk about what

[Unidentified committee member (possibly Sen. Randy Brock)]: the guidelines are, what is included, and what kinds of costs are appropriate and have

[Sen. Alison Clarkson (Chair)]: an incentive, but that's important. Let's keep moving because we just have 20 So five

[John Gray (Office of Legislative Counsel)]: that is the change to related costs. Speaking of the struck municipalities municipalities throughout throughout the the year, I think this is just what you would expect to be struck when you're expanding to include the sponsor development. So directly related to the creation and implementation of the housing infrastructure project, you could actually leave the municipalities there. It doesn't really matter. We know what you're talking about. And then you can see the obvious reason you would strike the language on 16, including reimbursement of sums previously advanced by the municipality. In this case, because you're expanding to include sponsored development, it could include reimbursement of sums previously advanced by book the sponsor for development instead of just the municipality.

[Sen. Kesha Ram Hinsdale (Member)]: If you've actually been close to the TIF process, which I was in Burlington, the the city extracted money from the developer to pay for their attorney costs, their public engagement process, etcetera. And this would actually just do a better accounting of all the money that was spent to develop the project. Otherwise, there's a lot of, I would say, more informal agreements where municipalities take the money from the developer to use without that being considered fully.

[Sen. Alison Clarkson (Chair)]: Well, it just means it also it also means that the developer would keep those related costs to pay for what they were directly paying for.

[John Gray (Office of Legislative Counsel)]: Yeah. There's there's all sorts of things that could happen. It could result in just a shifting Exactly. Of the way the costs are covered. Right. It could also expand the kinds of things that are covered, but it depends. The questions that will help you to answer

[Sen. Kesha Ram Hinsdale (Member)]: this are really empirical rather than Right. And it's transparency. Let's keep going.

[John Gray (Office of Legislative Counsel)]: Okay, page two. We are now shifting to the housing infrastructure agreement. You will recall that this is the agreement, the contract that memorializes the arrangement between the municipalities, the sponsor, and the developer, and it may be that the developer and sponsor are the same entity, in fact, most cases they might be. So this is the contract, and this is where a number of conditions are included related to core purpose program, including importantly what you see in Subdivision 4 here on line nine. So again, I'm gonna start with existing language and then we'll talk about the changes. So in the housing infrastructure agreement, what you see is that it shall provide that any housing unit within the housing development, that's what's stimulated by the improvements financed through CHIP, provide that any housing unit within that development be offered exclusively as a primary residence till all indebtedness for the housing infrastructure project of which development is part has been retired, and it gives a condition on how you would show that on a regular basis. It says condition shall be satisfied by biennially providing a landlord certificate or claims set declaration. So just to sum it up quickly, it's saying that for the duration of the debt, the CHIP project, housing units can only be offered as primary residences. I'm sure you'll recall the discussions around this at the end of last year during the conference committee. There were folks who wanted this to be in perpetuity. There were folks who wanted no restriction on primary residence, thinking that you're just trying to generate housing. The compromise that was arrived at in the conference committee, as I recall it, was this until all indebtedness is retired. The new condition that you see here on line 10

[Sen. Alison Clarkson (Chair)]: Well, it was a balance between in perpetuity and not at all. Sure.

[John Gray (Office of Legislative Counsel)]: Provide that any housing unit within the housing development offered by a sponsor be offered exclusively as a primary residence. What this is saying is the restriction essentially would not apply to any downstream purchasers. Under the current CHIP program, you would expect, I think, covenants or conditions to be created at the point of transfer such that no one could offer, keyword is offer, residence as anything other than exclusively as a primary residence. With this new addition, the sponsor, who presumably is owning the housing development in the first instance, is required to offer the housing units exclusively as a primary residence, but at the point that someone purchases it, that condition would go away and they would have the option of selling not as a primary residence.

[Sen. Kesha Ram Hinsdale (Member)]: But the other thing we should take into account if we create a definition of what an ongoing non primary resident is, is that person themselves could have a sick family member in another state or something like that and decide to use their own home as a non primary resident, and we shouldn't be interfering in that decision. And and the developer has no ability to interfere, so it's not enforceable. However, this enables a sponsor or developer to simply flip a a No. It doesn't. Yes. It does. No. It does. It's not with our definition of what a property transfer tax primary residence is.

