The Senate's 2025 Housing Bill (S.127 / Act 69) - Overview & Analysis

The Senate's 2025 housing bill (S.127) is a comprehensive legislative proposal aimed at addressing housing shortages and improving housing accessibility, affordability, and infrastructure in Vermont. The bill amends existing statutes and introduces new programs to incentivize rental housing rehabilitation, manufactured home improvements, infrastructure development, and protections for vulnerable populations. It establishes study committees, funding mechanisms, and regulatory reforms to support housing development, with a focus on low- to moderate-income households, individuals with disabilities, and other marginalized groups.

The Details:

• Vermont Rental Housing Improvement Program (VRHIP) Amendments (Sec. 1)
  • Program Expansion: Enhances the VRHIP to provide grants and forgivable loans for rehabilitating or creating rental housing units, with a focus on accessibility and affordability.
  • Funding Limits: Up to $70,000 per unit for accessible units meeting Vermont Access Rules. Other units are eligible for up to $50,000, with an additional $20,000 per unit for accessibility improvements meeting Vermont Access Board standards.
  • Eligibility: Prioritizes households exiting homelessness, immigrants, refugees, individuals with disabilities, those displaced by natural disasters, or organizations serving these groups.
  • Requirements: Landlords must coordinate with nonprofit housing partners, accept housing vouchers, and maintain rents at or below HUD’s fair market rent (FMR) for 5 years (grants) or 10 years (forgivable loans).
  • Revolving Fund: Creates a fund for repaid loans to sustain the program.
  • Reporting: Annual reports are required on units funded, tenant turnover, and rent compliance.
    
    
• Vermont Manufactured Home Improvement and Repair Program (Sec. 2)
  • Purpose: Provides funding to nonprofit housing organizations for manufactured home improvements, new slab placements, and park enhancements.
  • Funding: Up to $20,000 for community owners for small-scale capital needs (e.g., lot preparation, septic upgrades) and $15,000 per homeowner for foundations or slabs.
  • Eligibility: Focuses on habitability, accessibility, and infill of vacant lots in manufactured home communities.
    
    
• Vermont Infrastructure Sustainability Fund (Sec. 3)
  • Creation: Establishes a fund within the Vermont Bond Bank to finance water, sewer, and transportation infrastructure to support housing development.
  • Eligibility: Projects must demonstrate a direct link to housing production, create reserve capacity, and show municipal commitment to long-term operation.
  • Funding: Low-interest loans or bond purchases, with a revolving fund for repaid funds.
    
    
• Rental Housing Revolving Loan Program Amendments (Sec. 4)
  • Affordability: Ensures subsidized units remain affordable for at least seven years or until loan repayment plus three years, with annual rent increases capped at 3% or as authorized by program managers.
    
    
• State Housing and Residential Services Planning Committee (Sec. 5)
  • Purpose: Develops a plan for 600+ service-supported housing units for individuals with developmental disabilities.
  • Report: Due in November 2025, addressing support needs, funding, and policy barriers.
    
    
• Tax Data and Landlord Certificate Changes (Secs. 6-8)
  • Data Access: Requires municipalities to submit detailed grand list data, including assessor databases, to the Department of Taxes.
  • Landlord Certificate: Mandates annual reporting of rental property details (e.g., ADA-accessible units, renter names) and repeals prior amendments from Act 181.
  • Public Database: Directs the creation of a sortable spreadsheet of rental property data, with aggregated reports to legislative committees.
    
    
• Housing Protections (Secs. 10-13)
  • Rental Application Fees: Prohibits fees for residential rental applications and requires landlords to accept various IDs for background checks.
  • Anti-Discrimination: Expands protections against housing discrimination and harassment based on citizenship, immigration status, and other characteristics.
    
    
• LURB Study (Sec. 14)
  • Advances the deadline for the Land Use Review Board’s report on Act 250 appeals to November, 2025, evaluating whether appeals should transfer to the Board or remain with the Environmental Division.
    
    
• Brownfields Redevelopment (Secs. 15-19)
  • Report: Requires a study in December 2025, on challenges to redeveloping contaminated properties for housing and the feasibility of a licensed site professional program.
  • Funding: Authorizes up to $2M from the Environmental Contingency Fund in FY2026 for brownfields assessment and cleanup.
    
    
• Community and Housing Infrastructure Program, aka CHIP (Secs. 20-22)
  • Purpose: Creates a pilot tax increment financing (TIF) program that is project-based to fund infrastructure for housing developments, particularly for low- to moderate-income households. The program allows municipalities, developers, or third-party entities to finance infrastructure improvements tied to housing projects.
  • Mechanism: The program retains a percentage of the education property tax increment generated by new developments, which can be used to cover financing costs. Municipalities can retain up to 60% (or 80% for middle-income housing) of the incremental increase in education property tax and 85% of incremental increase municipal tax for up to 20 years to finance the infrastructure for a project.
  • Eligibility: Projects must meet a “but-for” test (development wouldn’t occur without CHIP), except for affordable housing projects, which are exempt from this test. At least 15% of units in a housing development must be affordable, with affordability preserved until all project-related debt is retired. At least 25% of units must be affordable for households earning up to 150% of the area median income (AMI), based on county, metropolitan, or statewide median income.
  • Oversight: Requires approval by the Vermont Economic Progress Council and a new Community and Housing Infrastructure Program Board, with annual audits and reporting. The Joint Fiscal Office (JFO) will provide annual reports on the performance of the CHIP program, including the number of housing units produced and their compliance with affordability criteria.
  • Limit: Caps total education property tax increment retention at $200M annually.
    
    
• Smoke and Carbon Monoxide Alarms (Secs. 23-24)
  • Standards: Updates requirements for photoelectric or UL 217-compliant smoke alarms and carbon monoxide alarms in single-family dwellings, with specific installation and power rules.
  • Certification: Sellers must certify compliance at closing, with a 10-day window to address deficiencies.

NOTE: The House version added Residential Universal Design Study Committee, a Land Bank Report, and an off-site construction report. These were removed in conference committee negotiations.

Analysis:

S.127 is an incremental but multifaceted effort to tackle Vermont’s housing crisis, with strong emphasis on affordability, accessibility, and infrastructure. Its strengths lie in its targeted support for underserved groups, innovative financing (CHIP), and data-driven approach. However, its complexity, new requirements for BOTH developers and landlords, funding dependencies, and administrative demands pose significant implementation challenges.

The CHIP program represents a significant potential new funding stream for low and moderate-income homes. But with the current cost of of affordable housing over $500 per square foot, funding alone will not solve the problem. Regulatory and market reforms will be necessary to reduce the cost of construction. Concept in the House version of the bill, like a statewide landbank and off-site construction promised to start addressing this issue, but were struck in conference committee negotiations.

Legislators will need to continue work next year on reducing the cost of construction to make more projects viable.

Current Status:

The bill has been passed by the House and the Senate and was signed by the Governor on June 12th, 2025

Last updated: 6/21/2025

DISCLAIMER: Generative AI used to assist in the production of this report.