Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Housing Infrastructure topic
No spam. Unsubscribe anytime.
Senate Finance weighs TIF-based infrastructure program to spur workforce housing
Summary
Lawmakers, housing officials and developers debated S.127—a proposal to use project-based tax-increment financing (TIF) to pay for roads, sewer and other infrastructure to lower development costs and encourage more housing, while members pressed for clearer affordability limits, developer safeguards and a sunset review.
The Senate Finance Committee on March 25 discussed S.127, a bill that would allow project-based tax-increment financing to fund infrastructure aimed at lowering the cost of building homes for working Vermonters.
Committee members, state housing officials and developers spent more than two hours probing whether the bill—s language is tight enough to ensure public investments produce workforce housing rather than higher-end second homes or ski condos.
The issue, lawmakers said, is a familiar one: municipal infrastructure costs (roads, water, sewer) often make the difference between a project that "pencils" and one that never starts. Alex Farrell, Commissioner of the Department of Housing and Community Development, told the committee the program is intended to "stretch all of our affordable housing dollars much further" by covering infrastructure costs that otherwise fall to developers or to scarce subsidy dollars.
"This is a way for all of our dollars to actually stretch a lot further," Farrell said, adding the program should be flexible enough to work for small towns as well as larger jurisdictions.
Laura Collins, executive director of the Vermont Housing Finance Agency, urged the committee to preserve a simple administrative model and to avoid assigning program administration to VHFA, which she said lacks the staffing to manage a program with complex income compliance. Collins said a recent housing needs assessment and a legislative summer study both flagged infrastructure as a recurring barrier to creating more homes.
"VHFA is very supportive of whatever the state can do to support the investment in infrastructure," Collins said, while cautioning that adding typical affordability compliance rules to an infrastructure-focused tool could create implementation burdens that defeat the purpose.
Developers said the money must be large enough to move projects from "can't do" to "can do." Zeke Davison, Summit Properties, described a Middlebury project in which infrastructure costs for the initial phase totaled about $5 million. Davison said modest public support targeted at those horizontal costs could unlock projects that are not currently feasible without one-off grants.
"If the deal doesn't make a developer money, they're not gonna do it," Davison said. "This is the kind of tool that gets projects to pencil."
Committee members repeatedly raised narrower questions about the bill's definitions and limits. Senators urged: (1) a clearer purpose statement that emphasizes primary-residence workforce housing; (2) consideration of a floor-area or percentage metric to ensure a meaningful share of built space serves housing; (3) requirements or incentives to discourage use of the program for second homes and vacation properties; and (4) an expiration and evaluation so the Legislature can review outcomes.
Several lawmakers (including Sen. Hardy and Sen. Brock) asked the drafters to add a sunset and evaluation requirement: return to the Legislature after five years to report how many units were created, how many were occupied as primary residences, and whether the program had shifted housing affordability.
Members also debated the bill—s definition of "infrastructure improvements." Some raised objections to including "commercial and industrial facilities" in that definition, arguing those items are private development rather than public horizontal infrastructure. The committee coalesced around deleting commercial/industrial items and explicitly including sidewalks and other basic public infrastructure commonly required in new neighborhoods.
No formal vote was recorded in the hearing. Committee leadership said they will circulate draft amendments that remove specified affordability thresholds from the statutory text, tighten the purpose language to emphasize workforce and primary-residence housing, add an evaluation and sunset, and narrow the definition of infrastructure.
The committee also confirmed the bill currently lacks an administrative appropriation; several witnesses said the program—s administrator (referred to in testimony as "Pepsi"/"Vepsi") told the committee it could run the program but that the statute should avoid onerous compliance rules that would require a large appropriation to staff enforcement.
The committee scheduled continued consideration and signaled it may pass the bill over to allow further work on amendment language.
The discussion touched on numerous related funding sources and programs: low-income housing tax credits (LIHTC), Community Development Block Grants (CDBG), HUD funds, American Rescue Plan Act (ARPA) allocations used for local infrastructure, and existing revolving loan funds. Witnesses said many of those sources are limited and that targeted TIF-like infrastructure financing could leverage those scarce subsidy dollars.
The committee asked staff to prepare draft language reflecting the conversation, including a five-year review requirement and removal of commercial/industrial facilities from the definition of infrastructure. A revised bill will be circulated for a future meeting.
