[{"_1":2,"_99":-5,"_100":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32,75,87],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":68,"_69":70,"_71":72,"_73":56,"_74":56},"mediaId",6116233,"mediaKeyId","2733782-0bff40c41e54223d5aaf0e22dcc146e5","parentId",2733782,"title","Bill would let developers or towns finance infrastructure with project-based tax-increment financing to spur housing","audioSeconds",9129,"startMs",916000,"endMs",10045000,"viewUrl","/Search/View?dp=1&key=2733782-0bff40c41e54223d5aaf0e22dcc146e5&start=916&end=10045","thumbnailUrl","https://assets.pipeline.soar.com/2733782-0bff40c41e54223d5aaf0e22dcc146e5/thumbnail_916000.jpg","articleUrl","/articles/6116233/Vermont/Bill-would-let-developers-or-towns-finance-infrastructure-with-project-based-tax-increment-financing-to-spur-housing","mediaUrl","https://secure.pipeline.soar.com/6116233-0c9388668b61c3950eb50d283d4412cd/orig.mp4?Expires=1771004016&Signature=fg8qlLx7Ojk5A0bTLAiH6HCPPyc~jUZUCcUiGGQ3kgfu~c8-mn~UraRs89OPs068~Zt63SEzt525YRwdNkb3HyNMQ3d7G9eOtY7FS~1YjbvYQkNOvYmoj5Bh1F2EgCOUMHx9Qp2Pm1yGYOaM8HrgHIoeTo6PFYD682QVQaCRsNIQyPK3RVdhCc4v-cCtxtg-DfyJPFGnzGdRg0ycCrRfI5Fdetc1VaUBovL9JiS-TaQx6vVhl9~yGARp57XhrRvr7Z~DyD-vHMm3Fif7WHbg6VEWSgb3anwgaEjTS2LMrMeRKZu5tfXhbUr8EYFvaFrulQ4cb2mvKbVw94VxFKLAdw__&Key-Pair-Id=KUT5TJCACFTXG","author","","date","2025-03-21T09:17:30Z","article","John Gray, Office of the Legislative Council, outlined a plan in S.127 to let towns or private sponsors finance infrastructure for a single housing project and be repaid from the property tax increment the project produces.

The proposal—described in the bill as a Community and Housing Infrastructure Program (CHIP)—would allow a municipality to create a narrowly defined housing development site, authorize infrastructure improvements tied to that site and retain a portion of the future property-tax increase (the increment) to repay financing for up to 20 years.

Why it matters: Supporters said CHIP could unlock projects that currently stall because small towns lack water, sewer or road extensions and cannot afford large up-front public investments. Critics warned the move risks diverting education fund revenues, could expose towns to new financial complexity and needs clearer safeguards and rulemaking before it is widely used.

Key features of the draft bill and debate

- Project focus: Unlike traditional TIF (tax-increment financing) districts that cover broad areas, CHIP would be project-based. A housing development site can be a single parcel and adjoining lots where the infrastructure is intended to stimulate housing construction. John Gray said the intent is to tie the increment to a specific project so there is no “background growth” issue typical of larger TIF districts.

- Who can finance: A “sponsor” may be the municipality, a private developer or a third-party lender. The sponsor finances the infrastructure and is repaid only from the tax increment generated by the housing development site. John Gray said the sponsor concept is a “really key distinctive piece.”

- Affordable-housing requirement: Applications to the Vermont Economic Progress Council (VEPC) must show the proposed housing development “includes” affordable housing. CHIP’s draft defines affordability as housing costs that do not exceed 30% of gross income for households at 50% of area median income for both owner and renter units; the bill does not set a required share of units that must be affordable, meaning one unit could meet the threshold as written.

- Tax-retention limits and timeline: The bill would permit retention of up to 80% of the education property-tax increment for up to 20 years and require municipalities to retain a substantial municipal share (draft language references retaining at least the same municipal effort as current law). The debt-incurrence (borrowing) period is proposed at 5 years, with VEPC allowed to extend that incurrence window by up to 3 years. Sponsors must segregate retained increments in a special account until financing is repaid.

