Senate Finance considers H.398 changes to Vermont Economic Development Authority, including disaster‑recovery loan fund

Senate Finance received a detailed walkthrough of H.398, the House‑passed bill that amends the statutes governing the Vermont Economic Development Authority (VIDA, also written in testimony as VITA). The bill primarily makes technical drafting updates but includes policy changes: statute‑level direction for project eligibility tied to a Vermont Sustainable Jobs Strategy, authority to create and govern nonprofits with narrower board‑composition rules, expanded types of security for authority loans, extended repayment terms for loans to local development corporations, allowance for electronic signatures on bonds, and a new VIDA disaster‑recovery loan fund.

Cameron Wood of the Office of Legislative Counsel presented the bill text and said most changes are technical cross‑references and drafting cleanups resulting from earlier subchapter repeals. VIDA requested several substantive clarifications: removing the governor’s required approval of the authority executive director’s compensation from the statute (VIDA testified the governor currently does not approve that salary in practice), allowing loan officers to act under authority policies without separate manager approval for small loans, and deleting obsolete cross‑references to a repealed subchapter.

Policy items highlighted by staff:

- Project purpose and Vermont Sustainable Jobs Strategy: H.398 inserts the Vermont Sustainable Jobs Strategy criteria into statute. The inserted list requires the authority to find a candidate project materially supports objectives such as creating sustained employment, providing quality wages and benefits, advancing growth in priority sectors, and encouraging projects that reduce or mitigate pollution and climate impacts. House Commerce added explicit language referencing pollution mitigation and climate change objectives; staff said the move places the strategy in statute so future administrations cannot change it solely by executive action.

- VIDA governance and operations: the bill clarifies that VIDA may form nonprofit corporations and seeks to reduce a current requirement that a newly created nonprofit have an additional 14 members selected by authority members (VIDA said that would create oversized boards). The bill also replaces repeated references to a repealed subchapter, authorizes electronic signatures for bonds, and modifies signature and delegation language so the manager or designee (not the governor or chair) may execute routine loans and bond documents under adopted policies.

- Loan terms and collateral: H.398 renames a subchapter “direct secured loans” to permit security other than mortgages, expands collateral language, and allows loans to local development corporations to be amortized over 20 years (up from 10 years). Staff said the change aligns VIDA loan terms with typical bank practice and can make projects more financeable.

- Disaster recovery loan fund: the bill creates a VIDA disaster‑recovery loan fund to provide low‑cost loans and financial assistance to businesses and agricultural enterprises impacted by disasters. VIDA must consult with the Agency of Commerce and Community Development and the Agency of Agriculture on whether funds should be made available except when a governor‑ or president‑declared disaster exists. The House added a requirement that interest be limited to rates necessary to cover administrative costs and that the fund operate as a revolving, nonlapsing fund.

Fiscal staff explained the House had deleted a $2 million appropriation from the bill and instead repurposed $2 million of a prior FY25 transfer ($7 million originally transferred to another program) to stand up the disaster‑recovery fund; the repurposing was consistent with the governor’s recommendation and results in initial capital of $2 million for the new VIDA fund in FY25. Joint Fiscal said the interest rate on loans would be set to cover administrative costs.

Committee members asked VIDA representatives for examples of prior nonprofit entities it had formed (for example, an agricultural credit program administered under VIDA) and for further information about municipal versus authority bonding language. Cameron Wood and Joint Fiscal staff answered technical questions and said VIDA would provide a fuller explanation and witnesses would appear at the next meeting.

Ending: VIDA and Joint Fiscal were scheduled to return with testimony and examples to give the committee operational context for the statutory changes. Members signaled interest in the disaster‑recovery fund, the statutory codification of the sustainable jobs strategy, and the change to executive‑compensation oversight.