[Sen. Alison Clarkson (Chair)]: I we'd have to review that. But my understanding of this as I look at it is that it it shortcuts, creates a loophole for moving out of having a primary residence, which is what we're using public taxpayer dollars for to create more full time residencies for our We're

[Sen. Kesha Ram Hinsdale (Member)]: looking to create housing units at the time of units for full time for mothers fault.

[Sen. Alison Clarkson (Chair)]: Public money. I I think this create this we need to look at this closely. This is not a technical change. This is a major change and is something that needs much consideration looking at the purpose of why we spend public taxpayer dollars.

[Sen. Kesha Ram Hinsdale (Member)]: It's a technical change in that the developer cannot control what happens to the unit after they sell. Betsy would probably tell you the same thing. Unless we're looking in people's windows, we're looking through their tax filings in the future, there's no way to enforce the uncarefully written language from the conference committee. Perhaps, let's keep moving.

[John Gray (Office of Legislative Counsel)]: So that is the change there. I'm gonna skip over this six now and I will come back to it in just a second because it's gonna make more sense after I go over the next section. You If would like me to read it now, can, but I think it will make more sense

[Sen. Alison Clarkson (Chair)]: Yes, to I think so, yeah.

[John Gray (Office of Legislative Counsel)]: So I'm gonna go to page three. This is amending the section describing the tax increment for the CHIP program. You'll see here that the existing language describing the uses of tax. We've already talked a bit about this, the application exclusively to financing, related costs, and direct payment on the projects. What this says is that a municipality may apply tax increment pertaining to percent of the sub cap rate to debt incurred within the period, that's your financing, for related costs, and to the direct payment of the cost of the housing insured property. We've already talked about that, so that's your that's your uses of tax increments, and then it describes some particular conditions related to these. A municipality may provide tax increment to a sponsor only upon receipt of an invoice for payment of the financing, and the sponsor has to confirm to the muni once that tax increment has been applied to the financing. So that's one of the checks on ensuring that the increment is going to the permissible purpose, being applied directly to the financing. Any direct payment shall be subject to the same public vote provisions as applied to debt. If that's an option that the municipality likes to take, they seek to vote on providing that directly. You might imagine that that would be presumably less of a concern for voters, because presumably it reduces the cost of taking on the bond of the person. The new language that you have in front of you says that a municipality may provide tax increment to a sponsor as a reimbursement of taxes already paid, or as a credit against taxes due and payable. I will try to describe what I take this to mean. As I understand it, this is intended to fit within the existing uses, meaning the sponsor is allowed to apply the increment exclusively to financing, and it's trying to describe the form that the payment would take to the municipality. Instead of the form of a payment that is then applied to the financing, they essentially just receive a tax credit that reduces their tax liability. I will say that I struggle a little bit with this one because I understand the economic argument that money is fungible, and in providing money in the form of a credit, you reduce the cost for the sponsor and therefore presumably reduce the cost of financing the project, or maybe the money arrives in a different way that's advantageous to the sponsor, I don't know. But it's harder for me to see how that is applied to the financing. If you're providing a credit that reduces their liability, it could be that they end up with the same amount in dollars that you would have provided as a payment, but I don't see how it's applied to financing. It's in the form of a credit.

[Sen. Alison Clarkson (Chair)]: But is that a piece of the stackable understanding of what as we look to how we finance these huge projects?

[John Gray (Office of Legislative Counsel)]: I think it's kind of a policy question as to how you want to promote. Yeah, exactly. I do want to note that the word financing is a technical definition under CHIP, and it means essentially debt. I just want to make sure we don't equivocate and say, This will reduce the cost of financing the project, and that means you're actually lowering what would be taken on in debt, when the point here is that you only apply the increment to the debt. That said, it's easy What to would

[Unidentified committee member (possibly Sen. Randy Brock)]: you do with that? Is there a specific purpose or benefit for I the

[John Gray (Office of Legislative Counsel)]: don't know. I don't know.

[Unidentified committee member (possibly Sen. Randy Brock)]: So you don't, it was not explained to you by whomever asked this.

[John Gray (Office of Legislative Counsel)]: No, but on all of these it's likely helpful to hear from the advocates as to how on the ground this impacts them, but this is one where, yeah, I just don't understand how it fits with the application to the increment, but I sort of get the economic argument that you're just providing payment in a different form. I would suggest that it is the route we go, we would need to learn more about.

