SmartTranscript of House Appropriations - 2025-05-21 - 2:05PM

[Chair Robin Scheu]: Good afternoon. This is the House Appropriations Committee. It's Wednesday, May twenty first twenty twenty five. It's just after two PM. We are off the floor, and we have an amendment to hear on s one twenty seven, which is the housing bill, that includes, CHIP, and this amendment is making its way around, to the various committees that saw the original bill. We are looking at draft one point three, I believe. Yes. And we have with us, John Gray from Legislative Council and representative Kimball from Ways and Means who has become the chip champion, another CH in there somewhere, expert. I'm sorry. I couldn't get it here. It's your job. Okay. So maybe we'll have Tom walk us through sort of the high level business and then okay. We have, like, JFO here as well if we have other questions. Thanks for coming, Pat. And then, Charlie, you can talk to us about some of the other pieces. I know you put some other data that's, you know, about housing and things like that. We'll be very helpful. Mhmm. So we went through this bill in they are a matter of detail before. But so tell us what's changed, I guess. [Representative Charlie Kimball]: Is it maybe thanks, John. Thanks. [John Gray]: Would you like for me to screen share, or do you want me to just describe? [Chair Robin Scheu]: Why don't you screen share? That's fine. Just for a viewing audience. [Speaker 3 ]: Yeah. [Speaker 4 ]: So [Trevor Squirrell]: there we go. [Chair Robin Scheu]: I think it's [John Gray]: a little bigger, Maybe. So just to hand what changes in the proposed amendment, and I'll just go them by item by item and Yeah. For you guys. So the first change is gonna be on page four, I believe. Yes. And this this is a non substantive change. This is just aligning more closely the actual reference. So this previously said middle income housing is now mixed income housing because we can target these to focus at different income levels. And if you think about having a twenty percent requirement as you see in the definition of mixed income housing development, you can imagine that some are targeting particular income and then make sure it's not. So just some total shift in the language there from middle to mixed. [Chair Robin Scheu]: It's a little more expansive or just and the more accurate nature. [John Gray]: Exactly. I think it's more accurate to what the language allows. Some updates slight updates to the purpose section just to call out the intent here. So purpose, is to encourage the development of new primary residences for households of low and moderate income, and then here's the real big change here across both rural and urban areas of all Vermont counties. So just calling out this is meant to be a statewide program, and this isn't merely a rhetorical change. The purpose section is brought into a couple of places where folks have to make a determination that you're serving the purposes of the of the chapter. So just calling out what the program is meant to be about. The next changes are to section nineteen ten, which is the actual application section that sets up the, criteria that any applicant needs to meet, and that is on page starting on page eight. And you're not gonna see here the changes because much of you'll see some of them, but many of them are deletions. So let me just call out what they are. So first is that a FHIR iteration of this draft stood up something called the chipboard. And and, basically, the process that was in place is that as a merchant from voice and means, Pepsi would conduct a standard analysis of an application, would review an application under the section, and then they would recommend that for board approval. The board has been stripped out of this, so Pepsi is just doing its application, so you don't see a reference to the board here. The other omission that is Oh, [Chair Robin Scheu]: we can turn that off, Charlie, if you don't mind. It's good. It's fine. I think it's in the middle. Yes. Thank you. [John Gray]: The other omission here is that it used to be on page ten preceding the project criterion section, that we had a location criteria section that spelled out permissible areas in which to to, have projects. That has been stripped. So, effectively, it means you could pursue a project project anywhere in the state. So no location criteria required. Obviously, independent regulatory regimes like activity and the, like, stand. You have to go through all those procedures. But for tip purposes, you don't have to build any particular area. [Chair Robin Scheu]: And that one with the old one, the the that one that had sort of the tiers and the second and the stuff, so all that's gone there. Exactly. [John Gray]: Okay. Conforming changes from middle to mixed tier. And then on page eleven, this looks like a lot of highlighting, but it is not as much. It looks like I mentioned before that the board has been removed. So this approval section has been moved down to the bottom of the section. Once you've gone through the application, what does Pepsi do? And the substantive change here is really, they shall approve or deny not later than forty five days following receipt of a complete application, so there's a deadline that [Speaker 3 ]: they have to meet. And note that [John Gray]: that is a type to complete an application, not, just any application that comes through. And then So [Chair Robin Scheu]: what pause there for a second, John. What was there before? No timeline? No deadline? [John Gray]: There was no timeline specified previously. There was a requirement for the board's timeline, which is that it had to respond within forty five days, I think, of recommendation from Pepsi, but this is about Pepsi's actual approval. And then the other change here is either sunsetting or just final application date that's been moved out December thirty one of twenty thirty one. So that's pushing back by year, I believe, is the That's a year. Okay. The other changes here, there's a tech I'm sorry. In the limit section, this is a pretty meaningful change too. We talked about that forty million dollar cap, and so we provide a process here that is much like what is done for the FEGI program Mhmm. To allow an increase of that limit by not more than five million upon application by the governor to an approval of approval of, joint fiscal committee. And then they have to provide particular kinds of information, including reference forecast, budget projections. That need to provide testimony documentation, public application data, and any other requested information to demonstrate that increasing the cap will increase will create an opportunity for the creation of additional housing to meet the needs of of Muni and the state. [Chair Robin Scheu]: So I'm gonna pause you there. I'm gonna ask Charlie to introduce himself. And this is where I know you have some data with the forty million and the five and housing and all that stuff that I heard you talk about before. So [Representative Charlie Kimball]: Sure. Thank you, madam chair. Charlie Kimball, representative from Windsor five. So I am on this amendment with four other members of the house. And so the this particular change is recommended by the group being in response to the concerns that the cap was not high enough, that there wasn't enough money available through it. So as we do the math and work backwards from what is the forty million dollars initially anyway, remember that is the tax increment that is retained over the life of a project. And so at any one year, Vepsi can approve projects that some total of which cannot retain more than forty million over a twenty year period. Working backwards, that equates to about anywhere between a hundred and forty five and two hundred and forty million dollars in improvements that are made at that time, so with that project in mind. So that's a substantial amount of investment that would occur. Now that does not mean that TIF is