VEPC urges 10-year TIF review, rejects new CHIP board in testimony on S.127

Burlington, Vt. — On April 25, 2025, the Vermont House Committee on Commerce & Economic Development heard testimony on S.127, the CHIP infrastructure program bill, from Jessica Hartleben, executive director of the Vermont Economic Progress Council (VEPC). Hartleben and VEPC staff recommended adjustments to reporting, a 10-year financial review for tax-increment financing (TIF) style districts, clearer language on “excess increment,” and against the creation of a separate CHIP oversight board.

Hartleben told the committee that VEPC views CHIP as an infrastructure investment for municipalities rather than a direct housing subsidy for developers. “We see this as an infrastructure investment in Vermont communities that are gonna benefit future generations of Vermonters,” she said. She said VEPC is prepared to administer the program, provide annual, performance-based reports, and work with partners on data if the legislature requests more detail.

Why it matters: S.127 would create a program to help municipalities build water, sewer, roads and other infrastructure intended to enable housing development. Committee members pressed VEPC on how retained tax increment would be handled, how the program would verify housing and affordability outcomes, and whether adding a separate CHIP board would improve oversight.

Key recommendations and concerns raised by VEPC

- Annual reporting and oversight: Hartleben said VEPC already tracks housing types and amounts under existing TIF work and can provide yearly reports to the Legislature. She offered to return to the committee with additional data and clearer examples. “We are also prepared to structure reports annually that will provide you performance based data,” she said.

- Excess increment and 10-year review: VEPC asked that S.127 adopt the existing TIF statute’s 10-year check-in process (cited in testimony as 24 VSA 18 94 g and TIF rule 900–913). Under VEPC’s explanation, a district typically retains increment for 20 years while repaying longer debt instruments; VEPC recommended keeping a 10-year financing review so retained increments can be “right sized” and any true excess can be returned to the Education Fund. Hartleben described a common timeline: municipalities incur bonds within five years of approval, retain increment for 20 years, but may carry 30-year debt instruments to make early cash flow work.

- Housing definition and enforcement: Committee members asked how the program would verify that a required share of floor area is housing (a 60% floor-area threshold was discussed in the meeting). Hartleben said VEPC does not have capacity to conduct statewide site-measure verifications or to enforce income-based eligibility tied to AMI; she recommended relying on local municipalities, regional planning commissions (RPCs), and letters of support from housing partners such as VHFA (Vermont Housing Finance Agency) or the Department of Housing and Community Development (DHCD) as part of the application. “Vepsi [VEPC] does not have the capacity to verify site measurements statewide,” she said, and suggested municipalities be trusted to make those determinations while VEPC retains financial oversight.

- Opposition to a separate CHIP board: VEPC argued a new CHIP board would add redundancy and slow projects. Hartleben said VEPC already conducts rigorous review, including staff financial analysis assisted by the administration’s economist, Jeff Carr, and that TIF applications sometimes require multiple council meetings. “VEPC does not rubber stamp projects,” she said, and recommended strengthening existing mechanisms (the 10-year review and application requirements) rather than creating a separate approval board.

Other details from the hearing

- Percentages discussed: committee discussion referenced draft-language ranges discussed in earlier drafts (70%, 80%, 85%, 90%) for the share of increment or thresholds tied to housing proportions; VEPC suggested those figures be subject to adjustment after financial review at the 10-year mark. The committee also discussed an alternative set of incentives tied to higher percentages of housing floor area rather than strict mandates.

- Use of partner letters: Multiple participants suggested the application require supporting letters from RPCs, VHFA or DHCD to attest that a proposed project meets local or regional planning and housing goals; VEPC said this approach had worked in prior programs.

- No final action: The committee did not take a formal vote during the session. Committee members indicated a plan to move the bill on Tuesday, and VEPC agreed to follow up with clearer numerical examples and potential application language revisions before that date.

The committee’s next steps appear to include incorporating VEPC’s recommended 10-year financing review language, clarifying the excess-increment treatment on page 14, subsection d of the current draft, and deciding whether to require letters from housing partners as part of the application process. VEPC said it would return with concrete examples and follow up with VHFA and other partners.