[Sen. Alison Clarkson (Chair)]: Right. Yeah. And Thomas, and then explain to John how this fits into six on the page before.

[John Gray (Office of Legislative Counsel)]: Yes. I'm sorry about that. Okay. Thomas.

[Sen. Thomas Chittenden (Member)]: No. No. Please continue that. I wanna go back to the previous company.

[John Gray (Office of Legislative Counsel)]: Yeah. So six says that the housing inventory agreement should describe how the municipalities will provide tax increment to a sponsor. It is tied to that request for providing it in the form of the tax credit. It's basically saying, memorialize in the contract the kinds of ways that you could pay out the increment, and it could be that you're providing it under this language in the form of a credit or reimbursement for taxes paid. Under the reimbursement for taxes paid, there's likely something technical that I am missing. I would assume that that you wouldn't need to describe reimbursement for taxes paid because you could just provide the tax increment. That's one I just think you would need to think a lot more about how it works, but those are the changes I'm gonna go the sort question.

[Sen. Thomas Chittenden (Member)]: Can I go back to the previous point on the forcibility of primary residence for individual? I I was not in the Canadian conference, but I'm wondering if in your in your discussions last year, I I take the concern that this could be sold initially and then just flipped and then been used as, a vacation home or ski home. We don't want public dollars used for that. I still think we're just building houses that won't pay taxes, so it's not the end of the world. But did you discuss some deep covenants or liens or other ways to try in the because this is new housing to put it because those things are pretty darn effective. So if it's something in the need that this has to be used as a who enforces it as secondary consideration. But if it's in the DS, we think something could violate it, that would have any owner in the future have to abide by it, but otherwise bear

[Sen. Kesha Ram Hinsdale (Member)]: So so bear bear with me because this is It's unclear. I think we have to get pets sorted out. It's unclear also because of our own actions this year. So if we we have set a definition of a non primary residence in the property transfer tax language, that is, in my mind, the first place we have that repart definition. Okay? I like that definition. But the one that passed yesterday in h nine thirty three, what is coming to us in h nine fifty five changes the definition of a nonprivate residence and then requires that a lister try to determine with somebody if the use that year beyond the owner who's sharing their landlord certificate or their Homestead declaration requires that someone verify whether or not in that year it's being used as a primary noncredit residence. Now I will I gave you the definition that we've used already in law because that's incredibly hard and invasive to achieve. It creates a whole new definition of what's considered a long term rental for a non primary residence that does not is not predicated on what the the task payer provides you, which is a landlord certificate or a homestead declaration. So if we are going again, I've said this all session. If we are looking in people's windows to see how they're using their home, that's the only way you could enforce a primary residence definition that meets the new ways of means definition that they have forwarded, which I disagree with that's in that 55.

[Sen. Thomas Chittenden (Member)]: Enforcement is one thing, but I think people want to do and abide by the laws. Right. It did come up that it could potentially require that the deed's position of housing be that this

[Sen. Kesha Ram Hinsdale (Member)]: So what I I I don't know if this showed up in any of the conversations John has had, but the the the alternative approach is we basically said I mean, this is where the more we try to define things, the worse we are off. We said at least 40% of the project has to be housing. Right? The developers and attorneys are trying to say, the other 60%, does that need to be a laundromat or could that be nonprimary residences? We shouldn't push for commercial development in the other 60% of a project when our intent was to get the 40% to be housing. That could be housing, a coffee shop, and a flexible number of non primary residences after sold. Now what I will say as a housing passionate housing policy at squirt is also that the more dense you make the housing, the less likely you are to get nonprimary residences that are continually used as as luxury step in homes. You have people who might age. They might move to Wake More Oven and rent their place out, etcetera. But you need to let people make their own life decisions privately. And a developer and a municipality cannot enforce a bonafide land bonafide non primary residence into perpetuity, which is what the language was last year, that the the house and that no housing provider could enforce. So any I'd really love to have you go to the guidelines Sure.

[Sen. Alison Clarkson (Chair)]: So that we can look at these requests in context with what exists at the moment.