providing all the money, in this case, CHIP, is not providing all the money for the construction of housing units. TIF and CHIP are specifically limited to the construction of infrastructure. And as we've talked to different housing organizations, the estimates are from anywhere from two thousand to seventy five hundred units. Per year [Chair Robin Scheu]: or total? [Representative Charlie Kimball]: It's not per year according to a clarifying conversation this morning, but so at least to add at least a thirty percent increase in the construction of housing. Our highest year ever for construction of housing was in nineteen eighty eight, and that was four thousand eight hundred units constructed in that year. So if we're adding, say, two thousand a year, which is possible and depending upon who you're gonna ask and who what assumptions are in there, it's a substantial increase over what the current housing starts are. So I've also had [Chair Robin Scheu]: different housing starts under Chip, not other housing starts that are happening that don't have anything to do with Chip. [Representative Charlie Kimball]: That's right. So Chip is not going to be the right tool for every project. So it is going to be the right tool for many projects, but it's just another tool in the financial tool chest, if you will. So it can it can be meaningful and what can it what it can contribute. But this particular change is similar to what you've seen in the Vermont employment growth incentive, which is also a tax incentive program that's administered by Pepsi. They have a ten million dollar annual cap, but what actually gets paid out after the nine year process of somebody going through Veggie is only about two million dollars a year. That's a different reason why it's only two million dollars a year. There's only been one time that I know of that Vepsi has asked for an increase above the ten million dollar cap. That was a few years ago. So the number of new jobs that they were approving for the tax incentive were actually had a value over ten million dollars So in this case, we're looking at an increase of five million in that same construct of five million of lifetime increment retained from the projects approved in that year. [Chair Robin Scheu]: Okay. That help? Yeah. Just wanted while we were on that section, have translated, what does that mean for houses and things like that? So Yeah. It's not forty million of housing. It's this is the increment part of it. [Representative Charlie Kimball]: Yes. And it's and it's quite yes. Just the increment of that seventy well, sixty or eighty percent of the property taxes resulting from that. And remember, the other side is the municipal entity is receiving eighty five percent retention. That's not included in this approval. That's a totally different thing. Yeah. [Chair Robin Scheu]: Okay. Thank you. Back to you, John. [John Gray]: So the next piece here is just a technical cleanup in the indebtedness section. This is on page twelve. So previously in subsection a and in subsection c, we called out the ways in which the housing development site, which is where that OTV is set, where construction for the housing development occurs, when that ends. And the two the two times in which it can end is, one, once your debt is retired, your site would go away just like it would happen for TIP districts. Or if you don't incur any debt, then your site goes away as well. In both cases, it terminates. If you fail to incur any debt during the debt incursion period, then it's it's over. Previously, this was just split across two subsections, and it could be read to create a conflict because it specified that the housing development site would terminate five years after the creation of the site. But if you had received an extension of three years, then you would have you could have accidentally terminated the site prematurely. So what you see on page thirteen is just a simple reference to explain exactly how this works. Subsection d, the housing of ownership rights shall continue until the day now or the indemnity is retired, or if no debt is incurred, the debt incursion period ends. And we call out debt incursion period in subsection a. So this is not a subsequent change, even if it doesn't take clarifying [Chair Robin Scheu]: a. Sorry. That's okay. What did I do? [Thomas Stevens]: Maybe. Oh, Jean will change. Sorry. [John Gray]: Okay. The next change is, I believe, would be in the contract for rulemaking. Yep. We're looking at section nineteen ten f, bottom of page twenty one and running on the page twenty two. And there are a few things to call out here. I'll start with the thing that is omitted because it's language that was deleted. We previously had a subsection that said draft rules that Pepsi was producing for this program. We've sent it to the joint fiscal committee for their review twenty five, forty five days prior to to pre filing with iCAR that's been removed so quicker process submitted here and then the other changes you see first you'll recall on the house floor this concern about the political sensitivity of the use of the word polite that's been updated to reference vacancy or dilapidation And just to call out what this is, this is tacking Betsy with rulemaking to govern its prioritization of applications because there's a cap in place, but it needs to think about particular things when it develops that prioritization process. One of them would be this vacancy dilapidation. [Chair Robin Scheu]: And is this also linking back to the purpose section, right, which is about urban and rural across the whole state? So Exactly. So Windsor County doesn't get all the house Exactly. [John Gray]: If you see. Pick up all. Pick up Windsor. Line. [Representative Charlie Kimball]: I'm sure. [Trevor Squirrell]: Wayne? Line so labor sheds. It's on page twenty two. Line four. What templates the labor sheds? [Representative Charlie Kimball]: That was in the original House Ways and Means Amendment. And labor sheds, we had a lot of discussion about whether or not it was necessary to locate housing close to job centers That it made the most sense from a transportation and environmental perspective that housing should be located close to those centers. We had a lot of differences of opinion as to what that meant because we had words such as proximity to and that kind of thing. But we know that in some areas, somebody could work at GlobalFoundries and live in Enosburg, and that would be the a particular labor shed. So we're trying to say the priority of housing is to, like, fulfill what those labor areas are and what that made sense. [Trevor Squirrell]: So you're using the term such as it's a synonym to the concept of watershed. Yes. Yep. [Representative Charlie Kimball]: Exactly. The term has also been used in consideration of school district boundaries and the type of sheds that are contributing into what school district should be considered. But yes. [Trevor Squirrell]: I have never never learned a process used in that context before as they is it doesn't has it been used? Is it dictionary that you know, is this something the only reason I bring it up is if we have a term, it needs to be commonly known with these folks. Yeah. I think it can be. [Representative Charlie Kimball]: Yeah. I think shed is besides where I park my bike, I think it's commonly used as some kind of easement or some kind of path. I don't know if it's defined in statute, but because we have view sheds also commonly referred to watersheds, other kinds of sheds. And it's this is subject to rulemaking by biopsy. [Trevor Squirrell]: So could they the definition would be nice. [John Gray]: If I could call out the the party to whom the definition of this word matters is Betsy who was in the room, and [Trevor Squirrell]: it's got what's happening. [John Gray]: The term was not created in this bill, but I agree it's not a commonly used, but it's not a novel. [Chair Robin Scheu]: You could sort of imagine what it