The Senate Economic Development Committee met on Friday to take additional testimony on the latest draft of the BE Home Bill.

Elizabeth Bridgewater (Executive Director, Windham and Windsor Housing Trust) thanked the Committee for prioritizing housing issues and seeking ways to make the development process itself faster and more efficient. Reforming the appeals process, she believes, is particularly needed as she “unfortunately has some experience” with this.

She outlined a Putney development with EverNorth, describing a “small but recalcitrant group of community members” who didn’t want the project and have “been using the appeals process as a way to delay the project.” It has already caused two years of delay already and “if some of the provisions of this bill had been in effect it would have already been built,” she claimed. Instead, the cost has increased over $1M because of legal fees and inflation in building costs.  Meanwhile the sole appellant spent $295 for the filing fees and hired no attorneys. Over 70 questions were directed in the appeal, most were not relevant to local zoning, but they had to respond to every question by law.  This “spaghetti on the wall approach” resulted in only one issue of factual dispute. She believed this was a stalling tactic to inflict pain on the developer.

Solutions Bridgewater offered included an appeals bond required to file an appeal or an independent appeals board, like New Hampshire has, to review appeals for validity. See her full comments.

Maura Collins (Executive Director, Vermont Housing and Finance Agency) wanted to see a few provisions she was concerned about. Namely, the Vermont Housing and Finance Agency (VHFA) revolving loans for infrastructure municipalities. She does see the need but did not draft the idea and it appears that was not included in the Governor’s recommended budget. VHFA would have difficulty staffing to support these with “all they already have” on their plate.

She moved on to the “Middle-Income Homeowner Development Program” where VHFA has requested $25M to “re-open this program” and build the work they did with the one-time monies last year. They have a couple tweaks, such as recapturing the affordability subsidy in future sales to make it more of a revolving fund able to provide re-investment in future buyers. There were also some technical amendments they wanted to see.

Two other issues Collins pointed to were the variation in affordability definitions across different programs (there is no universal definition of affordable housing). The second request was to beef up the rental registration form, asking landlords to provide more information about their units. See her presentation documents.

Next, Legislative Counsel provided an overview of new language for the Committee to consider related to the property transfer tax (PTT). The new language would tax properties not intended to be primary residences at twice the rate of other residential properties. Commercial properties would also be exempt. Senator Brock wondered how his would work if “an individual buys a property with the intent to occupy after renovation whilst they occupy a second property as their current primary.” There was no clear answer to this question.

There would also be an exemption for construction and rehab in designated areas. Additionally, there is a proposal to “freeze” the grand list value of a rehab property for five years following the renovation in order to incentivize the rehabilitation of existing housing stock.

Senator Clarkson noted that “anything that impacts Ed Fund taxes this year is going to a challenge for me.” Chairwoman Ram Hinsdale sought consensus on this point and it seemed the Committee was still interested in moving forward.

There would PTT Exemption for “blighted” properties that rehabilitated within three years of purchase as long as they are not short-term rentals.

Clarkson voiced suspicion of giving more funding to the Vermont Housing Investment Program (VHIP) for eligible rehabs that already receive up to $50K in forgivable loans. Senator Cummings noted they would have to find the $400k in revenue elsewhere. Ram Hinsdale is also skeptical but wants it left in for now.

Ted Barnett (Fiscal Analyst, Joint Fiscal Office) shared that the fiscal analysis shows doubling the PTT would generate $14M annually. However, Cummings warned that the “hot housing market is plateauing” so perhaps they actually should keep expectations low. She suggested a special fund for these revenues that would be designated for housing programs.

There was a debate on how to proceed with a rental registry, which the Legislature passed a form of last year. Ram Hinsdale was inclined to use existing mechanisms first, like beefing up the landlord certificate program that triggers when a property is purchased. There was some debate about requiring these forms annually. Brock wondered why this was even needed and if it created any long term value, but the consensus was against him and favored fines and a new enforcement position.

Short term rentals came up and Senator Harrison, Clarkson, Cummings seemed to favor regulating them like lodging establishments. It was unclear how they would do that but moved forward on adding four new positions in the Fire Safety Division to respond to “compliant driven” issues. 

One of the more controversial provisions of the bill (at least outside the state house) is a provision that would require flood risk disclosures at time of sale. These disclosures to the buyers would include flood maps, FEMA designations, and past flooding events. Cummings would like to see what realtors think here.

NOTE: Cummings is a real estate agent herself and is likely concerned about the prospect of existing homeowners in flood areas getting “trapped” because the disclosures would discourage owners from buying there.

Clarkson was excited to take a “1st look at landlord tenant eviction process in a long time,” but they didn’t get very far in this particular meeting. Additional staffing needs would be required to support mediation and investigation into complaints.

The Committee moved into Act 250 and land use sections of the bill. There was some discussion around Priority Housing Projects and when they should be phased out given the new tiering framework they are pursuing. For now, they appear to be leaving them untouched.

A new provision would exempt motels and hotels from Act 250 review if they are converted to permanently affordable housing. It does not a full exemption for local zoning but just at least for its conversion of use to housing. The Vermont League of Cities and Towns proposed a similar idea last year.

Cummings commented that you “wouldn’t want it next to a daycare.” But it was pointed out that these are affordable, not necessarily for homeless transitional housing, but in some places it may be that.

Ram Hinsdale indicated that they needed to get the bill out by the end of next week so the Committee will be fast-tracking their work.