[John Gray (Office of Legislative Counsel)]: Yep. Happy to do that. And to your question, Senator Chittenden, that was the discussion was related to deed restrictions and covenants. And I would just note that the restriction is for offering exclusively is the condition. I am not an expert in this area to know how people built this in, but that is the restriction, and that was certainly what came up during the opportunity. So this we might see in the guidelines, so I'm gonna flip to this. So there's a bunch of things here. This was something that Betsy quite quickly put together. It got out for that November 15 deadline.

[Sen. Kesha Ram Hinsdale (Member)]: Well, had

[Sen. Alison Clarkson (Chair)]: a whole task force. I mean, it wasn't I mean, I'd say it was actually very thoughtful.

[John Gray (Office of Legislative Counsel)]: I I sorry. I didn't mean that to suggest

[Sen. Alison Clarkson (Chair)]: that It wasn't just was quick. I mean, they had a whole task force dedicated to this, and it took several months.

[Sen. Thomas Chittenden (Member)]: Yep. So

[John Gray (Office of Legislative Counsel)]: I I meant to say that they responded quickly to

[Sen. Alison Clarkson (Chair)]: the Yeah. I would would say hep c stood up a new program in this state in an incredible time frame. Sure. They we asked a lot of them. They stood it up very fast, and we have it up and running. It's been up and running since January. That is incredible. We seldom see programs set up that quickly that are this important this this quickly. So I'll

[Sen. Kesha Ram Hinsdale (Member)]: Because we know people wanna take advantage of it for this construction season while there's other housing exemptions in place that we passed. And I would add, they are doing their best to be to to achieve fidelity to what we passed. And they have known for several months, and I'd be happy for them to attest, characterize this themselves, that this is a non enforceable component of the bill. And they sort of wanted to just see how the projects come forward and figure out how to deal with it, but that's not good policy, and that's our fault.

[Sen. Alison Clarkson (Chair)]: I'm not sure it's not good policy. I support primary residents with public dollars. So I I think they tread that line, and I think they did a good job. And I think that this is one of the reasons

[Sen. Kesha Ram Hinsdale (Member)]: They didn't do anything. They they met the spirit of our law. Yes. So Thomas and John.

[Sen. Alison Clarkson (Chair)]: Okay. We could walk through some some of the changes. It's just good to just see where what the current law is.

[John Gray (Office of Legislative Counsel)]: Yeah. So the things I really wanted to point to are pieces that are related to the language that you had in front of you. If you'll recall that the one of the first I think it was the first piece I walked in and walked through with the new language was related to the definition of improvements, and I talked about that dual check, fulfill a public good and the purpose of the subchapter. And so the current CHIP, the CHIP guidelines that you see from November, reflect that public good piece. You are likely asking the question, what is that? I So just wanted to point to the way that FC casts this out in the guidance. I can read the full of this, but I think it's most helpful to look to the third. Public good will be considered met for improvements that directly support the housing development and are publicly owned and publicly accessible, that's sort of intuitive, privately owned and publicly accessible. They could be privately owned, but potentially just public good that they are A

[Sen. Alison Clarkson (Chair)]: water system or even a sewer system.

[John Gray (Office of Legislative Counsel)]: Then as you can imagine, applying the most strict or critical eye to something that is both privately owned and privately accessible, asking the question, what is an independent public good for that beyond what the purpose of the subchapter is? Here's the way that that's described in. Privately owned and privately accessible improvements may be eligible so long as they can demonstrate a community benefit from the CHIP supported infrastructure project. The municipality shall articulate with evidence how the community needs or desires the planned improvements, and that they are mutually beneficial for the municipality and developer, I. Private septic systems or development in a community that does not have a municipal wastewater system, and or the cost of connecting development to an existing system would be cost prohibitive to the developer and town. We wanted to explore this more. Would encourage you to obviously talk with folks at Pepsi, but I just wanted you to see the kind of ways that folks were thinking about having a dual check here. The new language is to say the purpose of the subchapter is sufficient if you have incurred the development of primary residence for low and moderate income Vermonters, then you've met the test for what an improvement needs to do. So that's the first piece I wanted to just show you. There's a bunch of things on this page. I'm trying to make sure I hit the pieces that I As you can see here what kinds of improvements are, I don't think we have to go through this, but they're classic infrastructural pieces. Related costs, this is the other big one I wanna show you. Under the current law related costs that you can apply tax increment to, those are exclusively as incurred by the municipality. This is where Senator Brock had some questions about how that would work, I think it's largely an empirical question, but just to get a sense of what kinds of related costs are, you can see them here. Costs incurred by municipality sponsor and or developer associated with the creation, implementation, and administration of the CHIP site. Eligible related costs include, but is not limited to these, costs of plans, studies, or reports specific to preparing that finance plan application, any commitments, costs of providing public notification and obtaining any public approvals, costs such as consulting, design, architects, engineering, accounting, legal, project management, Kurt discussed earlier. Who approves the government? The municipality, the VEPSI. The related cost would be built into your increment financing plan. Which is approved by VEPSI. It is approved by VEPSI. Increment financing yeah. I'm sorry that I didn't get the direct answer earlier. In part, it's me. I've been out of this space for some time, so trying to recall all the