might be even if it's not precisely defined. [John Gray]: And the way that the committee arrived at it was by rejecting alternative approaches, right, that were prescriptive as to, oh, this proximity to that. So it's trying to get at a flexible term that would capture the consideration. Yep. [Chair Robin Scheu]: Without saying, like, within sixty five of the largest employer or whatever. Yeah. [Representative Charlie Kimball]: And we we talked about all those things, you know, proximity to, job job centers. [Trevor Squirrell]: Telecom marketing, flying in from the West Coast. [Chair Robin Scheu]: You could We're not gonna build houses in California. [Trevor Squirrell]: It's it's fine. I just I just I just like you know you know how I Yep. [Speaker 3 ]: Like the that's it's a fair point. Okay. I gotcha. [John Gray]: The third piece here, the third specific directive in the rulemaking section is to on line seven supplement the BUC4 test giving due consideration to any rulemaking undertaken to supplement the BUC4 test for existing title thirty two TIP districts. So this is saying to Pepsi, if you've undertaken rule taking to build out the BUC4 test that you currently currently use for TIP districts, Give that consideration as you build out the BUC4 test for purposes of this program. And so if they wanna use rulemaking to expand on, like, housing specific ways of addressing the BUC4 test, they could do that through their task with looking at this. [Representative Charlie Kimball]: Our intent was to create a more explicit definition of what but four might mean for the CHIP program so that people that are considering you applying to the CHIP program could then understand more clearly if their project met the but four test or not. Now, in the process of discussing this, I know I've received several ideas as to how to define what that but for test should be, whether it's the financial stack available, what the percentage of housing was met and that type of thing, or have there not been any investment in that community in terms of actual investment in new housing. So rather than trying to define that, we really want Pepsi to kinda build that out as to what those butt forecasts. Because there are several ideas, all of which seem good, but, like, we don't have that expertise. Yeah. [Chair Robin Scheu]: Trevor? [Speaker 3 ]: As Trevor Belcar, I I pick up on these things. You have a man in your mouth shell regarding rulemaking, and there's no date that I've seen in the when it's supposed to be completed. [Representative Charlie Kimball]: There is a may and there is a shall. So it may engage in general rulemaking, and then it shall engage in specific rulemaking regarding these criteria. Yep. I just so where is that in [Chair Robin Scheu]: I see the may Just [Speaker 3 ]: in a [Chair Robin Scheu]: quick breath. [John Gray]: You click on lines twenty and twenty one of that [Speaker 3 ]: It is on page. [John Gray]: Page. Twenty bottom of sorry. Bottom of page twenty one. [Chair Robin Scheu]: Oh, yes. [Representative Charlie Kimball]: Page dot rule shell specifically. [John Gray]: So all rulemaking authority and then specific directives to you have to do these three things. You can do more, but you have to do these three things. [Speaker 3 ]: And you had a date on this date if you've done? [Representative Charlie Kimball]: We do not have a date. We did we did not set a date for which they should complete rulemaking. [Chair Robin Scheu]: This can still be changed. Right? Because I heard that is that right? Or is it [Representative Charlie Kimball]: the amendment's been submitted. [Chair Robin Scheu]: Oh, it has been. Alright. Yes. I heard that Congress was gonna add the word and reconstruction. [Representative Charlie Kimball]: There was a discussion that we had as whether construction means reconstruction. Okay. There was feeling that that's something that we might be able to do in conference if it passes, but we're we were looking at changing, like, one or two words of the bill that's had general Okay. Distribution. To [Chair Robin Scheu]: that. Okay. Yeah. That makes sense. [Trevor Squirrell]: Alright. Wayne? So the above four, the the intent of that is to allow for exceptions. [Representative Charlie Kimball]: No. It's to more clearly call out how you're gonna meet the buck forecast. [Trevor Squirrell]: So what I guess, you guys explain the buck forecast. Explain the buck forecast. [Speaker 3 ]: So I'm [Representative Charlie Kimball]: gonna defer to counsel. Okay. [John Gray]: So what the specific directive there in rulemaking to do is to supplement the buck quartet. So in rulemaking, you would not create rules that contradict what is in statute. Right? The statute within Trump. So, let me just scroll up to the actual test itself, whether I prefer it. I would follow it. The I am on page eight now. The buffalo test is in sub section b, and what it requires is Betsy to determine whether the infrastructure improvements and the proposed proposed to serve the housing development site and the proposed housing development would not have occurred as proposed in the application or or would have occurred in a significantly different and less desirable manner than as proposed but for the proposed utilization of the incremental revenue. So would this not have happened or happened in a significantly different form if you didn't have access to these incremental revenues? And then that is directed to take into consideration particular piece. So the review shall take into account the amount of additional time and cost that might be required if you didn't have this financing. They have to take into account how this, proposed housing development components and size would differ, including in relation to if you have affordable pieces of that. Right? So would they would the project be a different size of cost substantially, or would you not be able to include affordable housing if you didn't have the financing and the amount of additional revenue expected to be generated? So this is a way of seeing, are you covering the cost? Right? So supplementing the buck four test rule using rulemaking to supplement the buck four test is basically saying, look. The review is to take into account these three pieces. Right? But you could add other considerations that should be taken into account, and they could be housing specific. There may be other things that Pepsi proposes to do, and as long as they are not contradicting the buck four test, right, they would be able to pursue that through through rulemaking. [Trevor Squirrell]: So it's a it's like a if you get a fork in a notebook, you you do this or you don't do something. You do something or you don't do something. This is a [John Gray]: It's it's asking could this have happened without the Right. [Speaker 3 ]: So it [Trevor Squirrell]: could've if the answer is no. It couldn't have, then you're gonna move forward with the project. [John Gray]: That would be the thing that allows you to pass the buffer test. That's right. [Trevor Squirrell]: And if it was flip side, does that mandate that you don't go forward with the project? [John Gray]: Yeah. If you if you if you do not meet the buffer test, then you can't meet section nineteen ten. [Chair Robin Scheu]: But you basically go forward with the project. You just don't go [Trevor Squirrell]: through it. [John Gray]: You just don't have access [Representative Charlie Kimball]: to You don't have access [Chair Robin Scheu]: to chip. Chip. Right. Right. So some projects pencil out and don't need anything else. Some projects, even with Chip, will never pencil out because the economics just aren't there to make that work. And some will only pencil out if they have this. And so that's kinda math. Right? It's gonna work or it's not. So that's actually a clearer but for than we have in many other things that we do. [Representative Charlie Kimball]: It is. I mean, when you're asking with the Veggie program in particular Yes. You have