Conference committee debates revisions to S.127 CHIP program, TIF rules and housing provisions

A conference committee reconciling the Senate and House versions of S.127 met May 28 to negotiate changes to a new CHIP program and related tax-increment financing (TIF) rules, along with several housing provisions that appear in a parallel bill, H.479.

The meeting focused on disagreements over how to define eligible improvements, how to measure whether a project needs state increment retention (the "but-for" test), affordability thresholds and retention percentages, program timelines and caps, and how much rulemaking to put into statute versus deferring to existing TIF guidance and agency rules.

Committee members said they want the CHIP program to remain usable for smaller municipalities and to preserve the TIF program’s flexibility. Members opposing the House draft asked to restore broader, more flexible definitions of eligible improvements to match long-standing TIF language and to avoid prescriptive statutory rulemaking that could delay projects. They also proposed extending the program timeline from 2031 to 2035 and lengthening the program term to 10 years rather than a shorter pilot period described in one draft.

Among the specific disputes: the group discussed a $40,000,000 lifetime increment-retention cap that appears in one draft and questioned whether a fixed-dollar cap is practical over a multi-year period given inflation and changing market conditions. Retention rates under discussion included 85% retention for projects designated as affordable or moderate-income housing developments, 75% retention for other projects, and other proposals as low as 60% that some members said would make the program hard to finance. Committee members also debated whether the statute should require floor-area minimums (the House language included a floor-area reference that some members asked to remove) and whether the statute should impose deed-restriction–style perpetual affordability covenants or instead require affordability limits only on initial offerings or for the life of a project’s indebtedness.

A key technical point under negotiation was the but-for test used to determine whether CHIP/TIF increment is necessary to make a project financially viable. Members said the test needs to be quantifiable; some argued it should be consistent with existing TIF but-for tests, while others asked the agency (identified in the meeting record as having a role in guidance and rulemaking) to propose specific metrics tied to housing targets and local vacancy rates. Several participants urged reliance on existing TIF rulemaking and guidance rather than creating lengthy, prescriptive new rules in statute.

Committee members also discussed a set of non-CHIP provisions the House has advanced in H.479 that several members want considered in the conference package. Those included rental credit-reporting provisions, immigrant fair-housing language, a land bank extension (draft language suggested moving an expiration from April to November 2026), and funding or program language involving VHFA and DHCD. Members signaled support for keeping land bank extensions and for continuing work on immigrant fair-housing language so the two chambers can reach common ground.

Several participants raised administration and conflict-of-interest questions. The draft places agencies (named in the meeting as BHFA and BHCP in the transcript) at decision tables; some members proposed making those agencies nonvoting to avoid perceived conflicts when an agency both advises and stands to receive funds. Members also discussed harmonizing cost-increase caps (the House draft included a 3% cap on some expense increases) with existing rental affordability programs.

On process and next steps, committee chairs asked staff to prepare side-by-side comparisons: the Senate-passed S.127 language, the House amendment proposals (including H.479 language where relevant), and the most recent alternative draft circulated by the House. The committee asked staff counsel to produce those three side-by-side documents so members can review the differences and focus only on sections where the chambers disagree. The committee scheduled a follow-up meeting for 4:30 p.m. the same day and planned to have an agency representative provide testimony on TIF/CHIP rulemaking and the but-for test.

No formal motions or votes were recorded during the session; members exchanged policy positions, technical fixes and scheduling directions intended to inform a future amendment or agreement to present to the full chambers.