- Public process and agreements: Municipalities must adopt a housing development plan, map the site, hold public hearings and execute a “housing infrastructure agreement” among municipality, sponsor and developer. The agreement must identify the sponsor and obligate tax increments only to repay financing and related costs; it also must provide for “performance assurances.” If municipal borrowing is used, public votes would be required for each issuance; if a private sponsor finances the project, the statute as drafted would not require a municipal bond vote but does require public notice and VEPC review.

Debate and concerns raised

- Auditor’s view: An auditor testifying to the committee warned the draft “is a direct transfer from taxpayers to the developer” and urged a means test and stronger documentation of need. The auditor also flagged uncertainty about whether municipally issued tax-exempt debt could be applied to privately owned property in every case and urged rulemaking and fiscal analysis before adoption.

- Risk and default: Committee members asked what happens if a private sponsor defaults after building public infrastructure. Proponents said the statute and the housing infrastructure agreement are designed to allocate risk and that tax-increment liens are senior; they also stressed the municipality would not be on the hook if the sponsor carries the debt. John Gray and witnesses emphasized the agreement can include protections and performance assurances and that lenders and municipalities could choose the financing route that best suits the project.

- Scope and standards: Several lawmakers said they want stronger guardrails so CHIP does not subsidize high-end housing or projects with minimal affordable units. Proponents argued that requiring at least some affordable housing and limiting the program to specific project sites, plus VEPC oversight and rulemaking, strikes a balance between enabling projects and protecting public interest.

Evidence of use and precedent

Proponents pointed to other states that allow project-level sponsor financing and to local examples where infrastructure costs (water, sewer, pump stations, roads) that run tens of thousands per unit make modest housing projects infeasible without a financing tool. David White, a housing and economic development consultant, said the project approach reduces administrative burdens for small towns and helps capture only the increment generated by that site rather than background grand-list growth.

What would happen next

Committee members and witnesses asked VEPC (referred to in testimony as Vepsy/VEPC) to write rules and for the fiscal office to produce more analysis on likely impacts to the education fund. Multiple speakers said they want stronger rulemaking and clearer performance assurances before the bill is finalized. The chair signaled willingness to keep working on the bill rather than rush a final passage.

Ending

Proponents described CHIP as a narrowly tailored tool to accelerate small and medium-sized housing development by making the necessary infrastructure financeable. Auditors and some legislators urged stronger safeguards, clearer affordability targets, and formal rulemaking authority to limit fiscal exposure to the education fund.

","mediaType","Video","parentTitle","Senate Finance - 2025-03-20 - 1:30PM","oneSentenceSummary","John Gray, Office of the Legislative Council, outlined a plan in S.127 to let towns or private sponsors finance infrastructure for a single housing project and be repaid from the property tax increment the project produces.","taxTitle","Finance, SENATE, Committees, Legislative , Vermont","taxId",38150,"location","Vermont","headline","shortSummary",{"_33":76,"_35":36,"_37":38,"_39":77,"_41":78,"_43":79,"_45":80,"_47":81,"_49":82,"_51":83,"_53":84,"_55":56,"_57":58,"_59":85,"_61":62,"_63":64,"_65":86,"_67":68,"_69":70,"_71":72,"_73":56,"_74":56},6116224,"S.127 would alter medical-expense deduction for continuing‑care fees and freeze value of new ADUs, supporters say",393,191000,584000,"/Search/View?dp=1&key=2733782-0bff40c41e54223d5aaf0e22dcc146e5&start=191&end=584","https://assets.pipeline.soar.com/2733782-0bff40c41e54223d5aaf0e22dcc146e5/thumbnail_191000.jpg","/articles/6116224/Vermont/S127-would-alter-medical-expense-deduction-for-continuingcare-fees-and-freeze-value-of-new-ADUs-supporters-say","https://secure.pipeline.soar.com/6116224-42e4edb27049a5ac9b7fc8a398a171fe/orig.mp4?Expires=1771004016&Signature=R2SsS2ABNd5QaMM0rYJR1T8E7CVmjqvZ4Tl5sqELUxlB5uP4envcWwno1KmPelt7hN6lLrHa2--cxBoE1jvWecoJ2b1OtppRnO03H-htgyNVmZMmX2wO9VMZfSr8qVp03lleSVA6boaWhOSLTHrve-rVuWORyGpnGZnU8iuwsEbscavn2QOhH8EfVWvZEe844ehiqGvkLbyufPQv2zMlB6fgQFTAjW0yD~WkIRRs8siMiMzkWu5mr28IF2fr7xHGO2-dcFF4umvVCzYJWI9NpiawWK6cKix-JKf1Jftg0L9rdwPv8S3xx4ZtCaikE1YucoRCv8HrDRF2nZRSZZ-RSw__&Key-Pair-Id=KUT5TJCACFTXG","The committee reviewed tax provisions near the end of S.127 that would (1) change a medical-expense deduction related to continuing-care facility monthly fees and (2) create a three-year property-value freeze for certain construction projects, including accessory dwelling units and projects using state housing grant or loan funds.

