Members of the conference committee for S.127 met May 28 to discuss reconciling differences between the Senate and House versions of the CHIP (Community Housing Investment Program) proposal and related housing provisions carried in H.479 and other amendments. Committee members and staff reviewed non-CHIP items (appeals language, land bank extension, rental-credit reporting and fair-housing language) and CHIP-specific issues including eligible improvements, parcel eligibility, affordability definitions, retention of tax increment, the duration of program authority, and how to measure a "but-for" test for TIF-like investments.

The discussion centered on several recurring edits proposed by the House side: dropping an overly prescriptive definition of "improvements" and reverting to the more flexible language used in existing TIF authority; restoring a land-bank extension to November 2026; removing a universal-design study; restoring rental-credit reporting language (previously worked in H.479); and reworking municipal appeals language. On CHIP-specific items, the House representatives said they want to rely on existing TIF rulemaking where possible rather than create extensive new statutory rule lists, and they proposed a longer authorization window (extending a 2031 deadline to 2035) and higher increment-retention shares to make projects feasible for smaller communities.

Lawmakers debated technical program design. The committee discussed replacing a newly drafted "mixed-income housing" definition with separate affordable and "moderate-income" development categories (for example, 80% AMI for rental/20% AMI for ownership in the House proposal, with a lowered development-percentage threshold of 15%). The House side said it reduced some thresholds and suggested a 10-year authorization rather than a short pilot and argued for leaning on existing TIF rulemaking processes to accelerate implementation.

Committee members also pressed on eligibility mechanics intended to ensure public infrastructure investments benefit the public good beyond individual project sites. Concerns included a proposed limit on eligible parcel size, new language describing a project as an "offered bona fide domicile in perpetuity" (interpreted as an attempt to prevent initial short‑term-rental or second‑home offerings), and the administrative practicality of enforcing deed restrictions. House members proposed relying on deed restrictions or landlord/homestead certification tools for enforcement but noted limits on municipal capacity for long-term policing.

The so-called "but-for" test—language intended to show that state increment retention makes a project financially viable—emerged as the most difficult point. The House asked VEPC-related staff and tax-increment experts to craft a quantifiable approach, suggesting that measures tied to statutory housing targets, vacancy rates or local grand-list growth could be combined with financial viability metrics. Staff and lawmakers said they had reviewed other states' use of but-for tests and solicited additional work from agency staff and Jessica (staff witness referenced in committee) to propose clearer, quantifiable metrics.

On program caps and retention percentages, the House expressed concern that a $40,000,000 lifetime increment-retention cap (as drafted) and low retention shares (60%) would reduce economic feasibility, especially after inflation and higher construction costs. The House proposal suggested higher retention shares for affordable/moderate-income housing (proposed 85% retention) and higher baseline retention (proposed 75% for other projects), with flexibility tied to meeting housing targets rather than an arbitrary dollar cap.

Committee members discussed administration and conflicts of interest: the House proposal would make VHFA and DHCD nonvoting on decisions where they could also be funders, to avoid perceived conflicts. Affordability requirements were discussed as being tied to a project's indebtedness for rental projects, with a request to harmonize cost‑inflation protections (for example a 3% cap on certain expense increases) with language in H.479.

No formal votes were recorded in the session transcript. Members agreed to continue work: staff were directed to post side‑by‑side documents showing S.127 as passed and the House proposals (including a draft titled "S.127 1.1 by John Wright" for sections 25–26, per committee discussion), and the committee scheduled a follow-up in the afternoon to review three comparison documents (S.127, H.479 changes and the tax-increment draft). Jessica was expected to provide additional technical testimony on rulemaking and the but‑for metrics; counsel and clerks were asked to confirm parliamentary/germane questions about bringing H.479 language into the S.127 conference product.

What remains is technical reconciliation: quantifying the but‑for test, harmonizing affordability and cost‑index provisions, defining eligible infrastructure and parcel scope, and finalizing retention shares and deadlines. Committee members agreed to reconvene later the same day to review side‑by‑side drafts and hear further testimony.