The Senate Committee on Natural Resources took up S.100 on Wednesday, with written testimony from Dr. David J. Weissgold.

He took a strong position that local communities must have the final say regarding which housing and commercial developments they want and which they do not want. It was clear that he did not favor the bill as written. He stated that it was simply wrong to take that power of self-determination away from local communities, specifically pointing out that this bill would jeopardize the protections South Burlington residents and public servants had worked to put in place since 2006 to keep many of their open spaces undeveloped, and that it is simply not appropriate for the State to usurp those choices that have already been made. The written testimony was powerful, claiming that there must be firm legislative guardrails in place to support local control.

Representative Bongartz was up next, he gave a brief history about how he had put together H.68 as the starting point for S.100 and had met with administration groups and zoning groups to try to deal with local zoning issues. However, as the discussions continued, questions emerged about where the "balance" in the bill was because the bill did not include meaningful Act 250 issues to reduce interfering with the beautification of countryside lands, trails and landscape. Bongartz skirted the question by saying well, he just chose one lane, to help one area and go that route. He chose the downtown development "lane" and ignored the other issues, and pretty much the "other folks" in the countryside. The Committee discussed guided the discussion towards how these efforts always lead to benefits for downtown areas and forget the existence of the lifestyle of those living "beautification and protection" of the trails and rural parts of the state, a balance that Act 250 gives to Vermonters.

The next to testify was Chris Cochran (Director of Community Planning & Revitalization, Agency of Commerce & Community Development). He spoke to the benefits of Act 179 that was passed in 2020 and how the current would parallel that one with designation benefits for the downtown areas, with the focus being on downtowns and ignoring the other areas that the current Committee was focused on. Benefits of Act 179 that were brought were: Downtown and Village Center Tax Credits, Downtown Transportation Fund, State Grant Priority, Sales Tax Reallocation, Reduction of Fees, Exemption of Land Gains Tax, Act 250 Exemptions for Priority Housing Projects Designated Centers.

The Act 250 identified the previous legislation were: exemption for ‘Priority Housing Projects’ (in DC, NTC, GC & NDA designated districts), Presumption of Compliance of Compliance for Act 250 Criterion 9L (ALL designated districts), Agricultural Soil Mitigation Fee Reduction (in DC, NTC, GC & NDA designated districts), and 50% Fee Reduction (only NDA). No evidence was provided to support the benefits of these exemptions.

Sabina Haskell (Chair, Natural Resources Board) and Peter Gill (Executive Director, Natural Resources Board) followed. They were asked to provide housing data on Act 250 Permits. They shared that there were 400 permit applications per year with 30% pertaining specifically to housing. One in ten went to major hearings and the rest were approved without hearings. The average time for the approval process was 73 days from the time the application process was deemed complete (each application process was its own time frame). Of the projects approved between 2017-2022, $1.44M in fees were assessed to cover costs to administer the program (based on construction costs). Some fees benefited the Agency of Natural Resources as well. No applications were denied. 20% of operating cost for the Agency came from the General Fund and 80% of the of their operating costs came from these assessed fees. The Agency is now operating with 28 staff, including the Executive Director, and is having to add additional staff.

Vermont Natural Resources Council

Jon Groveman (Vermont Natural Resources Council) gave his background to the Committee and then addressed the Commission’s recommendations around the major reforms to Act 250, including lifting Act 250 review in certain designated areas as part of a tiered jurisdictional approach that they believed would avoid duplication with local zoning were robust planning and zoning programs existing. The secondary aspect of the bill is to leverage Act 250 to better protect natural resources outside these designated areas by addressing the increasing fragmentation of our forests, critical resource areas, and rural and working lands. Groveman explained that Act 250 reform bills were introduced during the 2019 -2020 and 2021-2022 legislative sessions that addressed these jurisdictional issues. He claimed that several bills were passed to reform Act 250, but were vetoed by the Governor. He believed agreement could not be reached for a number of reasons, including that the designation programs have not been developed to the point where Act 250 jurisdiction could be lifted. Additionally, there are complaints that all stakeholders were not adequately heard from in making changes to Vermont’s bedrock land use program established in 1970 (Act 250).

Groveman went on to explain that it was their interpretation that, as detailed in the Act 250 Commission report, the landmark legislation has helped shape the Vermont we have today. The state has avoided much of the sprawl and strip development as well as booms and busts in the real estate cycles that have been experienced in much of the country. His organization believes that significant changes to Act 250 should be made thoughtfully and carefully by finishing the "comprehensive work" of the Act 250 Commission, not through "hastily made changes" in a housing bill. 

