House committee weighs tighter CHIP housing tests, 60% housing floor-area target and residency limits

The Vermont House Committee on Commerce and Economic Development on April 29 debated several changes to the state’s proposed CHIP (Housing Capital and Infrastructure Program) legislation in S.127, including adding a requirement that municipalities or the state review board explicitly determine whether a proposed housing infrastructure project “furthers the purposes” of Section 19 07; setting a suggested 60% minimum of floor area dedicated to housing; and narrowing or removing a provision that units be offered exclusively as primary residences “throughout the life of the housing development site.”

Committee members and legislative counsel said the proposed edits would give reviewers a clearer standard to check whether a project advances the bill’s goal to encourage development of primary residences affordable to low- and moderate-income households. John Grayhaus, legislative counsel to the committee, outlined two insertion points under discussion: require a municipality to include a determination in the housing development plan under Section 19 08, or add an independent project criterion in the FEPC/board application review under Section 19 10 so the board itself must make the finding.

Why it matters: the changes would affect when and how projects qualifying for public infrastructure support are screened for housing intent, and they could change which projects reach the CHIP board for final review. Maura Collins, executive director of the Vermont Housing Finance Agency, told the committee she “strongly want[s] to be on the record as saying that it should be at least 60% of the floor area of the development that benefits from CHIP should be housing.” Collins said a 60% floor-area threshold would keep the program focused on housing while allowing some ground-floor commercial uses in downtowns.

Local governments’ group the Vermont League of Cities and Towns (VLCT) warned against placing enforceable residency obligations inside the development agreement. Josh Hanford and Samantha Sheehan of VLCT told the panel that requiring development agreements to ensure each unit be “offered exclusively as a primary residence throughout the life of the housing development site” could be infeasible and have unintended market effects. “The only way to enforce that would be to pass on a housing covenant to the developer,” Hanford said, and such covenants, they warned, can make financing harder, limit resale markets and shift enforcement burdens to municipalities that often lack staff and resources.

VLCT also said that development agreements for public–private partnerships typically function as contracts to protect municipal interests and that adding requirements a party cannot realistically enforce could weaken the contract’s usefulness. The group proposed keeping the program’s intent—supporting primary residences—clear in statutory purpose language while avoiding long-term, contract-level enforcement obligations that municipalities would be expected to police.

Committee debate focused on two technical approaches to the “furthers the purpose” test. Grayhaus and others sketched options: (1) require municipalities, when preparing the housing development plan (Section 19 08), to include a short, internal determination that the project advances Section 19 07; or (2) add the requirement to the board/FEPC project-criteria review (Section 19 10) so the reviewing body must independently determine whether the project furthers the statute’s purposes. Legislative counsel said the latter would be a more substantive, independent check but could be redundant if municipalities already make the finding; embedding it in the housing development plan would be a process check that the review could pick up.

The committee discussed procedural safeguards and transparency: Grayhaus described options to require the board to provide a written explanation of its decision and to set a turnaround deadline. Committee members and witnesses broadly supported a firm but practicable deadline; Collins suggested a 30- to 45-day maximum for the CHIP board to act if a project is routed to it for review. The committee’s draft language discussed a 30-day response requirement to ensure timeliness.

On residency language, VLCT and Collins both urged removing or substantially narrowing the phrase “throughout the life of the housing development site.” Collins said monitoring and enforcing a perpetual residency restriction would likely require deed covenants, ongoing monitoring and state or municipal enforcement capacity or dedicated appropriations. VLCT said such covenants are common in permanently subsidized affordable housing administered by nonprofit owners, but they are generally tied to subsidized finance and long-term stewardship, not to the type of infrastructure development agreement envisioned under CHIP. Several legislators signaled openness to keeping the program’s stated purpose (favoring primary residences) while dropping or rewording the long-term enforcement language in the development agreement.

Other technical points discussed included: whether the project-criteria route should apply only to one alternative route in the statute (for example, the route that uses a percentage-of-housing test) and whether a single consolidated board (the draft CHIP board chaired by the treasurer) should adjudicate exceptions. Multiple witnesses and legislators said the CHIP board should have strong housing expertise; Collins offered VHFA participation on that board.

No formal vote was taken on any amendment during the meeting. Committee counsel said he would draft updated language (referred to as draft 4.5) reflecting the group’s directions for further review. Witnesses said they support the underlying goal of prioritizing housing and suggested statutory language and administrative approaches be tuned to avoid chilling development financing or imposing ongoing unfunded municipal enforcement duties.

The committee scheduled follow-up work and further testimony; the treasurer’s office will serve as chair and provide administrative support to the CHIP board in the current draft, and counsel noted additional edits will be circulated for review.

Looking ahead, the committee signaled support for a higher housing floor-area threshold than earlier drafts (committee discussion moved toward 60% rather than a lower 40% figure), a clearer process for municipal and board determinations that a project “furthers the purposes” of Section 19 07, and removal or narrowing of any requirement that municipalities enforce primary-residence covenants “throughout the life” of a development.