Medical-expense deduction

- Current practice and proposed change: Testimony described an existing Vermont income-tax deduction that allows taxpayers who itemize federally to deduct medical expenses above the standard deduction and exemptions. S.127 would remove a prior limitation that disallowed deducting recurring monthly payments to certain continuing-care facilities (sometimes called continuing-care retirement communities) where the monthly fee bundles lodging, food and other services that the payer may not be able to allocate to medical care. A committee member asked whether the change would allow taxpayers to deduct “condo fees” or bundled rent-like payments; counsel said the proposed amendment removes the limitation that previously excluded those recurring continuing‑care payments from the medical deduction for affected residents.

- Questions and context: Committee members asked whether the change applies only to a specific facility or to all qualifying continuing-care arrangements. Counsel and other staff said it is intended to remove the restriction for people previously limited from deducting those expenses; they noted federal deductibility rules and said further review may be needed.

Property-tax freeze for ADUs and VHIP-funded rehabilitations

- The bill would allow a three-year freeze in municipal and education tax assessments for (a) properties rehabilitated or built with a Vermont Housing Improvement Program (VHIP) grant or loan and (b) newly built accessory dwelling units (ADUs). Under the proposed freeze, municipalities would not count the ADU’s added assessed value for three years, intended to encourage new units.

- Lawmakers asked how the freeze would interact with affordability requirements for VHIP-funded projects and whether a short freeze could be used by owners who then market high-priced short-term rentals. Speakers asked staff to confirm whether prior programs tied freezes to affordability criteria and whether the new draft aligns time limits for affordability covenants with the tax freeze period.

Next steps

Committee members said they want fiscal notes and clarification about whether the medical-deduction change applies broadly or to specific facilities, and they asked staff to ensure the ADU/property-freeze language coordinates with state program affordability requirements. Several members urged caution and requested more precise drafting before advancing the tax provisions.