He proceeded to list what some of these "hastily made changes" might be that could have consequences:

• Housing Units - The bill proposes changing the requirement that a person who develops 10 housing units within a 5 mile radius in a 5 year period triggers Act 250. The new threshold would be a developer of 25 housing units within a 5 mile radius in a 5 year period. This provision would, in his opinion, dramatically increase the number of housing units in all areas of town (not limited to designated growth areas), including in smaller towns that do not have the capacity to administer land use and planning programs and may not even have zoning and subdivision bylaws. If the Committee insists on moving forward with this provision, VNRC recommends that it be limited to raising the jurisdictional threshold in only Designated Downtowns, NDAs and Growth Centers to ensure that municipalities have adequate bylaws and the capacity to administer them.
  
  
• Priority Housing Project (PHPs) - The bill lifts the caps on units associated with PHPs in smaller towns (50 unit cap in towns with a population of less than 6,000 and 75 unit cap in towns with a population between 6,000 and 10,000). It also allows PHPs in Village Center’s that have adopted zoning and subdivision bylaws. Under current law, the PHP exemption only applies in Designated Downtowns, Neighborhood Development Areas (NDAs), and Growth Centers. for Groveman, the expansion of the PHP exemption is the most concerning Act 250 change as it exempts large developments from Act 250 that could include significant commercial components. A PHP is defined as “a project... that consists exclusively of mixed income housing or mixed use, or any combination thereof, and is located entirely within a designated downtown development district, designated new town center, designated growth center, or designated neighborhood development.” The definition of mixed use means that 40% of the development project needs to provide mixed income housing. This could be added onto a larger development project involved a retail or office complex, for example. This is where his concern lies as it could "undermine our smart growth goals" and result in a "sharp increase" in fragmentation of rural lands. He asked the the Committee to explore how to limit the impact of this provision.
  
  
• No Review Changes - They were also very concerned provision that allowed modifications to projects that include up to 24 units of housing to avoid Act 250 review. VNRC sees this provision is very problematic as it would allow a permit holder to alter an existing project and permit conditions that other property owners and the community may have relied upon to protect their interests when the initial permit was granted. They strongly recommended that this provision be eliminated.
  
  
• Enhanced Designation - The bill proposes a new Enhanced Designation be administered by the Natural Resources Board (NRB) that would allow Act 250 jurisdiction to be lifted in these designated areas. VNRC actually recommended that the Committee leave this provision in the bill as an alternative to significantly expanding the PHP exemptions. Groveman believe that the Enhanced Designation provision is consistent with the type of changes that Agency of Commerce and Community Development (ACCD) will review in its study and report on improving the designation programs. Enacting a robust designation program that ensures a municipality can handle the increase in development review is consistent with Act 250 Commission report and the analysis of reforming Act 250 that has occurred over the last several years.
  
  However, he recommend delaying implementation of the Enhanced Designation program until January 1, 2025 in case the ACCD study recommend more efficient or effective way of replacing Act 250 review in certain designating areas. He noted that the existing designation programs were not enacted to exempt Act 250, his view is there is no accountability associated with these programs. Designations are issued by the Downtown Development Board, which is composed mostly of Administration officials. There is no ability to appeal a designation decision and there are several examples where designations did not follow criteria and could not be challenged. VNRC is hopeful that the ACCD report will address accountability of designation decisions. However, until this is in place there should be limited Act 250 exemptions in designated areas. The Enhanced Designation provision in the bill represents the type of tiered jurisdictional approach recommended by the Act 250 Commission that ideally involves identifying areas where we want to encourage growth, where we want to address our housing crisis, and accommodate climate migrants while protecting our crucial natural resources that under threat. Groveman pointed to a climate migration and biodiversity crisis caused by climate change and highlighted concern about resources we will need to adapt to impacts of climate change.
  
  
• PHPs More than 25 Units in Three Months - The bill also includes a provision that triggers Act 250 for PHPs in NDAs if more than 25 units are built by the same person within a three month period. He believes this provision does nothing to mitigate the concerns about the significant expansion of the PHP program. It is not clear where the three month threshold came from. He thinks it would be "quite easy" for a person to stagger developments to avoid this trigger. He pointed to this is a good example of why we should improve the designation programs to exempt Act 250 "responsibly" rather than creating more complex rules around the PHP program. He called this provision a last minute change that does not appear to be well thought out could lead to unintended consequences.
  
  
• Appeals - The bill removes the longstanding provision that allows ten voters and/or property owners in a municipality to appeal an Act 250 application because it violates the town plan or bylaws in a municipality. Groveman believes there may be people in a municipality who could be adversely affected by a project that do not live in the “immediate neighborhood” of a project and will not suffer a “physical or environmental” impact to their personal property. He state that there are "numerous examples" of projects that may have widespread impacts on a community where the zoning authorities in a municipality do not correctly apply the zoning bylaws or town plan. He gave example of projects that require a significant increase in municipal services or impact natural resources in the town. Some people do not live adjacent to the proposed project may want to appeal on grounds like these. As an alternative to this provision, VNRC also supports the use of Act 250 Master Plan Permits to pre-approve locations for housing in certain designated areas as set forth in S.200 introduced by Senator McCormack last year.

