House panel reviews S.127 CHIP proposal that would let municipalities use tax increment financing for housing infrastructure

HEADLINE: House panel reviews S.127 CHIP proposal that would let municipalities use tax increment financing for housing infrastructure

LEDE: Members of the House Ways & Means committee spent most of a May 6 hearing on S.127 walking through a proposal to add a Community and Housing Infrastructure Program, or CHIP, that would let municipalities and other project sponsors use project‑based tax increment financing to pay for infrastructure that supports housing. Proponents and staff described rules, eligibility criteria and an incentive for projects that reserve at least 20% of units for lower‑ or moderate‑income households; the state’s fiscal office said it could not produce a reliable dollar estimate of the program’s cost.

NUT GRAF: The CHIP language (inserted into a 70‑page housing amendment) would change longstanding tax‑increment practice in Vermont by allowing smaller, project‑level financing rather than broad TIF districts and by offering an extra share of education property tax increment to projects that meet affordability targets. Committee counsel and staff emphasized process safeguards — municipal plans, housing infrastructure agreements, state review and a new advisory board — but JFO warned of uncertainty about how much the Education Fund might forgo if many projects use the tool.

BODY: The committee began the hearing with explanations from members and counsel about how the bill was assembled and where the CHIP language came from. "What House General has done is really combine those 2 things together," said Cameron Wood of the Office of Legislative Counsel during opening remarks, describing how the House and Senate housing bills were merged into the current proposal.

John Gray, also of the Legislative Council, summarized the core difference between CHIP and traditional tax increment financing: "At the highest level, it's the difference between a district and a project based approach to tax increment financing." Under CHIP, sponsors may propose a single housing development site and request tax increment to finance infrastructure tied…