LAOB urges short-term surcharge and coordinated action to fund community-led affordable housing

Members of the House General & Housing Committee on Wednesday heard testimony on H.445 and a related Act 181 study report, as the Land Access and Opportunity Board (LAOB) and state housing agencies pressed for new, stable capital to support community‑led affordable housing, rural land access and resilience efforts.

"This bill creates a short term tax for incomes over 500,000 to create a revolving loan fund," said Ronnetta Mata Figueroa, director of advocacy and community engagement for the Land Access and Opportunity Board, describing H.445 as a source of capital for grants and loans administered by LAOB.

Why it matters: Committee members were presented with both a revenue proposal and a multi‑agency report that together aim to unblock projects from the earliest planning phases through construction. Testimony stressed that regulatory changes alone will not produce affordable housing and that predictable capital is essential to move shovel‑ready community projects, pilot programs and developer technical assistance from plan to build.

LAOB's proposal and scope LAOB described H.445 as a time‑limited, five‑year proposal that would add a 1.5% income tax surcharge on earnings above $500,000, placing receipts in a Land Access and Opportunity Revolving Loan Fund for community‑based affordable housing. LAOB staff said the fund would be used for a mix of revolving loans and grants to support projects they are currently helping to prepare, including cluster housing and “agrihood” concepts that combine farming and shared living, emergency resilience toolkits for flood‑impacted communities, and pilot projects tied to technical assistance programs.

LAOB staff estimated the surcharge would generate roughly $30 million a year as a starting point; a separate figure shared during the hearing noted that a 3% surcharge projection by JFO had yielded about $75.4 million a year, suggesting a 1.5% yield in the mid‑30s of millions. Committee members and LAOB staff said LAOB has not finalized exact deployment rules and plans to work with the committee over the summer to refine grant and loan criteria and project prioritization.

Alternative revenue streams and current funding LAOB officials said they are also exploring other revenue streams to complement or replace a surtax, including a portion of the cannabis excise tax. Testimony referenced a proposal under consideration in another bill that would set aside $500,000 for LAOB and $500,000 for a Cannabis Business Development Fund, with the remainder to the general fund. LAOB also confirmed it has $1.6 million in base funding in the current budget but that capital for construction and acquisition is the limiting factor for many community projects.

Act 181 study and recommendations Following LAOB’s presentation, the committee received the Act 181 study report, developed by an interagency work group that included the Vermont Housing Finance Agency (VHFA), the Vermont Housing & Conservation Board (VHCB) and the Department of Housing and Community Development (DHCD). The study group conducted expert focus groups and a public survey (757 responses) to identify barriers and incentives for affordable and mixed‑income housing.

Key findings and recommendations from the study report included: - Stable subsidy is critical: Stakeholders repeatedly said subsidies and predictable capital are necessary; regulatory streamlining alone will not close the affordability gap. The report recommends preserving and adapting the Priority Housing Project (PHP) approach rather than discarding it. - Use Act 250 incentives strategically: Recommendations include adapting priority housing project regulations to support project‑level infrastructure bonds, removing unit caps in Tier 1B areas, and making Tier 1B the default rather than opt‑in for qualifying municipalities. - Appeals and permitting reforms: Stakeholders urged reforms to reduce appeal timelines and administrative barriers that delay projects; the report highlighted opportunities to coordinate appeals reform with the Land Use Review Board (LURB) workstreams. - Inclusionary zoning and technical assistance: The study recommended technical assistance for communities and developers to design inclusionary zoning and compliance mechanisms that produce long‑term affordability. - Brownfields and tax policy: The report called for expedited brownfields review and exploring tax‑policy levers (including residential tax rate differentiation and land banking) to support affordable housing.

Committee reaction and next steps Committee members and witnesses repeatedly framed the work as the start of a longer action plan rather than a finished policy package. LAOB and agency staff invited the committee to engage over the summer and fall to refine revenue options, deployment criteria and sequencing (for example, ensuring subsidy is available before wide appeals‑streamlining is fully implemented). Several members urged coordination with environmental and land‑use committees and the LURB rulemaking process so that plan‑level environmental review and municipal planning align with permitting and appeals reforms.

Other points from the hearing - LAOB described community resilience work tied to flood response and volunteer networks, noting that local residents are often first responders and that toolkits and community‑level capacity building are part of LAOB priorities. - VHFA and VHCB officials emphasized the scarcity of development‑ready land with infrastructure and said consistent funding would allow developers to plan and bring projects forward. - Committee members discussed possible revenue sources beyond an income surtax, including state property or surplus lands sales and portions of cannabis excise collections; no new revenue source was adopted during the hearing.

What the hearing did not decide There were no committee votes on H.445 during this session. LAOB and agency staff said they will provide written materials and continue coordination with the committee. Several participants asked for targeted, realistic revenue options that could survive legislative negotiation; others urged more granular technical work in existing LURB and committee workgroups.

The committee expects follow‑up memos and additional testimony over the summer as agencies and LAOB refine deployment rules, revenue options and coordinated action items ahead of next session.