In conclusion, Groveman state that VNRC agrees that comprehensive Act 250 reform is needed and that what they have advocated for  are meaningful, well thought out, and balanced reforms. They also agree that we need to address the housing crisis and they believe that the zoning changes in S.100 is another major step toward addressing this issue.

“However, there are also serious gaps in resource protection under act 250," he stated (emphasis on the "However"). "Including the continuing fragmentation of Vermont’s forests," he continued. The report from the Act 250 Commission outlines issues well, and (he believes) supports VNRC’s position that Act 250 reform should be addressed comprehensively, versus continuing to "merely focus" on exemptions to Act 250. They believe the Legislature should move forward with the zoning changes and do "no harm" to Act 250 until the studies are completed later this year, which will examine jurisdictional policy. He argued this would set up "a comprehensive Act 250 reform for next year.”

Thursday

The Committee resumed on Thursday with Thomas Weiss, a civil engineer, who testified about the contradictions in S.100 and various other bills. Specifically, he highlighted the contradictions in Bongartz’s testimony stating that “Bongartz has spoken glowingly of his "twofer" in all areas where zoning allows housing. What he neglected to mention is that there is no "twofer" for on-site wastewater treatment and disposal.” Twofers mean more bedrooms, which in turn lead to larger on-site wastewater treatment and disposal system requirements. And of course, larger means more expensive. Weiss noted, as has been previously pointed out, that this bill does not relieve the pressure to build housing in the rural areas. There will still be a demand for a thousand or more units in the rural Vermont each year.

A major impetus for Act 250 back in 1969 was sewage coming out of the ground because the housing density was too high to allow the on-site treatment systems to function properly. On-site sewage treatment allows uncompensated encroachment on a neighbor's property.

Seth Leonard (VT Housing Financing Agency) spoke next, giving the usual housing statics. He specifically highlighted the need for and additional 30-40,000 homes. Building houses is difficult and the typical bottlenecks include available capital and delays in project pipelines.

The Committee used their remaining time on Thursday for a walk-through of the bill with Legislative Counsel.

Friday

The Committee returned on Friday to hear from Karen Horn (Director of Public Policy & Advocacy, VT League of Cities and Towns). She identified areas in S.100 where they believed flexibility to make changes in the bill were needed. Her suggestions included:

1. Establish flexibility to amend zoning bylaws to incorporate provisions to increase density tailored to circumstances in different municipalities. An option would be a density requirement must be met unless a municipal appeals, in writing, the reasons for establishing a standard that allows for less density. Included in this should be the ability to establish reasonable height limitations that account for health and safety considerations.
2. Eliminate the provision for any ten people to appeal a zoning permit. Persons with property adjacent and all other municipal actors can still challenge a permit without this provision.
3. Eliminate appeals of zoning permits for housing in designated areas based on “character of the area.”
4. Establish that a person appealing a zoning permit decision should not be able to appeal with the goal of reducing the number of units below the number of units allowed in the district.
5. Eliminate Act 250 jurisdiction for Priority Housing Projects (PHPs) and extend eligibility for PHPs to be built designated village centers.
6. Increase the number of units that can be built before Act 250 is triggered.
7. Eliminate altogether the language in Act 250 that establishes jurisdiction based on a developer who builds five projects in five years within a five mile radius (aka the 5-5-5 rule).
8. Establish an Enhanced Designation Process for municipalities to incorporate Act 250 criteria in the local zoning permit process for review of projects in designated areas.
9. Eliminate Agency of Natural Resources "duplicative" permitting of connections to wastewater and water supply. Municipalities, which own, operate, maintain, and whose users pay for those infrastructure investments, permit connections to those systems today. The current duplicative system adds no value, according to Horn, and costs developers both dollars and time.
10. Require property owners to disclose when they are selling property located on a Class IV Road or legal trail and that the town is not obligated to maintain the road or trail.

Horn stated that they are also concerned about a subsection in the bill that would prohibit towns from regulating hotels or penalizing a hotel for not renting rooms to provide housing assistance through Vermont’s General Assistance Program. There are no state staff or support services for the many needs of those who are receiving housing assistance. As a result, municipal police, fire, and emergency medical services are both severely strained and exhausted as they are the people on the ground who must respond. Likewise, they urged legislators to define “emergency shelters” to include, emergency shelters regulated by the Agency of Human Services that incorporate wrap around support services to meet the needs of those who use emergency shelters.

Chairman Bray announced that he wanted the Committee to begin to identify what areas they wanted to mark up the bill as he wanted to have the bill ready for possible Wednesday (after Town Meeting) vote. Legislative Counsel stated that it was necessary for them to identify the scope of their mark-up requests in a timely manner. Senator McCormick stated that he did not like that this bill was considered their jurisdiction and that it was clearly a housing bill, as he put it "pretty much clothed as an anti-Act 250 bill." He lamented that they could not take all the time they needed to work out the details without concern of a cross over deadline. As he sees it, they have a duty to "keep control" over this bill until they could deal with the complexities of it.