an option of creating these jobs here or in North Carolina. And then basically, it's like, well, we wanna create them here and not accept. But for test, there's but for the incentive, we would create these jobs in North Carolina. So it's one of those that's a much squishier, this is a little more hard and fast. [Trevor Squirrell]: So it's just looking at the edge there between where where the decision making process comes, whether or not someone could, [Chair Robin Scheu]: you know Yeah. [Trevor Squirrell]: Play the games on the wall. [Chair Robin Scheu]: I think this feels like it's harder to play the game. I worked invent stuff in my old job, and it was a lot easier to play the game. Yeah. Yeah. [John Gray]: The last couple changes here, I am on page twenty three. With the removal of the chip board, I think that there was still a desire to have some housing expertise look at these applications. So there's been an amendment to the membership of Pepsi's board, and That's what you see starting on page twenty four. The very bottom of that page, line nineteen, exclusively for purposes of reviewing and approving housing infrastructure project applications under CHIP, the council shall additionally have, on page twenty five, two voting members, executive director of Blount Housing Finance Agency and the executive director of the Blount Housing and Conservation Board, and as a nonvoting member, the commissioner of the Department of Housing and Community Development. Those are exclusive. Those additions to the Pepsi board are exclusively for purposes of the CHIP program. They're not touching Veggie. Right? These housing specific folks aren't touching the Veggie program. They're just here for purposes of CHIP. So expansion of that board with the removal of the CHIP board. The last part of the bill is extending the sunset for the TIF district program and that's on the very very last page the council shall we're talking about title thirty two this is existing statute for the TIF district program Council shall only approve under this section application for Patrick and Financing submitted prior to December thirty one twenty thirty one. This is the same date as you saw for the application deadline for the CHIP program. So both of those would come up at the same time and you would you could revisit them. [Chair Robin Scheu]: Questions. I have a couple of questions. [Representative Charlie Kimball]: Can you define the next income? [John Gray]: So are you asking for a definition of what the specific term mixed income means or what mixed income housing means? [Representative Charlie Kimball]: Yes. Mixed income. Mixed you're using that to indicate the private housing that you're going to be. [John Gray]: So I will screen share real quick. [Chair Robin Scheu]: Page four? Yes. Four [Speaker 3 ]: four. Yep. [John Gray]: So mixed income housing is housing subject to a housing subsidy covenant as defined in title twenty seven of perpetual duration. What I will call out and I can pull up that statute of helpful, but the title twenty seven definition of housing subsidy covenant doesn't target a specific income level. It's basically a covenant that you can use to target specific restrictions. So if you're in your municipality, you wanted to pursue a project that used the housing subsidy covenant to target low income, you could do that with this. If you wanted to target middle income, say, a hundred fifty percent of area median income, you could use a housing subsidy covenant to do that. So it is a flexible approach as opposed to some of the previous affordable housing constructs that said, it's gotta be eighty or a hundred twenty percent of AMI. Right? This allows them to choose what that income level is. But note, you have to have that housing subsidy covenant. It has to be of perpetual duration. Right? So this is forever, affordable to that income level that's specified in the housing subsidy covenant. And, importantly, in the definition of mixed mixed income housing development, it's not the whole of the development that is made available for these purposes. Right? It's a housing development of which at least twenty percent of the units are mixed income. So the way to think about this is to access the enhanced incentive, that extra twenty percent education property tax increment, your housing development needs to include at least twenty percent units with a housing subsidy covenant of perpetual duration attached to them targeted to the income levels that you want to pursue in your area. [Chair Robin Scheu]: Does that include workforce housing, middle income work, and does it include certain family homes? [John Gray]: You you could do any so the the area where you would the single family homes might be problematic from the twenty percent piece. Right? Like, that would just be a hundred percent if it's a single family. I I guess I say that. If you did a neighborhood I don't know. If you did a neighborhood, right, and you had multiple building from that site, you could have twenty percent of the neighborhood meeting this mixed income piece, and you wouldn't have and that remaining eighty percent could be targeted to that could be market rate. Right? So I think the answer is you could do any of those things through this. Yeah. [Representative Charlie Kimball]: Is there any income I mean, you talk about I'm not sure if it's a definition. [Chair Robin Scheu]: You're talking about workforce housing. [Representative Charlie Kimball]: Is there any kind of definition of income for that or is that just [Representative Charlie Kimball]: There's typically three definitions. There's very low there's four. Very low, low, moderate, and mixed or middle income. So very low is, I believe, fifty percent of area median income. That's very low. Low is under eighty percent of area median income. Moderate is eighty to a hundred and twenty percent, and then middle income is generally a hundred and twenty [John Gray]: to a hundred and fifty percent. [Representative Charlie Kimball]: So that's kind of the range. [Chair Robin Scheu]: There is a range. Yes. That was a twenty percent. [John Gray]: You you could target different income levels even than those. And so what I would say is the constraint that you would find at the upper end is really through the purpose section. Right? The purpose is to produce homes for low to moderate income families. Right? So if you wanted to use a housing subsidy covenant to make this available to folks at five thousand percent of AMI, I think you're gonna be pretty clearly violating the spirit of the chapter, and so that would be the constraint. But just literally the term housing subsidy covenant doesn't have a firm income cap. Does that make sense? So you look to this [Representative Charlie Kimball]: as follow those low [John Gray]: Exactly. Middle. [Chair Robin Scheu]: Okay. Yeah. The second question is, what's the inter fund? That's on page thirteen. [John Gray]: The inter bond loans? This is if I may be sticking a little bit out of my area of expertise here, but, basically, if a municipality has its own multiple accounts separated and it would be useful for them to transfer funds from one from one to another, they could do that, but they wouldn't charge interest across those different accounts that they have. So it's an internal transfer. [Chair Robin Scheu]: It's like we do interdepartmental transfers and the council service fund. It's the same thing for municipalities. [Representative Charlie Kimball]: K. The second one the next one is there was sixty percent for one level [Thomas Stevens]: Yes. [Representative Charlie Kimball]: And then eighty percent for another level. This is your low moderate. And then somewhere later on in here where it looks like it's old language for Betsy, it says seventy percent. [Chair Robin Scheu]: And I know it's my understanding is seventy percent now. [Representative Charlie Kimball]: But, again, did somewhere or other there, do you have three different