[Sen. Thomas Chittenden (Member)]: Assuming the sponsor developer has a cost, it would ultimately go before Vepsie, and they would have the ability to say yay or nay.

[John Gray (Office of Legislative Counsel)]: Yeah. And I think there's a question as to let's say something minor came up during your process. Would it constitute a substantive change that requires amendment of your financing plan? Because if it didn't require an amendment of your financing plan, then the change that you made wouldn't go to the FCC for approval, So you could imagine that maybe there's a way for incredibly minor, I don't know, but you could speculate that minor changes that might not rise to the level of necessitating a financing plan change would it require some significant approval?

[Sen. Thomas Chittenden (Member)]: I know we're running out of time, Mr. Chair. I just want to say I don't know if this was injected in this conversation, but I'm really glad we're taking this on because we have emails from people on the ground trying

[Sen. Alison Clarkson (Chair)]: to get I have not had a single email.

[Sen. Thomas Chittenden (Member)]: Oh, or to see if

[Unidentified committee member or staff]: you want.

[Sen. Alison Clarkson (Chair)]: Well, they haven't sent anything to me.

[Sen. Thomas Chittenden (Member)]: It's just this week, bro. I'm just saying they are saying these are the types of things that we need to make

[Sen. Alison Clarkson (Chair)]: sure we're I understand that let's build homes and Hula. Stephanie Amy. I She is Stephanie Clark. She is Clark.

[Sen. Kesha Ram Hinsdale (Member)]: She works for White Newburgh.

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

[Sen. Alison Clarkson (Chair)]: I know who she is.

[Sen. Kesha Ram Hinsdale (Member)]: She's she's listening right now. Okay. Great.

[Sen. Alison Clarkson (Chair)]: I'm glad hear everybody. Hi, everybody. John, could you just finish going through this thing? Sure. And then we're gonna take a break.

[Sen. Kesha Ram Hinsdale (Member)]: And I would love to point something out. In the language we passed last year that points out the the way we try to make it clear that we are not enforcing by by changing people's dwelling use over and over again. We wrote into the bill because I anticipated this would happen, that we said the condition shall be biennially biennially by providing a landlord's certificate or a homestead declaration.

[John Gray (Office of Legislative Counsel)]: That's right.

[Sen. Kesha Ram Hinsdale (Member)]: What we just there's two options we could take. One would be, you know, if if we were trying to then say, there are too many units in your place that are being used as as non primary residences, which is a short term rental, not a rental longer than a month, that definition can't change on people. That's not, you know, fair to their original agreements. If they're providing a landlord's certificate or a homestead declaration, then we might say to the municipality or somebody, you have too many non primary residences, and that might make the municipality have to pay back some funds. But you're not gonna go to the individual property owner or renter, frankly, or whomever and say, you need to pay back these chip dollars because you didn't provide a landlord certificate or a and so you're you have to look in the aggregate. And what they're saying is in the aggregate, if you still have 40% primary residences, then you're meeting the spirit of the law. If we literally make them look in people's homes to meet the spirit of the law, that is not what we passed. And that is the challenge with ways that means continually trying to rewrite the policy and the language. I think on that note,

[Sen. Alison Clarkson (Chair)]: that is a good spot to end on for the moment. We will continue this discussion. If there are witnesses people would like to have on this for next week, please let me know. And thank you very much, John, for doing this so quickly. Thank you, John. Thank you, Kesha. Thank you, Thomas. Thank you, seem to be together on this, and thank you everybody else. This is great. And we'll go off