Committee reviews S.127 draft to create Community Housing Infrastructure Program; debate centers on 60% housing test, eligible infrastructure and a new CHIP "ad

On April 24, 2025, the Vermont House Committee on Commerce and Economic Development examined draft language for S.127, a proposal to create the Community Housing Infrastructure Program (CHIP) to subsidize infrastructure that supports housing development. The meeting, held on Zoom, focused on definitional language, eligible improvements, location criteria tied to the state’s tier system, tax-increment mechanics, reporting requirements and creation of a CHIP review board.

The draft presented by John Grama, Legislative Counsel, showed two alternative ways to qualify a project as a “housing development”: either at least 60% of the aggregate gross floor area upon completion be dedicated to housing, or a discretionary determination that the “projected housing development will meaningfully address the housing needs of the community” by a newly proposed CHIP board. Grama said any text in the draft that was not highlighted “is as received from the Senate,” and the draft replaces the CHIP subchapter in S.127 while highlighting changes for committee review.

Committee members debated how prescriptive to make the statute on what counts as “improvements.” The draft lists specific infrastructure items (power and telecommunications; wastewater, stormwater and water-treatment equipment; public roads, multimodal facilities, transit stop amenities, sidewalks and streetscapes; traffic signals and associated roadwork; land acquisition, demolition, and remediation, including flood remediation). The list omits an explicit callout for broadband/digital infrastructure and for parking or public facilities, which several participants flagged as notable omissions; committee members argued parking can be determinative in whether a project proceeds.

On location and eligibility, the draft ties housing development sites to the tier map and existing settlements: projects in Tier 1a/1b, in an existing settlement within a half-mile, or meeting certain interim exemptions are eligible. The committee discussed Tier 2 eligibility at length. Members noted that Tier 2 designation is not yet in effect statewide and that the draft’s current language would mean Tier 2 opportunities are effectively unavailable until the state finalizes those designations and the committee can set any additional constraints (for example, density or consistency with regional plans).

The bill revises tax-increment mechanics. The draft aligns CHIP project retention of education property tax increment with current TIF practice (restoring what the presenter described as the existing TIP percentages rather than the Senate draft’s higher amounts). It also narrows how municipalities may retain excess increment: up to 30% of annual excess above committed amounts could be placed into a project account for use only to offset financing payments in years with no increment, and any unused retained excess must be distributed to the Education Fund on retirement of financing. Grama described the 30% figure as a placeholder for committee discussion.

Reporting and transparency provisions in the draft add data collection requirements to annual reporting to the legislature, including expected or actual sale and rental prices and the number of units known to be occupied on a basis other than as a primary residence (the draft ties that reporting to what the municipality knows). The draft also asks for allocations of incremental revenue to be reported (amounts applied to related costs versus financing).

The draft creates a Community Housing Infrastructure Program Board to review projects that do not meet the 60% housing-floor-area threshold. The proposed board membership would include the state treasurer, the executive director of the Vermont Housing Finance Agency (VHFA), the CEO of VIDA, the executive director of the Vermont Bond Bank, and the executive director of the Vermont League of Cities and Towns, with administrative support and per diems. The board would evaluate, upon request, whether a proposed housing development “meaningfully serves the housing needs of the community”; the committee discussed whether that decision should be final and not subject to contested-case hearings or judicial review (the draft currently excludes contested-case hearing requirements for that determination).

Throughout the discussion members raised several recurring concerns: (1) whether enumerating eligible improvements risks excluding items the committee may want (broad buckets vs. an explicit exhaustive list); (2) the absence of an explicit broadband/digital-infrastructure and parking callout and whether parking should be eligible; (3) municipal control and the role of local select boards and regional planning commissions in demonstrating community need; (4) operational burden and potential workload for the CHIP board if many applicants pursue the discretionary pathway; and (5) the potential fiscal impact on the Education Fund and the advisability of delaying or phasing Tier 2 eligibility until more data are available from Tier 1 activity.

Committee members asked staff to return revised language reflecting their directions (for example, clarifying whether the CHIP board’s determination is the only route for the discretionary path; whether public applies to “public roads, streets, bridges;” whether parking and broadband should be explicit; and whether the CHIP board should have designees and a sunset aligned with other program sunsets). Grama said he would update the draft and return with revised language for additional committee consideration.

No formal motions or votes were recorded in the transcript for this meeting; the transcript records discussion and staff direction only. The committee agreed to continue the discussion when the presenter returns with draft revisions.

The committee’s next steps, as described in the meeting, are for Legislative Counsel to revise the draft language and for members to provide further detail on preferences (broader versus prescriptive eligibility lists; thresholds for housing; Tier 2 conditions and timing). The committee also discussed adjusting reporting timelines and earlier periodic reviews rather than waiting until the long-term statutory sunset or 10‑year reviews.