percentages of retained [Chair Robin Scheu]: tax? [John Gray]: So, I'm wondering if this may just be that we have the creation of a new chapter here, and then we have things that amend existing title thirty two. So TIF districts Yes. Remain at their seventy percent level. Right? And then the concept that is proposed here is sixty percent for your standard project that doesn't meet mixed, the affordability construct, and then eighty percent of your state with education property tax increment available if you meet this mixed income piece. And one one that potentially answer to that representative is that, TIF [Representative Charlie Kimball]: projects or TIF districts did not have a standard increment retention until the program was more codified maybe in two thousand thirteen, maybe in two thousand sixteen. I can't remember exactly when. So the TIF report is actually really good, put out by Vermont Economic Progress Council, which shows what those retention rates for existing district built. And some of them were much higher than the seventy percent. Even there was a Winooski before it retired all of its debt was at a ninety eight percent retention rate and that was effectively to pay off the debt quicker. [Representative Charlie Kimball]: Okay. Let's go back. Yeah. Retention rate applies to what? [Representative Charlie Kimball]: The property taxes. Right. So this whole thing is about the retention of the education property tax and the municipal property tax. So that's what the retention is, the retention of that percentage. Yep. K. [Representative Charlie Kimball]: So I was never really aware that they had that retention for the Ed Fund. It was that was always there. [Representative Charlie Kimball]: That's what gave it life, because the Ed Fund is that much bigger, in terms [Representative Charlie Kimball]: of that you preceded the Ed Fund, actually. [Representative Charlie Kimball]: When NUSQIA the Ed Fund started in nineteen ninety seven, so I don't know about that. [Trevor Squirrell]: So it may have not. [Speaker 3 ]: Right. Yeah. [Representative Charlie Kimball]: The other last question now. I have one more question. Sunset, you say, is going to be in five years. [John Gray]: December thirty one, two thousand and thirty one. So six years from [Chair Robin Scheu]: Yeah. Of course not. The point of it is is that I have heard and it has been discussed that there's sometimes some communities have to go ten years just to get the stuff organized to see if this is [Speaker 3 ]: to do [Representative Charlie Kimball]: the tips. If you have to go and pencil it out and it does or doesn't work or interest rates change or all kinds of whether it's a private developer or even a community, it could take more than those five years. And, you know, it's the way it works is that you really need a couple of years just to get yourself started. Yep. So is five years going to be long enough for six years? [Representative Charlie Kimball]: Well, there's two things to that. One is that Pepsi has the option of extending that initial debt incurrence period by three years. So that's the eight years. The second part is this is really intended [John Gray]: to be [Representative Charlie Kimball]: a much more streamlined version of TIF. So there should be one incurrence of debt theoretically. There might be two, but it's really intended not to be as extensive as as TIF is. So where you see some communities with the TIF district going out several times to their voters and say, we need to approve this bond for this next phase and that kind of stuff. And then a lot of TIF districts have phase filings according to what's going on. Those are complex. Hartford has a phase filing. Killington has a phase filing. I'm not sure about the Burlington waterfront. That's anyway, so there's all kinds of different tiffs as to how complicated that is. So this should have the ability to be fully funded if it's more succinct within that five years or with eight eight years total. [Chair Robin Scheu]: It's a smaller project and it's just for housing. [John Gray]: Should be. [Representative Charlie Kimball]: Yes. Well, it's for the infrastructure. It isn't for the housing. Infrastructure for [Chair Robin Scheu]: the housing too. [Representative Charlie Kimball]: Of course, is that infrastructure doesn't have an income limit. Income is not part of it. You put it in, and then what you're doing is you're limiting what that infrastructure for a few years or forever. Can then go and build with that infrastructure? I mean, can you not build something that's not meeting the low and moderate income or whatever? I mean, you know, we can put it up initially. There may be one part, but there may be six more other things. [Representative Charlie Kimball]: So the other, the other part about [Chair Robin Scheu]: I love what that's gonna be. [Representative Charlie Kimball]: But there is there is an agreement between the developer and the municipality in this case. They're developed as to what kinds of things you're developing. So there's a commitment from both the developer and the municipality saying the municipality is gonna extend the infrastructure and the developer is going to commit to building at a certain rate. There's even in this bill, the ability to use proceeds as an allowable use of proceeds to pay your debt service for up to four years. Now that's not entirely historical either. So that's been extended in this up to four years to give time for that. So it's and it's the the issue here too is to limit it to one parcel. Whereas a TIF district is drawing a wide boundary around several purse parcels. And even if development doesn't occur on those parcels, then the TIF district then absorbs the increase in value and the increase in the property taxes Potential is greater. Here. Right. [Chair Robin Scheu]: Right. So I'm gonna stop this conversation, let other people have a chance to ask the question. If you have Tom and me. [Speaker 4 ]: Thank you. So I'm noticing that on line nine of page five is additional language, and I'm just I just wanted a clarification [Representative Charlie Kimball]: because even and I I apologize for being for this in the beginning of [Trevor Squirrell]: this. Just want [Speaker 4 ]: a clarification. This if this yellow text is added from what we saw on Friday, the households are below the moderate. Originally, this then must have read new primary residences that would not be created up for the infrastructure. So and and here in the explanation, I'm hearing that this tells me that the projects must have the the mixed use or they can choose. And if they choose to have a project that's one hundred percent not mixed use, it's just market housing, that then what happens with what is at the sixty forty retention rate? And then if they build the twenty percent, it's eighty percent. Is that what we're talking about here? Just to be clear, because I'm hearing [John Gray]: I'm I'm I'm hearing a couple different things. [Speaker 3 ]: I I [John Gray]: think I can help with so a a couple of things. One is that, while it looks like the whole of this clause was added, and it would be natural to read it as if nothing was there before. Right? We've always had the concept in the purpose section of households of low and moderate income. It went through a phase where it was referenced as, middle income households. We couldn't call out mixed income households because the households themselves wouldn't be mixed income. Right? It would be the development itself that is mixed income. So the households of low and moderate income isn't new to this draft. It is new as against a middle income household, but that concept isn't present throughout. The real substantive change here is the addition of the across both rural and urban areas. But to your substantive question, this is the purpose section is built into a couple of places where, for instance, in its housing development plan, the municipality needs to evaluate that it satisfies