","The committee considered two tax provisions in S.127: removing a prior limit on deducting certain continuing‑care monthly fees as medical expenses and a proposed three‑year property-tax freeze that would exclude value from new ADUs and VHIP-funded rehabilitations.",{"_33":88,"_35":36,"_37":38,"_39":89,"_41":90,"_43":91,"_45":92,"_47":93,"_49":94,"_51":95,"_53":96,"_55":56,"_57":58,"_59":97,"_61":62,"_63":64,"_65":98,"_67":68,"_69":70,"_71":72,"_73":56,"_74":56},6116229,"VHFA asks for extension of tax-credit sales to keep down-payment and first-gen programs running",284,11181000,11465000,"/Search/View?dp=1&key=2733782-0bff40c41e54223d5aaf0e22dcc146e5&start=11181&end=11465","https://assets.pipeline.soar.com/2733782-0bff40c41e54223d5aaf0e22dcc146e5/thumbnail_11181000.jpg","/articles/6116229/Vermont/VHFA-asks-for-extension-of-tax-credit-sales-to-keep-down-payment-and-first-gen-programs-running","https://secure.pipeline.soar.com/6116229-d539eb3c7d8d47b5152d3a344fc1b14c/orig.mp4?Expires=1771004016&Signature=IqfxrmgMdpwxS5yG4IH4bj8CCSoOlFlxk93A2YwE8BCjgu46pewDkhFtsMuHxm--2Rd3zJWXRF1sUpPOqQ0F1GJ85gIxvroVy-ncJa2BC8FpKzXL6y66qR7j51rKSyqYi2L3DAjzc2GwLdBtxmTLSfxxLCR9W7gCza-iWNFth~COEOl9yCxlhw4AkjQWClnPt300Ku4CiS7J1AYhgIjkdL4UZdp2~qZkzBZsGFW1BPQrDSbrVxq-XpdGErbs9Ml4-4yJqIZVukXcl0lGLXrsnB4sp-oBaIEIduSbPL1XlywPlDdLkweuI437OnYsJ3bCPZFKf4Wy7hW8uz5CXfg9Gw__&Key-Pair-Id=KUT5TJCACFTXG","The Vermont Housing Finance Agency asked committee members to extend the state tax-credit sale authority that funds two house-buying programs: the VHFA down-payment assistance program and a newer first-generation homebuyer grant program.

Why it matters: VHFA’s down-payment assistance (DPA) program provides 0% repayable loans to eligible buyers through participating lenders; the program is funded by proceeds from five‑year state tax credits that lenders buy. VHFA said repayments have slowed because of low refinancing and fewer homebuyers moving, which has reduced the revolving fund’s cash flow. Without extending authority to sell credits, VHFA warned, the program will wind down.

What VHFA told the committee

- Mechanics: Since 2015 VHFA has sold state tax credits in five-year blocks and used the proceeds to fund a revolving pool of DPA loans. Each block allows the issuer to sell $250,000 of credits per year over five years (a $1.25 million upfront sale under current practice). Borrowers receive a 0% second mortgage that becomes due on sale, refinance or payoff.

- Recent changes: Median home prices and buyer needs have risen since the program began; VHFA increased DPA levels over time (from $5,000 to $7,500 to $10,000–$15,000 depending on income tiers). The agency said the borrowers helped by DPA have lower incomes, lower credit scores and higher student‑loan burdens than typical buyers.

- Request: VHFA asked the committee to extend statutory authority for the tax-credit sales so the DPA fund remains at roughly the same annual level of tax-expenditure liability in the near term and so the first-generation homebuyer program (previously funded by annual appropriations) can be shifted to a tax-credit sale model if lawmakers choose.

What opponents and fiscal concerns raised

- Fiscal exposure: Committee auditors and staff noted that tax-credit sales create a multi-year tax-expenditure liability and that the state’s forgone revenue should be weighed against other budget needs. The committee discussed whether to continue both programs, fund one, or adjust eligibility to stretch limited proceeds.

- Implementation choices: Lawmakers asked whether the DPA program could be narrowed (geographic targeting or lower asset limits) if proceeds become limited. VHFA said it would consider such limits if funding is constrained.

Ending

VHFA asked the committee to preserve the revolving DPA funding mechanism as the best way to keep serving moderate-income and first-time buyers while repayments slow. Members said they would weigh the request alongside competing budget priorities and returned questions to staff for more fiscal detail.

","The Vermont Housing Finance Agency told the committee that rotating state tax-credit sales fund a revolving down-payment assistance loan pool. VHFA asked to extend the sale authority so the program can continue while repayment flows slow as refinancing and moves decline.","actionData","errors"]

Article not found

Bill would let developers or towns finance infrastructure with project-based tax-increment financing to spur housing

S.127 would alter medical-expense deduction for continuing‑care fees and freeze value of new ADUs, supporters say

VHFA asks for extension of tax-credit sales to keep down-payment and first-gen programs running