the purpose of the subchapter in its application. So that's looking to this and asking, is this develop encouraging the development of new primary residences for those households? It doesn't mean that the whole of the project needs to be for that purpose. I don't know the level of demand that he is gonna put on the purpose analysis, and I think that's the ultimate answer to your question is the rigor of that analysis that they're gonna do in terms of meeting this. But this is to force people to say that in any application that comes to the door, they need to evaluate it against providing primary residences for households of low and moderate income. Actually, that's the best answer I can to [Speaker 4 ]: But they can create housing units that in their opinion or maybe Betsy's opinion may achieve a public good that are undefined concepts in the bill. But they can have they they can ask for this if they're developing a hundred percent market price housing. [Representative Charlie Kimball]: So it yes. They can. They just have that lower increment that you referred to. So the increment that they could retain would be sixty percent. As long as they meet the but for requirement because a pure market rate housing may be possible without Chip. [Speaker 4 ]: Right. And so I I mean, I appreciate it. And then again, I'll say, okay. Fine. It was there before. We just didn't it just we corrected the the syntax here. Yeah. Great. Thank you. Above that line three, section seven sponsor. If we can just go over this again, I'm seeing that that a sponsor has to be a municipality, period. Right? The municipality has to vote on whether or not to create a district that will utilize funds that were, you know I guess, I can understand that if there's a lot more property taxes, you know, we can argue philosophically as as as you say that whether it's a good project or not. But it is taking money that was collected for education and using it for, in this case, housing. And, again, that's in that's philosophically, you know, people can agree that whether that's a and disagree. I'm just curious about how the sponsors you know, you say, lending standard that meets lending state lending standard. So you have three. You have an for you have a municipality which enters TIF. So the municipality is on the hook for that. And it and, then you have a developer or an independent agency. So are independent agencies the nonprofit housing agencies or, and finally, on this point, without a vote, I I have a huge I'm I'm the the mountain I have to climb on this concept is the fact that a vote by municipality is not required. And simply because this is taxpayer dollars in some form that up until this point to use them, we are the appropriate we're stewards of the public the public bank, basically, the public monies. What loopholes or what problems can we find can we anticipate when municipalities or whoever's making that decision without a public vote and public money. So if you could just, like, separate out the three again, what that means for lending standards, and then please try to, you know, at least make me feel better that this is a process that is being watched like a hawk as opposed to having a public vote on. I know it's public meetings, but if exists because of the public vote. [Representative Charlie Kimball]: Yeah. So there's a there's a couple of things in there. The housing development site and the housing infrastructure project have to be in in entered into by the legislative body of that municipality, whether it's the board of aldermen or whether it's the select board of trustees, whatever it is, with the developer. And there could be a third role as somebody as a sponsor. So there is that contractual project process that goes on in which the legislative body would have to have, we're saying public meetings, but doesn't require a public vote. The only time a public vote would be required on the establishment of a chip is when the municipality is going out to bond. And that's when the the public has to approve the bond. So in this case, this is trying to be more flexible by enabling a developer to be the sponsor and the developer to actually enter into the depth without the city or without the municipality having to do it saying, I've got this infrastructure loan that I've got from a reputable bank to provide financing for the entire project, including the establishment of infrastructure. And so then but it's still subject to that housing infrastructure project agreement. So at that point so in your sent in your case of example of does a municipality do the citizens of a municipality have the opportunity to vote on whether or not increment is to be withheld? I think that's your question. That would ordinarily go to their coffers to pay for other municipal services. How it's currently constructed is that is not part of the process, is that voting on the retention of increment for the municipality. So it was meant to be really a lot more flexible than TIF in that way, but still subject to those agreements. Did I interpret it that right? No. [John Gray]: You're you're right. The thing I was gonna offer is that the the public vote that occurs for TIF districts, I think of that as tied not to the fact that you're taking statewide education property tax. Otherwise, you might imagine that being a statewide vote. Right? It's tied to the fact that the the voters of the electric of the municipality are incurring a debt obligation. In this case, if someone else is the sponsor, the voters are not incurring a debt. That's why there's no vote. And so what they're and I'm I have the housing infrastructure agreement up here. But to your point about are there strange things that could happen in this space? One of the safeguards that's built into the housing infrastructure agreement to to say that through the contractual negotiation between the municipality and the developer and if they happen to have this third party sponsor, that they obligate the tax increments retained for not more than financing and related costs. So what this means is you can only use increment retained for the traditional use. The the developer can't use this agreement to negotiate for uses of the increment beyond what they're meant to be used under the TIP program, if that makes sense. So trying to find ways to ensure that you aren't accidentally somehow siphoning that increment to someone something else. But the public vote, I think, of for TIP districts is really about I do the incurrence of a debt obligation, which they wouldn't here be doing. If someone else is a sponsor, all they're obligated to do is to provide that tax increment to pay back the financing for the for the developer. And if they received no increment right, then the developer is not getting right. They're not getting there. Alright. [Chair Robin Scheu]: I'm gonna move this along, and I've got Wayne and John, and then we'll try to wrap it up. [Trevor Squirrell]: Well, top page four, perpetual. Again, the last time I mentioned this, perpetuality is now off the long term. And, you know, normally, if you're building a house, houses have life lifetimes. Billings have lifetimes. And on the mortgage industry, it's for a lifetime. Mhmm. So and given that this is an investment, money that's being invested in this, what kind of conversation did you have around the choice of the word perpetual rather than having some limited time period that was, say, you know, associated with the the longevity, the the usability, the property for the purpose, or the expected lifetime of the investment? [Representative Charlie Kimball]: Yeah. If if we look in I'm not gonna ask you to pull up the statute. But under the covenants and that what exists in statute is that they could be of different lengths of time or they could be for the perpetual perpetuity for that particular housing project. Where the ways and means committee fell, to remember, this is not anything that we're amending from these five members. Ways and means committee felt that if we're creating housing that is supposed to be affordable in a mixed income environment, that we want to make sure those state dollars are being used to ensure that there is primary residences for people for the long long term. That's that's that's the real thing. Not for short term rentals, not for second homes, not for that type of thing. [Trevor Squirrell]: So hundred years from now, the covenant still is a place to catch one and the house is gone. [Representative Charlie Kimball]: Yeah, we'll all be dead by then. [Speaker 3 ]: I I'm not gonna [Chair Robin Scheu]: have to worry about that. Here's the thing. You know, if if if we ever finally get a law on the books about Chip, which we've been talking about my entire time that I've been in this legislature, we can amend the law. But if we don't get a law on the books, we're gonna be doing this every year for the next [Speaker 3 ]: Yeah. [Chair Robin Scheu]: Five hundred years in perpetuity rank. Yeah. Okay. Okay. John. [Thomas Stevens]: I have no question about perpetuity. I'm just thinking about a small rural community here that may be interested in pursuing some points. And obviously, now you're very small. Yeah. We'll induce. They got another capacity or to put this together. So, you know, would they I guess it's a couple of different questions, a little bit of a follow-up what Thomas' partnership sponsorship here. So a small town, municipality, or we wanted to find them here. They're interested in doing this here. What kind of support might they have to pursue what they need to know to pull together an application when they, for example, when they have to think about contracting in advance with a developer to investing some funds they may or may not have to put together a realistic application that would result in a positive outcome. So and they may not be interested in, you know, putting up a two or three story building here, but it may be a small neighborhood, you know, not a single family. That's some kind of thinking about in some of our more rural places. Small, you know, neighborhood here. I'm not sure what that will look like in terms of how many structures Yeah. Here. But just talk about that, Laurel, what might be available for small rural communities? No. They want to they want to see more housing currently. Here we have a lot of communities like, excuse Burke as an example here, and there's others out there too. We have a resort right there with a lot of people that work six months doing that, six months doing something else. They would like to have a more permanent situation than wherever they might be renting from. We don't have a lot of vacancy for that to begin with, and they are driving that long distance to Yeah. To come to work and it's the place where they wanna be. So what kinds of supports did you think about, talk about that could be available for small urban? [Representative Charlie Kimball]: It's a fair question. I think there's two answers to my neighbor. [John Gray]: Yeah. Yeah. My two bigger towns. [Representative Charlie Kimball]: Well, on Friday afternoon, I went down to my little town of Redding, which has six hundred residents, and there was VCRD was doing a community engagement meeting. And so a group of citizens came together and said, what's what do we have for assets with that kind of thing? There's about seventy homes in the village of Feltville in the town of Redding. True. And they're looking at putting in a a wastewater system, which they don't have right now. So you can imagine tightly compact. You got the same thing. Right. And they've got a three member select board and a town clerk. A lot of towns have a three member select board and a part town part time town clerk. Right. So do they have the the capacity? And I'd say a lot of them don't. So we've been talking about there needs to be some additional assistance. It's not contemplated in this particular bill or amendment, but, there is something in here in terms of reasonable costs or, related costs. [Speaker 4 ]: Is not so [Representative Charlie Kimball]: What is and that is that they might be able to work with a different housing organization or maybe a regional planning commission. And, when you're talking about the definitions and related costs, means expenses incurred and paid by municipality, exclusive of the actual cost of constructing and financing improvements to directly related to the creation implementation of the housing infrastructure project, including reimbursement of some blah blah blah blah blah, maybe included departmental or personnel costs. So that is not specific to application assistance. It does talk about a related cost, meaning an eligible cost to be repaid from some of that increment retention. So but there has to be at some level, even in some of the reports, there was one done for VLCT on the value of TIFs last year, maybe in two thousand twenty two, and said one of the conclusions that they came to is that there has to be some assistance at the state level to help these small communities. And you're right that I think they would be hard pressed to negotiate all those agreements on their own. [Chair Robin Scheu]: K. Okay. Dave, last question. My recollection is in the previous version, there's a requirement that projects had to be, I think, no more than a half a mile from the village center. Can you speak to that, please? [Representative Charlie Kimball]: Yes. So that's one of the biggest things. And, John didn't spend enough time gloating about this change in our amendment, and that is it removes all the location criteria. So we had a lot of discussion, but, about should CHIP be limited to what was a transition period, for land use planning. And if you remember, act one eighty one came up with tier one a, tier one b, tier two, tier three. And so the bill as it came to the house and it came to house ways and means, it was talking about tier one a and tier one b. What we tried to do as a committee at that point was to say, let's get away from that, but then let's increase the amount of communities where you could have CHIP by going with settlement areas. And that was one half mile from a settlement area. Mhmm. And a settlement area is any of those designated centers or even a a group of buildings that are more densely populated than the other area connected by a sidewalk, water, a park, or some something like it. I was going through Adamant the other day. I'm wondering if they would qualify as a settlement area, and I think they probably would, but it's pretty rural. [John Gray]: So that's out of the bill. I could have said that's out of the bill, but that's out of the bill. [Representative Charlie Kimball]: So we thought that it would be more appropriate to keep a financial tool separate from land use planning, and that's what we really wanted to do is not conflate the two on this bill. Thank you. [Chair Robin Scheu]: Great. Thanks. Mike. [John Gray]: Thank you. Both of you. Thank you. I think this helps to answer a [Speaker 3 ]: lot of questions for me, and I I think who's committed are wonderful ready for a motion. [Chair Robin Scheu]: Yep. I think if you're ready to make a motion. I don't know what we're making. This is a straw poll on the, on draft one point three of the amendment For the amendment. Twenty seven. [Speaker 3 ]: I do [Chair Robin Scheu]: have a question mark. Oh. This is an infrastructure bill. [Representative Charlie Kimball]: It's short. Infrastructure in. Yeah. It's gonna be short. Infrastructure in. Can you guys got it? Like, what a an apartment building or something that's a little moderate income, blah blah blah blah, maybe a couple of mobile homes, whatever. What happens in ten years when someone wants to come in [Chair Robin Scheu]: and put an office building in? [Representative Charlie Kimball]: Are they or a larger home or a duplex or a something other than the low to moderate or middle, whatever you wanna call it. [Representative Charlie Kimball]: Well, it would have to be part of the approved housing development site. That's a [Representative Charlie Kimball]: Another developer comes in ten years later, that thing is sold on and finished. And now it's a different place. [Representative Charlie Kimball]: No idea. [Representative Charlie Kimball]: It's it's hooked into the same infrastructure. It's the same sewer system. It's the whole [John Gray]: To be clear on the infrastructure, there are no prescriptions in the program as to uses of the infrastructure. So you could put an infrastructure that is aiding a project you wanna do, but it could also be available to other people. [Representative Charlie Kimball]: Everybody else. Yeah. [John Gray]: But if, you know, if if you create a private park, it I guess you can't do that in this concept. But infrastructure doesn't have prescriptive uses in the program. [Representative Charlie Kimball]: So you can add on to put any time to something else that's not part of that original. [John Gray]: This is the only cause of [Chair Robin Scheu]: the original development that's I can hear. [Representative Charlie Kimball]: So probably the best example is if you had to extend a water or sewer line for a particular project they wanted to build, and then somebody just down the street in Wax will also put in a new development that required use of that extended water sewer line. Yeah. There's nothing that would prevent it. [Representative Charlie Kimball]: There's nothing to prevent. [Representative Charlie Kimball]: Now would that other parcel be subject to tax increment financing? Not under this proposal. [Representative Charlie Kimball]: The second one. [John Gray]: The second one. [Representative Charlie Kimball]: The second, third, fifth, fourth. [Chair Robin Scheu]: It can Yeah. Yeah. Just curious. Okay. If the clerk is ready, please call the roll. Sunny, a stopple on the amendment. We will be reporting it tomorrow. Okay. Yep. [Trevor Squirrell]: Alright. Representative Boomerang? [Chair Robin Scheu]: Yes. [John Gray]: Representative Dickinson? [Representative Charlie Kimball]: No cigar. No. [Speaker 3 ]: Representative Harrison. Yep. Representative consent can help. [Trevor Squirrell]: Representative Roche. No. That's much better. Representative Roehiki. Yes. [Speaker 3 ]: Representative Nigro? Yes. Representative Scrow, yes. Representative Scrow, yes. Representative Scrowell, yes. Representative Scrowell, yes. Representative Scrowell. Yeah. So [Chair Robin Scheu]: I'm just curious as to what would have made it more palatable because it came at ten zero and all the other committees. So I'm just curious as to what's different here. There's another that's [Trevor Squirrell]: a problem. [Thomas Stevens]: August. Yeah. [Chair Robin Scheu]: Yeah. But what are the tweaks? What's different about [Thomas Stevens]: Working on that today. [Chair Robin Scheu]: Yeah. But I'm just curious as to what shows up. What we what wasn't enough is missing? [Thomas Stevens]: I think it's missing. It's really really for question I asked. Yeah. It's important to put the applications together here. I you you answered good good give me a good answer here, Charlie, here, but I think it just needs more more there, more specificity for that because our rural communities just currently benefit from this. They don't have the capacity to do it. Yeah. That's my concern. And, you know, in Burr, for example, we're not looking to bring up being twenty five new homes here. Now the price makes a lot more sense. We've got the labor shed in places. That's a good it's a good thing for those hearings there that don't say it serves the entire state. And there there's there's limitations on this. We we realize that here. But you just have no part of your house. You just have zero or losing people because of it. And and it's hard to find And [Chair Robin Scheu]: then we have to be in the house. You don't stay on the housing project. And Westford, which had a fully federally funded wastewater program, and they voted it down. [Representative Charlie Kimball]: You don't want low on middle income. [Chair Robin Scheu]: It's not always that. The wastewater treatment was not yeah. There's a lot of NIMBYism. Yeah. There's quite a lot of NIMBYism. [Trevor Squirrell]: From my perspective, I don't want this block to fill. No. I want this to happen. Right? Perpetual sticks in my crawls. Perpetual. Hawaii. [Chair Robin Scheu]: Yes. It's a long time. [Trevor Squirrell]: It's a very long time. And, you know, other things can happen. But and and when you when you when you're the one that will receive again, [Speaker 3 ]: you get to that day and it's perpetual. [Trevor Squirrell]: Yeah. It's trouble. So little things like that. So, you know, I'm just urging my goal my noble is urging to to try to Yeah. [Chair Robin Scheu]: Well, it's going to a committee of conference. So Yeah. [Speaker 3 ]: Right. [Trevor Squirrell]: But if we're going to go to committee of congress, you understand what we're saying. Right? [Chair Robin Scheu]: Right. Which is why I'm asking the question so people who are in the committee of conference will have a better understanding of what's on the the perfect [Thomas Stevens]: And I don't like the opportunity. [Chair Robin Scheu]: I don't like the sunset. Perpetuity and the sunset. I don't think it's practical. I think it [Representative Charlie Kimball]: you know, we do it with. We extend it and extend [Chair Robin Scheu]: it and extend it. I mean, you know, just and it but for [Representative Charlie Kimball]: we're not building it anyway. There's no but for of course, you're not gonna build it without some kind [Chair Robin Scheu]: of help or some kind of ability to get infrastruct infrastructure is the key. [Representative Charlie Kimball]: Yeah. Amanda, on the sunset and I know you're past the thank you for your support. On this, the sunset is intended to have them both come up do at the same time to see what success or what the end uptake is in TIF chip and also compare it to chip. The other way around. We know that there's application coming from Newport, Williston, perhaps Springfield for TIFs, not CHIPs. We know there's an active project that'll probably have a CHIP application, and Rutland just got their TIF going. So there's a lot going on and still a lot of uncertainty as to what we're doing in education and also the federal government. So, anyway, that's why we wanted to sunset. [Chair Robin Scheu]: Yeah. Well, and we're trying to sunset a lot of programs that we're doing now, which doesn't mean they're ever they're gonna go away. It means it forces a review. Right. And so we that's why we had the commission that whenever how many years ago in GovOps to the sum the review of all boards and commissions to get rid of it. And then we started saying, let's put in bills. Any new program needs to have a sunset, which can be repealed, but it needs it forces the review of the program. And with there's too many programs we don't review. So I'm actually for sunsets and pretty much anything that we do for that reason. Thank you, Jennifer, for coming in. We appreciate your time and flexibility. Pat, we never asked you a single question, but we were good now and good here. Thank you very much. Always. I will see you [Trevor Squirrell]: again. Yeah. I [Speaker 3 ]: asked another. [Chair Robin Scheu]: So committee, we just got s one twenty three, which is the DMV bill. There are actually no appropriations in it. It is coming to us because when it came out of senate the senate, there were some that are since been gone. This is a five minute conversation unlike today. We're gonna take it up. I think we're aiming for nine o'clock Friday morning. But for the Friday morning, it's not gonna be on the floor till next week, so we have reprieve. Okay. So that is the schedule that we have for that. We're on the floor again tomorrow at one, and then let's go offline.

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